Issuu on Google+

leadershiP

VOL/07 | ISSUE/05

business

technoloGy

V. balaji, CIO, Tata Technologies, says that the ability to “think global and act local” is a key ingredient to being a global CIO.

GO lobal

g

How to navigate transnational responsibilities without losing your local bearings. Page 36

MARch 15, 2012 | `100.00 www.CIO.IN

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View from the top K.V. Srinivasan on IT’s role in beating a slowdown.

telepresence r(ore)s Why Vedanta ran against the grain and invested heavily in it.

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Get ready to defend your mobile life. Mobile security. The threat is real and it affects everyone. Whether you’re a global corporation or a thirteen year old with a smartphone, mobile device security is one of the most important issues facing the connected world today. From a lost phone to malware attacks, spoofing, spam and sexting, new threats crop up everyday. Add to that five different mobile platforms and the challenge is clear: Mobile security is a multi-dimensional problem with no single approach that addresses every device. Until now. One security app. Dozens of security applications. Spanning all of the major mobile OSs, Junos Pulse addresses the Mobile Security Suite diverse security issues facing the mobile world today. And because it’s a network-enabled, device-side solution, Pulse eases the challenges of delivering security on the device at scale. Companies can deploy new security solutions quickly and easily to every employee, and service providers can profitably deliver the robust security services their customers want.

Introducing Junos Pulse ®

Loss and theft protection. Junos Pulse means a lost phone is no longer an end-user worry or a security risk. Features like GPS locate & track, remote wipe & lock, device backup & restore and remote alarm & notification make sure your data doesn’t fall into the wrong hands. FACT More than 87% use their smartphones to store or access sensitive information, including credit card numbers, Social Security numbers or medical records. *source Juniper Mobile Security Research Initiative

Antivirus. More and more, employees want to use their personal phone for business activities. But companies must ensure those phones are free from viruses that can take down the system. Junos Pulse offers real-time protection from these threats, scanning all network connections and prompting alerts on detection. FACT The world’s mobile worker population will surpass 1 billion in 2010 and grow to greater than 1/3 of the world’s workforce by 2013. Defend your mobile life. *source Forrester Research

Secure enterprise connectivity for iPhone. The most popular consumer smartphone is now ready for work. The Junos Pulse iPhone app enables secure VPN connectivity into the enterprise, offering access to business applications and networked data on their corporate intranet from anywhere in the world.

Anti-spam. Junos Pulse tackles the problem with blacklist filtering—blocking voice and SMS spam. In addition, message settings and automatic denial controls combat unwanted messages and contacts. Personal firewall. Junos Pulse enables both inbound and outbound filtering of all traffic, full control of alerts and logs and customizable filtering—making sure you know exactly what you’re connecting to and whom you’re connecting with. FACT SMS (text) messaging is now the second leading conduit for phishing attacks. Defend your mobile life. *source Gartner Research.

Device monitoring and control. Managing your child’s exposure to predators and damaging content is beyond critical. From a single dashboard, parents can use Junos Pulse to monitor and control applications, SMS and MMS, and emails. Parents can easily view address books, phone call logs and photos. Junos Pulse helps parents regain control over their child’s safety and protection. FACT 32% of online teens have been contacted by strangers. Defend your mobile life. * source Pew Internet & American Life Project

Smartphones and other portable, network-enabled devices have literally changed the landscape of our modern lives. We work more effectively and efficiently from anywhere in the world. We have access to an incredible repository of knowledge and entertainment at the tap of a finger. But all of that connectivity has also created a climate of vulnerability, ripe for hackers, predators and con artists to exploit. Junos Pulse mobile security suite is a powerful tool in meeting these dangers head on to protect your business and your family. Junos Pulse. Defend your mobile life. For further consumer information or to purchase Junos Pulse for enterprise visit juniper.net/pulse

Þ Inbound Response Management Priya Sharma v:1800 209 3062 f:022 66765553

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3/2/2012 3:55:36 AM


From The Editor-in-Chief

Publisher, President & CEO Louis D’Mello E d i to r i a l Editor-IN-CHIEF Vijay Ramachandran EXECUTIVE EDITOR Gunjan Trivedi Features Editor Sunil Shah Senior Copy Editor Shardha Subramanian Senior correspondents Sneha Jha, Varsha Chidambaram Correspondents Debarati Roy, Shweta Rao, Shubhra Rishi Product manager Online Sreekant Sastry

Get Real!

How serious are you about being a business executive if you are not into attracting and retaining profitable customers. How can CIOs embed themselves and their teams into the core business of an organization? It’s been many years since I started to ask this question, but it’s only a few days ago that I began to wonder whether I’d been posing the right query all along. Our research has consistently revealed that CIOs who leverage IT to improve product quality or re-engineer core processes and help to increase customer loyalty are seen as competitive differentiators. Thus, our exhortations to CIOs to get more involved with their business peers and end-users, to go walkabout on the shop-floor and to connect with customers more. The first two are things that many CIOs work at. I know many who have built catching up with peers into their schedules. I know even more IT leaders who spend time with lines of business, get their hands greasy on shop floors, and try and figure out how to make life easier for suppliers, dealers and distributors. It helps you and your team to understand the pains of business better, thus preparing you to play the role of the trusted physician who can heal all ills. It also enhances your credibility. All great things to aspire to. But ask a CIO how many customers he’s spoken to and a strange phenomenon occurs. If the CIO is from telecom, IT, ITeS, retail or advertising verticals, chances are that he’ll beam at you and launch into a tale which begins “Well, last week…”. Ask any other CIO, however, and chances are that the reaction will be very, very different. Silence, a shake of the head, and a querying look later, I typically get told about how its not really necessary, about how attempts to do so were frowned upon by the folks in marketing and sales, about how the purpose of a business (and by extension that of the CIO) is to make money and not small talk with customers. Each time I hear this, I mentally groan and wonder how seriously business takes you if they don’t trust you with the prime goal of business—to attract and retain profitable customers. How do you architect strategy without critical customer input? Of course, I’m not denying that a large part of the blame can be placed on an organizational culture that prefers watertight bulkheads between functions. But, shouldn’t you be attempting to erase those boundaries ever so slightly?

Custo m Pu b l i s h i n g Principal Correspondents Aditya Kelekar, Gopal Kishore Trainee Journalist Vinay Kumaar Design & Production Lead Designers Jinan K.V., Jithesh C.C, Vikas Kapoor Senior Designers Pradeep Gulur, Unnikrishnan A.V. Designers Amrita C. Roy, Sabrina Naresh, Lalita Ramakrishna Production Manager T. K. Karunakaran Ev e n t s & A u d i e n c e D e v e l op m e n t Vice President Events Rupesh Sreedharan Sr. Managers projects Ajay Adhikari, Chetan Acharya, Pooja Chhabra Asst. manager Tharuna Paul Senior executive Shwetha M. Management Trainees Archana Ganapathy, Saurabh Pradeep Patil Sales & Marketing President Sales & Marketing Sudhir Kamath VP Sales Sudhir Argula Asst. VP Sales Parul Singh AGM Marketing Siddharth Singh Manager Key Accounts Minaz Adenwala, Sakshee Bagri Manager Sales Varun Dev Asst. Manager Marketing Ajay S. Chakravarthy Associate Marketing Dinesh P. Asst. Manager Sales Support Nadira Hyder Management Trainees Anuradha Hariharan Iyer, Benjamin Anthony Jeevan Raj, Rima Biswas Finance & Admin Financial Controller Sivaramakrishnan T. P. Manager Accounts Sasi Kumar V. Asst. Manager Credit Control Prachi Gupta

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

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

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

IDG Offices in India are listed on the next page

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

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From The governing board

Gov e rn i n g BOARD Alok Kumar VP & Global Head-Internal IT& Shared Services, TCS

Put Users Center Stage One of the reasons users move up the IT maturity scale slowly is because systems aren’t built—enough—with them in mind. When businesses put customers at the center of their operations, they do so because they believe that meeting customer desires will delight them, thereby ensuring the success of the business. But for our internal IT systems, do we ensure that we put end users—who are our customers—center stage? Do we do that during design, implementation and operation? The truth is despite the fact that standard processes of demand creation, requirement gathering, prototyping, and so on, have been around for decades, we are still only on the fringes of user satisfaction. We meet requirements, but fall short of delight and excitement. That leads to users saying: “I want a system that is as easy to use as Google!” Or “Make it as user-friendly as a banking site or travel portal.” The systems employees use in their personal lives seem so much better than the ones they use inside the enterprise. This is especially visible when we study the use of internal IT systems to obtaining meaningful information or analysis. There appears to be varying levels of IT maturity, which I classified into five levels: Level 1: A user’s assistant gathers information and presents it in PowerPoint or excel. The user is not concerned where and how the information is gotten. Level 2: An assistant provides information that is gathered from enterprise systems without having to message it or convert it into PowerPoint. Level 3: The user herself sees the information from enterprise systems and is able to trigger actions to appropriate people with ease. Level 4: The user receives alerts from enterprise systems based on pre-defined events (or certain threshold being reached). She looks at enterprise systems not just when she desires information, but also when the situation demands it. Level 5: A user who has seen the benefits of level 3 and 4 begins participating actively in creating IT solutions, often generating demand even without being prompted by IT. The reason why few users haven’t matured beyond level 2 or 3 is not because of user attitudes alone. The truth is that when users attempt to evolve to higher levels of maturity, they find that systems aren’t designed to support their desires. And that brings us back to our first question: Have we put our customers center stage? S. Anantha Sayana , Head-Corporate IT, Larsen & Toubro

Amrita Gangotra Director-IT (India & South Asia), Bharti Airtel Anil Khopkar VP-MIS, Bajaj Auto Atul Jayawant President Corporate IT & Group CIO, Aditya Birla Group C.N. Ram Group CIO, Essar Group Devesh Mathur Chief Technology & Services Officer, HSBC Gopal Shukla VP-Business Systems, Hindustan Coca-Cola Manish Choksi Chief-Corporate Strategy & CIO, Asian Paints Murali Krishna K SVP & Group Head CCD, Infosys Technologies Navin Chadha IT Director, Vodafone Essar Pravir Vohra Group Chief Technology Officer, ICICI Bank Rajeev Batra CIO, Sistema Shyam Teleservices (MTS India) Rajesh Uppal Executive Officer IT & CIO, Maruti Suzuki India S. Anantha Sayana Head-Corporate IT, L&T Sanjay Jain CIO & Head Global Transformation Practice, WNS Global Services Sunil Mehta Sr. VP & Area Systems Director (Central Asia), JWT V.V.R. Babu Group CIO, ITC

Bangalore: Geetha Building, 49, 3rd Cross, Mission Road, Bangalore 560 027, Phone: 080-3053 0300, Fax: 3058 6065 Delhi: New Bridge Buisness Centers, 5th and 6th Floor, Tower-B, Technolopolis. Golf Course Road, Sector 54 Gurgaon- 122002, Haryana Phone: 0124-4626256, Fax: 0124-4375888 Mumbai: 201, Madhava, Bandra Kurla Complex,Bandra (E), Mumbai 400 051, Phone: 022-3068 5000, Fax: 2659 2708

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Runs Oracle

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Copyright © 2010, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates.

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contents march 15, 2012 | Vol/7 | issue/05

Case Files 62 | vedanta group CollaboraTion In a world which asks telepresence to pipe down, Vedanta has unleashed the technology and taken it to new heights. Why? by shubhra rishi

73 | genpact

COVER: P HOTO GRAPH BY IMAGES ; COVER DESIGN BY VIKAS K APOO R & UNNI KRI SHNAN AV

3 6

iT managemenT In recessionary times, customers are dearer. Genpact knew that and to provide more value to its customers, it did something unusual: It cut IT costs. by sneha Jha

more »

36 | Go Global Cover sTory | Globalization Global CIOs used to be aberrations; you could probably name one or two, but not anymore. As more Indian IT leaders lead transnational teams they face new hurdles and challenge old assumptions. Here’s how the best among them are coping.

5 4

Feature by shubhra rishi

50 | Rate Your Cultural Smarts Cover sTory plus | Globalization Take these quizzes from kwintessential.co.uk and find out how culturally-aware you are. Compiled by shubhra rishi

57 | The Art and Science of Pricing FeaTure | it StrateGy IT leaders need to step up and provide their companies with the sophisticated tools needed to make smarter pricing decisions, which lead to greater profits. Feature by kim nash

vieW From The Top: “i believe that it is not an investment. it’s a return-on-investment,” says k.V. srinivasan, CeO of reliance Commercial Finance.

more » 6

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contents

(cont.) departments 2 | From the editor-in-Chief Get Real! By Vijay Ramachandran

4 | From the Governing Board IT Strategy | Put Users Center Stage By S. Anantha Sayana, Larsen & Toubro

11 | trendlines

5 7 4

18 | alert Mitigation | 10 Ways to Test Better for DR Security | Breaking Video CAPTCHA

74 | Forging the Vendor Collective FeaTure | Vendor ManaGeMent Shell and other big businesses use their clout to get normally hyper-competitive vendors to work together on IT projects and reveal their R&D plans and other benefits. Feature by kim nash

Columns 23

| add-ling our minds

Internet | Google’ll Pay You to Spy on You Quick Take | Hiring Business People in IT Voices | Are Tablets Enterprise-ready? Popular Science | Smart Socket Powers Up Technology | The Virtual Mentalist Automotive| Auto Cop, Auto Car Robotics | Your Robot Avatar Security | Satellite Encryption Cracked Mobile | Do-Not-Track Disabled Career| 4 Ways to Fight Burnout By the Numbers |In Bed with the Enemy

52

85 | essential technology Mobile Apps | The Mobile Web Innovation | Charity Begins on Mobiles 90 | What We're reading Book Review |The Little Black Book of Innovation By Vijay Ramachandran

Cio Career Today, a five-minute YouTube video is too long a commitment and 140-character tweets have usurped thoughtful paragraphs. Has this constant partial attention brought us any improvements? Column by John D. Halamka

24

| The Cso’s First security assessment

underCover oFFiCer The first security assessment at this CSO’s new employer wasn’t supposed to be personal. It just ended up that way. Column by an anonymous

29

| it's heads *and* Tails

Think Tank Are cloud services attractive because they are less expensive or are IT professionals drawn by greater agility? It’s not an ‘either-or’ debate. Column by Bernard Golden

8

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3 2

alTernaTive vieWs: is it-as-a-Profit-Center Just bunk? Some CIOs are tearing up IT's cost-center tag by turning their IT depts into profit centers. But is that smart?

VOL /7 | ISSUE/05


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Announcing the addition of precision air conditioners to the Schneider Electric data centre cooling portfolio Data centres have always been mission-critical environments. Businesses worldwide depend on their uptime and efficiency. And uptime and efficiency depend on the right cooling deployment. Today, Schneider Electric can deliver the right solution quickly, easily, and cost-effectively. TM

Cooling solutions for every application Complementing its innovative APC InRowTM line and other cooling innovations, Schneider Electric now offers a comprehensive cooling portfolio. It comprises building-level options, including energy-efficient air conditioning equipment and chillers, to keep today’s fully integrated data centres operating at optimal levels.

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©2012 Schneider Electric. All Rights Reserved. All trademarks are owned by Schneider Electric Industries SAS or its affiliated companies. Schneider Electric India Pvt. Ltd., 9th Floor, DLF Building No. 10, Tower C, DLF Cyber City, Phase II, Gurgaon - 122 002, Haryana, India. Phone: +33 (0) 1 41 29 70 00 • 998-5972_IN-GB

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Cio online

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[ CI O ZONES ]

your information hunt stops here If your interests lie in a few specific areas, you have come to the right place. We've created six interest zones on cio.in for you: Virtualization, BI, cloud, security, datacenter, communications.

Boston Limited (India) Click Software India

does it-as-a-ProfitCenter make sense? We invited two CIOs to kick-start a debate on running IT as a profit center. Read all about it in alternate Views (page 32). Which side are you on? We also have more debates for you on www.cio.in

[ BO O K CLUB ] Conversation starter

Learn what your peers think of this book (on page 90) and join the conversation with them on the CIO Book Club section online.

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>>www.cio.in/bookclub

Form IV Statement of ownership and other particulars about the magazine Real CIO World, as required to be published under Section 19-D Subsection (b) of the Press and Registration of Books Act read with Rule 8 of the Registration of Newspapers (Central) Rules) 1956. Place oFF PuBlIcatIon: PerIoDIcIty oF PuBlIcatIon: PrInter Name: Nationality: Address: PuBlIsher Name: Nationality: Address: eDItor Name: Nationality: Address:

‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Monthly Louis D’Mello Indian ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Louis D’Mello Indian ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Louis D’Mello Indian ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka

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m a R C h 1 5 , 2 0 1 2 | REAL CIO WORLD

Louis D’Mello Signature of publisher

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

VOL /7 | ISSUE/05


EDITED BY sharDha suBramanIan

new

*

hot

*

unexpected

Google’ll Pay You to Spy on You

hiring Business people in It

S t a f f M a n a g e M e n t The IT department, by design, needs hard-core tech-savvy people, that goes without saying. But wait, does it? Is there a business benefit in hiring business people who understand technology? Shubhra Rishi spoke to Asmita Junnarkar, CIO, Voltas, who has taken this unusual route to find out more about her strategy.

Do you think it’s a good idea to hire non-IT people in the IT department? Yes, it is indeed a good idea. At Voltas, we’ve hired IT managers who have a business background. They participate in business planning and spot initiatives that IT needs to get involved with. This was a conscious move because I realized that it’s difficult for IT managers from an IT background to understand business nuances. What problems does this practice solve? The majority of the challenges that IT teams

Vol/7 | issue /05

Trendline_March2012.indd 11

face are due to a disconnect with the business. For example, when we implemented SAP HCM at our overseas locations, we trained one of the HR managers to become a project manager. The implementation was much smoother compared to the implementation in India where IT drove the project. What benefits have you experienced? The gap between business and IT has considerably reduced. During meetings and business planning sessions, these managers are able to feed into strategy much better than an isolated IT team. Today, they are the bridge between business and IT.

Asmita Junnarkar

il lustrat io n by p radeep gulur

QUICK TAKE:

users visit, but also “how [they] use them.” Jacobs noted that the program could potentially capture behaviors like mouse-overs in addition to clicks. Still, privacy advocates saw some positives to the program, mainly that it is purely opt-in. Both Jacobs and Justin Brookman, director of the Consumer Privacy Project at the Center for Democracy and Technology welcomed that approach. Brookman saw it as a positive sign about what Google will do with its planned new ability to combine data from a single user’s interactions with multiple products. Privacy advocates worry the company could build detailed user profiles. With the Chrome tracking program, Google is looking for equally detailed information from a single user. “They’re really asking to lift up the hood,” Brookman said. “It’s a good sign that they’re saying it has to be on an opt-in basis.” —By Cameron Scott

trendlineS

Amid widespread concern about its new privacy policies that kicked in this month, Google is now facing criticism over an offer to give users Amazon gift certificates if they open their Web movements to the company in a program called Screenwise. Google is asking users to add an extension to the Chrome browser that will share their Web-browsing activity with the company. In exchange, users will receive a US$5 Amazon gift (about Rs 260) when they sign up and additional $5 gift card values for every three months they continue to share. The tracking extension can be turned off at any time, allowing participants to temporarily close their metaphorical shades on Google. The company says the program will help it “improve Google products and services and make a better online experience for everyone.” But David Jacobs, a consumer protection fellow at the Electronic Privacy Information Center, noted that the fine print of Google’s announcement suggested the program might allow Google to track user behavior “at a higher level of detail” than it already does. The offer says Google will observe not just which websites

Web

Should other CIOs follw this practice? Of course. There should be a core team of IT savvy business managers. This team will help you bridge the gap between business and IT and it can bring a CIO closer to the business. REAL CIO WORLD | m a r c h 1 5 , 2 0 1 2

11

3/9/2012 3:33:27 PM


vOICES:

Do Tablets Make Sense in the Enterprise? From waiters in fancy restaurants to babus in Bangalore’s Vidhana Soudha, and from airplanes in the West to your BYOD-ed employee, tablets have found many takers. With the much-awaited iPad 3 or iPad HD, releasing recently, consumers and enterprises are excited. But is the tablet really enterprise-ready yet? Shweta Rao asked some of your peers and here’s what they had to say:

deviceS

MADHU, Head-Technology & Analytics, GVK-EMRI trendlineS

“We are considering adapting tablets in our company especially because 90 percent of our staff is mobile. The move will save telecom, commutation, and manpower costs. It will also bring inn data accuracy. more importantly, it will save many more lives.”

PRAMOD KUMAR REDDY, Vice President–ICT & CISO, AppLabs “We are not comfortable with tablets when looked at from a security perspective. If employees download customized apps, our enterprise network could be compromised. Segregating data space from application space might help invite tablets into the network.”

GODWIn FERnAnDES, CTO, Ask Investment Holdings “While large scale tablet adoption promises operational efficiency, it will also add considerably to our operational expenditure. Nonetheless, we are looking at the technology favorably, but 3G costs need to be condensed to facilitate extensive usage.”

Smart Socket Powers Up P o P u l a r S c i e n c e Sony is developing electric wall sockets and plugs that can control power consumption by appliance, user or original power source. The company showed several demonstrations of its technology recently in Tokyo, including “smart sockets” that only dish out electricity to approved users or devices, and a home power grid that constantly tracks electricity use by time and appliance. “These outlets will perform authentication whenever a device is plugged in,” says Taro Tadano, a general manager in Sony’s technology development division. “Power outlets haven’t changed in 50 years,” he says, so creating power networks that are more intelligent than today’s one-way grids is seen as a logical next step as communities worldwide adopt more renewable sources and try to cut down on waste. Crucial to networks powered by such sources is the ability to track and route units of power across vast electricity grids, which will require that data flows alongside electricity. Sony’s solution is aimed at the final destination of such grids, the outlets where consumers plug in their products. Sony hopes to employ technology from its touch-card platform, Felica, which uses RFID (radio-frequency identification) technology and is widely used in Japanese trains, mobile phones and credit cards for electronic money. The new system puts the equivalent of Felica “readers” in outlets and equips plugs with the “card” technology, so that the equivalent of a “touch” occurs when a power cord is plugged in and the two sides meet. While the firm says this solution uses proven security technology and existing hardware, it would involve adding adaptors to all outlets in a home to be effective. Sony is also developing a technology that uses a home’s power lines to send and receive the authentication information, so that a single “reader” could serve an entire household. The company said the concept could also be applied to public outlets, for instance those available at airports or for charging electric vehicles. Consumers could “log in” by tapping personal touch cards to the outlets, then be charged by the amount of electricity they use, similar to the way gas stations operate.

—By Cameron Scott 12

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Trendline_March2012.indd 12

Vol/7 | issue /05


The Virtual Mentalist

researchers have been able to reconstruct words based on the brain waves of patients thinking those words, using computer modeling technology. they were able to do it by gathering the electrical signals directly from the patients’ brains, and a computer model was used to reconstruct the sounds of words that the patients were thinking of, the bbc reported. the system is seen as a future way to help comatose patients to communicate. t to do the tests the researchers implanted electrodes directly into the same part of participants’ brains. the work was led by brian pasley of the university of california, berkeley. pasley and his team of researchers focused on an area of the brain called the superior temporal gyrus, or stg. this region of the brain is part of the hearing apparatus and also one of the “higher-order” brain regions which help us make linguistic sense of the sounds we hear. pasley and his team monitored the stg brain waves of 15 patients who were undergoing surgery for epilepsy or tumors, while at the same time also playing audio of a number of different speakers reciting words and sentences. the team then used computer modeling to map out which parts of the brain were generating which brain waves in response to the different frequencies of sound. using this model patients were then presented with words to think about, and the team were then able to guess which word the participants had chosen. and using the computer model they were also able to reconstruct some of the words by converting the brain waves back into sound. —by antony savvas

E-Shopping Grows Up internet

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to

rs 5,000

Indian consumers are taking to shopping online; Today’s they are now spending comfortable limit making a s 20,000 to rs purchase 10 times the size rs s 25,000 they used to.

Rs 50,000 crore

Size of Indian e-commerce market source:Vizisense

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Trendline_March2012.indd 14

Auto Cop, Auto Car a u t o M o t i v e While scientists have been busy with making more accurate self-driving cars, at least one set of researchers has thought even further ahead and developed a smart intersection that can manage crossing flows of autonomous vehicles. The intersections of the future will not rely on stoplights or stop signs. Instead, when cars are driven by software, they could be managed by virtual traffic controllers, which stay in close contact with the automobiles as they approach the intersection, said Peter Stone, a professor of computer science at The University of Texas at Austin. At least from a certain perspective, it is unusual that humans still drive their own vehicles, Stone explained. Other forms of mechanized transportation, such as airplanes, boats and railroad locomotives, have autopilot capabilities. Using computers and sensor systems, autonomous vehicles could handle much of the routine navigation that humans now do. Autonomous cars could get their occupants to their destinations more quickly and be safer, advocates say. Stone and his group have assembled a demonstration system for managing autonomous vehicle traffic in road intersections. Each intersection will have a manager, or a computer that will coordinate all the traffic in the most efficient way mathematically possible. And each car will have a software agent that communicates with upcoming intersections. “When a car gets close to the intersection, it calls ahead and says, ‘I want to go through the intersection.’ The intersection manager says either yes or no. It keeps track of the reservations it grants and makes sure it doesn’t give permission to other cars that would conflict with them,” Stone said. In the prototype, a self-driving car takes instructions from a traffic manager and waits for other (imaginary) vehicles to go through a virtually busy intersection before crossing the intersection itself. The system can be modified to work with both autonomous cars and regular human-driven cars. In these cases, an autonomous car could go through a red light if the manager saw that it was safe. Overall, he argued, autonomous vehicles would still be safer at intersections than regular cars, citing the statistic that 90 percent of all auto accidents are caused by human error. —By Joab Jackson

Vol/7 | issue /05

illustration by p hotos.com

trendlineS

technology


your robot obot avatar avatar application of a sensory-laden telepresence robot in a dangerous area is something that’s been in the works for years. One of these robots could do wonders at a location like Fukushima, where the radiation level is too high for humans to get near. Doctors could use this robot to perform remote surgery, assuming the Internet connection is fast enough to allow close to realtime telepresence. The Telesar V can move in seven different directions, and it has joints just like humans do. Coolest of all,

the sensors on the Telesar’s hands are sensitive enough (and high-tech enough!) to relay texture at a level advanced enough to determine a smooth surface or something bumpy like a LEGO.

—By Jason Kennedy

Researchers Crack Satellite Encryption

Vol/7 | issue /05

antenna and a pc as part of the research to capture and demodulate speech data, and then processed the captured data through an implementation of an attack they’d conceived to break the crypto. they did point out that in terms of real-world attacks, there were limits to their experiments. although they say they can decrypt communications secured according to the gmr-1 standard, there were still some barriers that prevented a full disclosure of a voice conversation. based on an experiment with the thuraya network, which makes use of gmr-1, the researcher say they weren’t able to reproduce the voice conversation in their own downlink because the speech-codec for gmr-1 is “currently unknown, we were not able to actually reproduce the conversation that took place.” the researchers said they had informed authorities well in advance of their announcement. “our results show that the use of satellite phones harbors dangers and the current encryption algorithms are not sufficient,” said ralf hund, chair of system security at rub. the researchers indicated, “there is, as yet, no alternative to the current standards.”

imaging by pradeep gulur

researchers at a university in bochum, germany claim to have cracked encryption algorithms of the european t telecommunications standards institute (etsi) that are used to secure certain civilian satellite phone communications. the ruhr university bochum’s (rub) horst görtz institute for it-security recently issued an announcement detailing how researchers there have broken encryption algorithms known as a5-gmr-1 and a5-gmr-2 that are used to secure civilian communications between mobile phones and satellites based on the gmr-1 and gmr-2 satphone standards. the researchers explained that in some regions of the world standard cell phone communication is still not available, so “in war zones, developing countries and on the high seas, satellite phones are used instead.” the group of rub scientists there said they simply used generally-available phone equipment and found the crypto key and managed to break it fairly easily by analyzing the software running on the satphones, in this case the thuraya so-2510 and inmarsat isatphone pro. “We have performed mathematical analysis and discovered serious weaknesses,” the researchers note in their announcement. according to the university’s announcement about their research, they used open-source software, a special Security

— by ellen messmer REAL CIO WORLD | m a r c h 1 5 , 2 0 1 2

trendlineS

r o b o t i c S Some Mondays you just don’t want to get up, get ready and go to work. Like the days; you didn’t sleep well, the water heater broke, you’re up late, or whatever. It throws your entire day off. But maybe those days are numbered, thanks to a new robot prototype from Keio University. It’s called the Telesar V. The remotecontrol is so precise that it can pick up and manipulate objects, and the bot has some very sophisticated sensors that allow it to detect the temperature of objects and texture via touch, which it can relay to its controller. The user can see through the robot’s eyes. It’s controlled through a virtual reality suit—3D helmet and all. While the controls look inconvenient and clunky now, this is an awesome foreshadowing for what’s to come. Not wanting to go to work aside, the

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Do-Not-Track Disabled gsm cellular networks leak enough location data to give third-parties secret access to cellphone users’ whereabouts, according to new university of minnesota research. “We have shown that there is enough information leaking from the lower layers of the gsm communication stack to enable an Mobile

trendlineS

attacker to perform location tests on a victim’s device. We have shown that those tests can be performed silently without a user being aware by aborting pstn calls before they complete,” write the authors, from the college of science and engineering, in a paper titled location leaks on the gsm air interface. the paper, presented recently, comes at a time when carriers, phone makers and software companies are under almost constant fire regarding customer privacy. reports surfaced recently that google and others allegedly put code on iphones that let companies track users’ activities without them knowing, apple itself vowed recently to purge apps from the app store that sneakily grabbed users’ contact lists, and a software maker named carrier iQ was at the center of a controversy in recent months regarding whether carriers used its technology to track users in nefarious ways. the computer scientists explain that wireless service providers’ cell towers have to track subscribers to find the past path on their network and connect calls. the towers issue pages to phones to find them. (access to device tracking information also needs to be made available for law enforcement reasons.)

the he researchers demonstrated how easy it was to track down a cellular device within a 10-block area in minneapolis using a t mobile g1 smartphone and open source technology. they never tcontacted the service provider to conduct the test. “it has a low entry barrier,” researcher denis Foo Kune said, in a statement. “being attainable through open source projects running on commodity software.” the concern is that agents from oppressive regimes could use such location data to track down dissidents or that thieves could watch a potential victim’s phone exit an area and leave their home open for a break-in. the researchers have contacted carriers and phone equipment companies (they specifically mention at&t t and nokia in the paper) with ideas on how to safeguard location tracking data through gsm software stack upgrades and are working on responsible disclosure statements for service providers.

4 Ways to Fight Burnout Burnout is as predictable in an IT professional’s career as the long hours that precipitate it. The demanding nature of IT jobs, coupled with a perceived lack of respect and appreciation, leads many IT professionals to lament, à la blues great B.B. King, that “the thrill is gone.” Here are four CIO-recommended ways to reignite one’s enthusiasm. Take pride in your team. Developing your staff members and observing their camaraderie makes all the politics and bureaucracy that otherwise grinds you down worthwhile, say several IT leaders. “What keeps me coming in each day is my team,” says

career

CIO.In

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Julian Lamb, head-IT, Tony Ferguson Weightloss. “We get these (young) people and build them into professionals. If we’re good at what we do…perhaps [they can] reach the work life balance that escapes many of us.” Look for a new challenge on the job. Jayashree Raju, a senior VP of IT for an investment bank, suggests exploring new functional areas in one’s company, particularly where IT is not being fully utilized. “This will broaden your scope and understanding of non-IT areas/new business divisions,” she said. Keep a pet project It’s a solution that works for Rod Carr, director of IT for a UK utility. “I always

—by bob brown

try to keep one or two personal ‘pet projects’ on the go, which get me all fired up,” says Carr. “It could be a trial on some long range tech, coaching a manager onto the next level of competence, or just going on tour around customers and operating sites.” Delegate your dirty work. If you have the money, says Steven Stern, CIO of Great Harvest Franchising, hire someone to do the work that bores you. It’s likely you can find someone who’s thrilled by the work that puts gray hair on your head. No money? Perhaps you can delegate it to someone on your staff. Either way, says Stern, you can spend your time doing the work that excites you. —by meridith levinson

to find the hottest jobs in the indian market visit itjobs.cio.in

Vol/7 | issue /05


c o m p i l ed by S h w e ta R a o

Best Practices

In Bed with the Enemy Crime does not discriminate. No country or organization is immune. That’s bad news enough. But it gets worse: According to PwC’s Global Economic Crime Survey of India Report a significant number—a full 60 percent—of Indian companies still identified internal employees as perpetrators of economic crimes. The number of cases of economic crimes is also on the rise. According to the report, the number of respondents who experienced asset misappropriation jumped from 27 percent in 2005 to 68 percent in 2011. Bribery and corruption too saw a similar increase from 17 percent in 2005 to 36 percent in 2011. Accounting fraud, however is, growing more slowly. In 2005, 19 percent of respondents claimed they experienced it, in 2011 that number was 20 percent. More interestingly, the report builds a profile of fraudsters. According to the report, perpetrators are almost always male and more than half of the time are a 1st degree graduate. He is also, 67 percent of the time, between the ages of 31 and 40 and has been with an organization for up to five years. Also alarming: While 56 percent of respondents informed the police when taking action against an ‘outside job’, only 20 percent did so for an ‘inside job’. Among different types of economic crimes, the report focuses on cyber crimes. Just under a quarter (24 percent) of respondents said they had suffered from cyber crime—versus 20 percent who had experienced accounting fraud.

1

2

3

ensure controls are continually upgraded and adapted to foil fraud at the rootlevel. These include internal audits, fraud risk management, electronic suspicious transaction reporting of corporate security, and rotating personnel or duties. Cultivate a culture that encourages internal tip-offs, and whistle blowing among employees.

trendlines

C

Who is the number one perpetrator of economic crime in India Inc? He is a loyal employee aged between 31 and 40.

React consistently. Ensure fraud detection triggers immediate punitive response irrespective of the perpetrator’s position. make or break a case.

Crime and Punishment Types of Economic Crimes*

Action Taken Against Employees

Asset Misappropriation

Dismissal

80% 73%

68% Warning/reprimand

Bribery and corruption

36% Cyber crime

24% Accounting fraud

20% * Indian respondents who said they experienced these crimes in 2011

Civil action including recovery 27% Regulatory authority notified 20% 12% Did nothing 13% 8%

53% 23% 39%

2011 2009

Source: PricewaterhouseCoopers Global Economic Crime Survey 2011 (India Focus)

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alert

Enterprise Risk management

10 Ways to Test Better for DR I

IMAGES by PHOTOS.COM

f you woke up tomorrow and ran a marathon, how would you fare? It’s doubtful that you would successfully run the 26.2 miles without months of training, drills, and exercises. The same is true for disaster recovery (DR): The chance that you could successfully recover IT operations without having exercised your DR plans on a regular basis is slim. The chance you could successfully recover and meet your recovery objectives is zero. Yet Forrester finds that exercising DR plans is one area in which many organizations continue to fall short. Although most enterprises claim to conduct a full exercise of their DR plans at least once a year, anecdotal evidence suggests that most are not comprehensive and thorough; with enterprises exercising a portion of the plan or a subset of applications. Many of the organizations Forrester has spoken with know that they need to improve their DR exercise program, but face

multiple barriers. Here are 10 ways to test better from Forrester:

Define Specific Exercise Objectives Upfront

Exercising for the sake of exercising is a waste of time. Make sure that there are clear and concrete objectives and goals set up upfront that will help determine the success of an exercise. An objective may be as simple as: “Verify our stated recovery time and recovery point objectives.” You could orient other objectives around training, such as, “Familiarize database admins with the plans for recovering Oracle.”

Include Business Stakeholders Business owners play a vital role in a DR exercise, and you need to involve them from the start of the exercise until

you have recovered all services. They should verify the successful recovery of services. This has the dual benefit of ensuring that you have properly recovered business processes with all critical components and ensuring that business stakeholders know what to expect in terms of recovery capabilities and performance at the recovery site during an actual declaration.

Rotate Staff Responsibilities It’s important that the person who wrote the DR plan is not the same person who executes the test, because it’s unlikely she will be available in a real disaster. Some companies Forrester interviewed went so far as to have employees with little specific knowledge of a system executing tests, such as a system administrator running the

f i n di n g s

How Serious is Serious?

A majority of Indian companies say having a working DR plan is what drives security investments—yet for a majority that investment is tested only once a year or less.

58%

Of Indian organizations say business continuity/ disaster recovery drives security spending at their company, the highest from 11 choices.

How often do you conduct an enterprise risk assessment? 44% Once a year

11% Less than once a year

39% Twice a year (or more)

6% Do not conduct an enterprise risk assessment

Source: Indian Information Security Survey 2011

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3/9/2012 3:48:48 PM


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alert

Enterprise Risk management

database DR test. An important secondary benefit: You are essentially cross-training staff in different areas.

Develop Specific Risk Scenarios Many enterprises conduct DR exercises without specific scenarios; they tell the response team to assume the datacenter is “a smoking hole.” But it is important, to define specific risk scenarios for two main reasons. One, it provides a more realistic situation for the response team and two, different scenarios require different actions from IT staff. For example, a DR plan for a short outage at a primary datacenter that only requires resuming operations would be different from a longterm outage that requires failover (and eventually failback).

Run Joint Exercises with Business Continuity Teams In our research, Forrester found that many BC and DR teams run all of their exercises separately and often fail even to communicate when they run exercises.

However, you should aim to exercise the full enterprise BC and DR concurrently at least once a year. This is especially important if the datacenter is in the same location as corporate headquarters.

Vary Exercise Types from Technical Tests to Walk-Throughs A common misconception in IT is that walk-throughs and tabletop exercises are not necessary for DR tests. While it’s true that these types of exercises won’t test the technical capabilities of a failover, they are critical for training, awareness, and preparedness. Interviewees told us that the majority of the time, exercises that didn’t go as planned actually struggled most with communication and employees’ understanding of their roles during an exercise. Non-technical exercises such as walk-throughs and tabletops can fix that.

Test All IT Infrastructure Concurrently at Least Once a Year Waiting longer than a year risks too much change in IT environments and

Big Brother Listens in In a move that’s unlikely to sit well with privacy advocates, the FBI has begun scouting for a tool that will allow it to gather and mine data from social networks like Facebook, Twitter and blogs. The goal is to use the tool to keep on top of breaking events, incidents and emerging threats, the agency said in a recent Request for Information (RFI) from IT vendors. The FBI said it’s seeking a “secure, lightweight web application portal using mashup technology.” According to the RFI document, “The application must have the ability to rapidly assemble critical Open Source information and intelligence that will allow [the FBI’s Strategic Information and Operations Center] to quickly vet, identity and geolocate” potential threats to the US. The FBI said the tool must have the ability to automatically search and scrape data off social networking and news sites based on specific queries. It must also be able to display alerts on geo-spatial maps and give users the ability to quickly summarize the “who, what, when, where and why” of specific threats and incidents. The FBI hopes to use information posted on social networks to detect specific and credible threats, locate those organizing and taking part in dangerous gatherings and predict upcoming events, the FBI said. —Jaikumar Vijayan

personnel—you need to bring new staffers throughout the organization up to speed on DR plans. The most advanced firms run full DR tests as often as four times a year. In between full tests, most firms conduct component tests that vary in frequency depending on the criticality of systems and rate of change in the environment.

Identify Members for the Core DR Response Team The stress of working under time and resource restraints for long hours, often during nights and weekends, is something people cope with in different ways. When picking a core response team, it’s important to pick people who can work under extreme amounts of pressure (and sleep deprivation). During an exercise or test, identify those individuals who can remain calm and collected.

Learn from Your Mistakes The point of running DR exercises is to find potential barriers to recovery while in a controlled environment. If you aren’t encountering problems during your exercises and tests, it’s more than likely you aren’t looking hard enough, aren’t testing thoroughly enough, or you have designed scenarios for recovery that are too simple. When you complete exercises and tests and you have identified problem areas, use what you have learned to update plans and create best practice documents.

Report Results to Stakeholders If your organization has recently made significant investments in improving preparedness, most likely executives and other business stakeholders want to know what the return is on their investment— how prepared are you? Reporting exercise and test results regularly and in a timely fashion gives executives and business leaders visibility into your DR program. Remember that the results are not pass/fail but should detail aspects of recovery that went well and areas for improvement. CIO Rachel Dines is an analyst at Forrester Research. Send feedback to editor@cio.in

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Enterprise Risk management

Breaking Video CAPTCHA

R

esearchers at Stanford University have discovered a way to break state-of-theart security video Captchas of the sort deployed by companies such as NuCaptcha with a 90 percent success rate. Rather than presenting users with a conventional static but scrambled series of letters and numbers, NuCaptcha’s video version offers partially rotating text that also moves from left to right across the screen, in theory making it much harder for computer systems to reliably detect which elements of the image are the correct ones. This has worked well—until now. After converting the NuCaptcha videos into individual frames, the background image was removed by the researchers and the remaining letters turned into a black and white image to ease processing. The team then used algorithms to nominate the most interesting objects in each frame, tracking these across frames as they changed. Next, they refined the number of objects by estimating the likely minimum size of the Captcha, subjecting the remaining ones to an algorithm designed to distinguish rotated letters from ‘straight’ ones. Because the researchers had multiple frames for each Captcha they were trying to break—a feature of any Captchas that use video—they ended up with more data from which to do a complex pattern analysis using tools familiar to anyone from the field of machine or robotic vision. Put another way, using the team’s method video Captchas were actually easier to beat than static ones because they offer more data from which to perform an analysis. The team said its cracking technique worked between 80 percent and almost 100 percent of the time, depending on the analysis algorithms used to isolate Captcha letters from the moving field. 22

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The researchers said they had worked closely with NuCaptcha during its research, which has since offered a technical response to news of the attack on its technology. “It is with combined efforts of researchers that potential weaknesses are discovered and resolved, prior to them becoming practice by attackers. No single Captcha will defend against every possible attack,” NuCaptcha said. The Stanford team believes that NuCaptcha’s video security could still be made to work. “What we need to do is to remove every discriminative feature that the attacker can use to tell apart decoy moving objects and the real Captchas,” the researchers suggest, most easily by introducing visual decoys to reduce the effectiveness of pattern-isolation algorithms. NuCaptcha was working on a new version of its system to do

Unique Malware is Up

alert

this, both the researchers and the company confirmed. Captcha (completely automated public Turing test to tell computers and humans apart) is not seen as the security barrier it was once believed to be, but it remains an important technique for slowing systems that register bogus accounts with webmail providers in order to generate spam. Constant attacks have caused some to question the underlying effectiveness of the whole technology. Only recently, the Cridex banking Trojan was found to be able to break the static Captchas used by Yahoo to secure its webmail services. However, Internet companies would rather have an imperfect system that beats automated systems some of the time than none at all. CIO John E Dunn writes for Techworld.com. Send feedback to editor@cio.in

The number of unique malware samples broke the 75 million mark in 2011, McAfee noted in its fourth-quarter threats report for 2011, which also looks back at annual global trends in malicious code activity. According to the McAfee report, total mobile malware samples identified spiked upward to more than 400 in the fourth quarter of last year, a sharp rise from each of the year’s three previous quarters that had seen only about 100 or fewer. “It’s primarily Android,” says McAfee researcher Adam Wosotowsky, adding that the samples are being discovered mostly outside the official Android store, not in it. “Much of the Android malware has been for-profit SMS-sending Trojans, which benefit cybercriminals by hijacking phones to send messages that cost their owners money,” the report concludes. The report also says it appears that the amount of fake anti-virus software, which lures victims into buying phony A/V or downloading Trojans, is on the decline. Apple Macintosh users, in the meanwhile, have generally been far less targeted for malware than PC users over the years. Mac malware showed a huge spike upward the second quarter of last year in the number of unique Mac OS malware samples discovered, rising to almost 300 unique samples in June 2011, but then dropped off sharply, with very few discovered since, month over month. — Ellen Messmer

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John D. Halamka

CIO Career

ADD-ling Our Minds

W

hen you're in meetings or on to cover. Today, my reading is more Web-like: I dip In a world where a fivephone calls, are you focused into a topic and pull out the important bits, then minute YouTube video is in the moment, or are you jump to a different topic. My skimming is efficient too long a commitment distracted by e-mails, text and keeps me well informed, but I never read a and 140-character tweets messages or social networking traffic? book at a relaxed pace cover to cover anymore. have usurped thoughtful Can you read an entire 20-page whitepaper, To see how severely afflicted I am with workparagraphs, we need to ask RFP or article? induced ADD, I looked at my calendar for this Do your thoughts flow unimpeded when week. And I came across a trend that I want to whether constant partial you're writing a presentation or an article, or change. Across my jobs and volunteer efforts attention has brought us are they interrupted by the urge to check your there are a few dozen critical projects with due any improvements. e-mail or mobile device? dates in this month. Ideally, my schedule should Do you find that your ability to explore issues have open blocks of time to focus in depth on each in depth has diminished over time because of the need to react to of these major efforts. the constant flow of input? Instead, my calendar demonstrates that I've delegated the depth If you’ve answered yes to these questions, you are not alone. to others in order to achieve a breadth of oversight by setting aside The nature of our work has induced a kind of attention deficit only a few minutes per critical project per day. The rest of the time disorder ADD). is devoted to tackling urgent problem-solving and unplanned Part of the problem is the expectation that we should all be work. Of course, even those activities speak to the tension of connected 24x7 and respond in near real time. change caused by the modern pace of activity. Part of the problem is an addiction-like behavior caused by a need to feel connected to others. Taking a Stand Part of the problem is the feeling that we have to work two days My writing, taken collectively, often paints themes for the year. for every workday—one with scheduled meetings, and one with This year, I hope I can restore depth, reduce breadth and begin to unscheduled electronic messaging. re-form my brain into the linear path of an expert instead of the hyperlinked random walk of a dilettante. In a world where a five-minute YouTube video is too long of An ADD Fix a time commitment for the average person and 140-character Knowing how attention-grabbing devices can shred concentration, tweets have usurped thoughtful paragraphs, we all need to ask I’ve adopted a useful tactic. When I write, I close my e-mail client whether living each day with constant partial attention has and put away my mobile devices. I often do this between 2 and brought us any improvements. 4 AM, when the tide of incoming messages is low. This is when I, for one, am willing to say that our modern work style is an I can collect my thoughts and write in a single stream, weaving emperor with no clothes, and we need to recapture our focus in together ideas from my previous compositions when possible. order to solve the complex problems ahead. CIO Setting aside this particular block of time to address this one task has been very helpful. I have been able to keep my thousand-plus articles integrated in my mind by writing in the earlyRe-think, Reignite morning darkness. John D. Halamka is CIO at CareGroup Healthcare System, CIO and associate To learn more read Time However, my reading has dean for educational technology at Harvard Medical School, chairman of the New Management: 6 Ways to suffered. When I was younger, England Health Electronic Data Interchange Network, chairman of the national Improve Your Productivity on I could sit in my old Morris Healthcare Information Technology Standards Panel and a practicing emergency www.cio.in c o.in chair and finish a book cover physician. Send feedback on this feature to editor@cio.in

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Undercover Officer

Anonymous

The CSO’s First Security Assessment The first security assessment at this CSO’s new employer wasn’t supposed to be personal. It just ended up that way.

W

hen I signed on with the company where I am CSO, I promised that I would provide an initial 100-day plan. Within a week, I did just that. A key item was to deliver an assessment of the overall security posture, something never done before at this firm. The plan was welcomed with open arms by the executive to whom I report, and by his boss, the CIO. From what I knew about the three previous security officers—the last of whom, I had been told, was fired for incompetence—none of them were up to the task, and I felt confident that I was the man for the job. Basing my approach on some industry standards, I put together an integrated risk assessment process. Then I set out on my quest to gather any and all information related to the company’s organizational and strategic risk. My goal was to get as much information as possible without disturbing the operational environment. The final product would be a complete report of the company’s physical and information security

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Anonimous_colunm_March2012.indd 2

posture, along with a prioritized roadmap of remediation strategies. Unfortunately, I was in for a lot of surprises— not only about a number of serious risks and vulnerabilities at my new employer, but also about the hazards of delivering bad news at a “no bad news” type of organization that would rather fix blame than fix problems.

Turning Over Stones The first order of business was filling out questionnaires about the security environment, doing vulnerability scans on the operating systems, and conducting physical walk-throughs Vol/7 | ISSUE/05

3/20/2012 12:24:52 PM


Undercover Officer

Anonymous

of the facilities. The results were not encouraging. There was no formal approach to patch management, which meant the operating systems had many critical vulnerabilities. In addition, the physical environment was so poorly protected that I was able to enter the building after hours, without an ID card or keys, and get physical access to sensitive computer devices in rooms that had been left unlocked. I immediately put together a status update that included digital pictures of my unauthorized night-time adventure. My manager was fine with the results, but he offered some good suggestions about the best way to present the information to the CIO. He wanted me to hone the information and more explicitly state the threat of having a given vulnerability. I shrunk the report to only a couple of pages. My manager seemed giddy with excitement about the new report. He said that it was great stuff—that I was finding out what the company’s problems were, something they hadn’t known before. He gave me permission to deliver an executive summary to the CIO in person. At that point, I felt good about things. I thought that my manager must be feeling like they had made a good hire, and that he was going to look good by moving this information forward. I thought of preparing 27 8x10 color glossy photographs with circles and arrows and a paragraph on the back of each one. Instead, I throttled my enthusiasm to a 10-slide presentation. I thought the meeting went extremely well. The CIO asked questions about

A Love-hate Affair To learn more about the CIO-CSO relationship, read Whom Should the CSO Report To? Visit www. cio.in

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c o.in

I was in for a lot of surprises—not only about a number of serious risks at my new employer, but also about the hazards of delivering bad news at a “no bad news” type of organization. how to fix the problems. Emboldened by my success, I headed out to delve deeper into the bowels of the IT organization.

Circling In The next phase of my security assessment focused on the flow of data and on application security issues. My team and I looked at the data leaving the company in every available protocol, and what we found was astounding. Personal information, including credit card numbers, was leaving the company unencrypted and in violation of regulatory requirements. We found unprotected account codes and routing information, legal documents and arguments, merger and acquisition information. We found discussions about sex, drugs and country music, and other unsavory activities of which I would rather not speak. Then there were the findings about vulnerabilities on the mission-critical applications that drive the business. The applications were riddled with holes that could provide an ambitious script kiddie with a downhill slide to the company’s mother lode of sensitive information. I packaged the information in the approved format and printed a copy to hand deliver to my manager. Again, he seemed excited and gave me the go-ahead to meet with the CIO. I delivered a sampling of application vulnerability scans, describing their potential impact on the business. Proud in my efforts, I ventured to a security conference. I thought the CIO would welcome the discoveries because

they would allow us to organize and prioritize a list of fixes. Why would I feel otherwise after my previous success? The difference was where I was focusing. If you were to look for the virtual home of the CIO, you would find him nestled within the hills and valleys of these highly complex applications. Standing proudly upon the mountaintop of his layered stack of code, SQL calls and integrated messaging, the CIO was much like the master control program (MCP) in the movie Tron. Months later, I can still hear the words of the MCP echoing in my head: “I can’t afford to have an independent program monitoring me.”

His Case (and Mine) When I returned from the conference, armed with new information and zest for the job, I found a meeting request from the CIO for early Monday morning. The first thing the CIO asked was, “Are you committed to this company?” As I sat there feeling stunned, he presented me with a case he was building for my termination. At least on the surface, it had nothing to do with the risk assessment. It centered on three things: He said that I had neglected to respond to a critical e-mail, missed an offsite vendor meeting, and failed to return from the conference a day early for a last-minute meeting. He said I had until Friday to prove I was committed to the company, or we would be having a different type of conversation. I spent hours that week gathering evidence to prove him wrong. Meanwhile, my manager had gone REAL CIO WORLD | m a r c h 1 5 , 2 0 1 2

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Undercover Officer

Anonymous

missing—I didn’t even hear from him until Thursday. As near as I can figure, once the CIO turned on me, my manager took his side, ever the yes-man. To make my case, I printed out an e-mail I had sent in response to the e-mail the CIO mentioned. I found weather reports and airline information that showed that my earlier flight back had been canceled. I showed that I had arranged for a staff member to attend the vendor meeting in my absence. I made two copies of everything— one for the CIO and one for me—and ventured into his office on Friday. We reviewed the data without fanfare, and the CIO did not apologize for the accusations. Clearly more was going on than he was saying, so I asked him what this was really about. He was surprisingly upfront. “Are you trying to get me fired?” he asked.

Then he told me, in a roundabout way, that in the past there had been people who came into the company and tried to have him and other members of the senior management fired. He had taken my description of vulnerabilities in the company’s IT systems as a personal attack. If ever there were evidence that it’s a conflict of interest for the CSO to report to the CIO, I was facing it. What was particularly odd about our conversation was the matter-offact fashion in which he addressed me. I tried to explain that I wasn’t going after anyone in particular—I was just trying to do my job. I was only trying to let him, as an officer of the company, know where our weaknesses are. Furthermore, I wasn’t suggesting that all the code had to be rewritten. There were other things we could do, such as purchase an application vulnerability scanner, train the coders on writing

secure code and deploy applicationlayer deep-packet scanning tools. But what he had told me said a lot about his mind-set. He seemed to be operating from a defensive posture, because of what I saw to be a feeling of inadequacy. I learned that he had worked outside of IT for the firm before being promoted to CIO and had little direct experience with technology. The meeting ended with an understanding, but it settled deeply within my psyche that in this company, charges could be manufactured and staff terminated at any time. The trust factor was gone. I would need to maintain an increased level of vigilance in all matters concerning discovered vulnerabilities. CIO

This column is written anonymously by a real CSO. Send feedback on this column to editor@cio.in

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3 Key Issues for Secure Virtualization Virtualization represents a sea change in IT practices. Bound for years by the “one application, one server” rule, IT infrastructure was over capacity, underused and not cost-effective.

What It Takes To Build Your Own IT The competitive advantages of building your own software.

www.cio.in/articles

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Bernard Golden

Think Tank

It's Heads *and* Tails Are cloud services attractive because they are less expensive or are IT professionals drawn by greater agility? It’s not an ‘either-or’ debate.

I

n Silicon Valley, the saying "it's a dessert topping and a floor wax" is often used to puncture the pretensions of a product that promises that it can address every need: It's applied to products claiming oxymoronic qualities. For example, the saying would be applied to a product that claimed to perform network management and word processing—two different, mismatched, and disharmonious functionalities. I'm reminded of this when I listen to debates on cloud computing. One person will assert that the cloud is less expensive than the traditional IT infrastructure operations; a second person then says "cost isn't really the issue for IT, what they really want from cloud computing is greater agility," meaning rapid provisioning of infrastructure resources.

IT Costs Matter

Illustration by PH OTOS.COM

Those who claim that IT organizations aren't really focused on cost, but are much more attracted to cloud computing's agility characteristic, are guilty of wishful thinking. Oftentimes, this claim is stated by vendors that cannot compete on price with other cloud providers (that is to say, Amazon). In my experience, IT organizations are extremely focused on cost—not to the exclusion of other important factors, of course, but, given a situation of relatively even capability, cost will be the tie-breaker. The fact that in most businesses IT is considered a cost center means that price of its inputs is even more important. Given technology's relentless pace of innovation, the number of companies that have suffered as their former competitive advantage is eroded by industry developments is legion. The number of IT vendors that have floundered on an attempt to justify a high price in the absence of true competitive advantage is also legion.

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Bernard Golden

Think Tank

Cost and Agility Aren't Mutually Exclusive The attempt to downplay the importance of cost regarding cloud computing is misguided. However, there is a greater mistake in branding cost and agility as conflicting choices; that choosing one means forfeiting the other. The fact is that low cost and agility both depend upon the underlying foundation of cloud computing: Automation. It is automation that supports both lower costs and agility, and both of them equally reflect its nature. Once one steps back from the "less filling, tastes great" conflict between agility and cost, the transformational nature of this automation can be examined more clearly. In every other industry in which manual processes have been supplanted by automation, a number of things have occurred: Cost for the good (or service) has dropped. One has only to look at the automobile manufacturing to see how mass production changed the end user pricing of cars. Henry Ford's automation turned cars from a plaything for the rich to an essential of everyday life. The fact is that automation reduces the labor content of a process and pulls cost out of it. Consequently, given cloud computing's automation, you can expect that the overall cost of IT infrastructure will decline, probably quite dramatically. Those who believe that "enterprise" pricing will continue despite the spread of cloud computing are misguided. Incumbent providers have been confronted by the need to adopt the new technology or go out of business. The number of US car manufacturers dropped by 90 percent in the quartercentury after Ford introduced mass production. Only those who could adopt Ford's techniques and compete with him on price survived. This means that every IT organization and service provider should recognize what the future holds and develop a strategy to adapt to it. Demand for the good or service has skyrocketed as it becomes cheaper. Henry Ford sold 15 million Model Ts, a huge number by any standards. This means that cloud computing is going to cause the demand for IT infrastructure to increase enormously. We consistently recommend that IT organizations develop strategic plans that include a "10X" scenario, because— based on historic analogies—IT will soon see an enormously higher volume of demand. Everyday life is transformed by this new, less expensive capability. The organization of our lives today would be shocking to a citizen of a century ago. Every dimension of our lives assumes the easy access of mid- to long-distance personal mobility based on the car. We work in suburban office parks, date and marry people who live 50 miles away, think nothing of taking a weekend visit to a museum or amusement park 200 miles away. Once the easy availability and low cost of a technology is available, it is rapidly subsumed into environmental assumptions. With respect to cloud computing, clients are now planning highly scaled, short duration applications to meet temporary business needs—because they 30

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understand that inexpensive, easily available (that is, agile) infrastructure is there for the taking. Returning to the agility vs. low cost "debate" in light of these facts, you can now see that the oxymoronic conflict between these two characteristics does not exist. Both are true and will, in the future, simultaneously affect IT. Trying to emphasize one characteristic to the detriment of the other is a losing proposition. Smart CIOs will need to understand how to achieve both. Rather than the arid faux dilemma dialogue of cost versus agility, a more appropriate response is to consider what an IT world where both are considered prerequisites for commonplace infrastructure. Here are some thoughts: Agility at the front-end isn't enough. While agility is typically embraced by senior IT management trying to reduce developer dissatisfaction (and "shadow IT" use of public cloud computing), agility needs to be present throughout the entire application lifecycle. This means production environments, too. Failing to automate infrastructure throughout the lifecycle means that production environments will remain high cost. The nature of apps is shifting to variable load, short-duration designs

Don't get trapped in the "either-or" discussion of agility versus cost. Don't even imagine that these two characteristics are really different. as app groups learn more about how to build and operate them. It's crucial to support agility in every part of the infrastructure. Price and cost benchmarking will be part of the daily environment for IT. Offering rapid resource provisioning and believing that it obviates the need for cost competitiveness with external providers is delusional. Putting agility into place and failing to meet market pricing will elicit a "what have you done for me lately" attitude from business and app groups. Switching costs for users are vastly lower in this world, and pricing transparency means benchmarking will be a fundamental fact of life for IT. Don't get trapped in the "either-or" discussion of agility versus cost. Don't even imagine that these two characteristics are really different. They are just two expressions of the same phenomenon, virtualization automation. One might say they are two sides of the same coin, except that intimates a "heads or tails" reality. Cloud computing is more like a "heads *and* tails" story. 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. Send feedback on this column to editor@cio.in

Vol/7 | ISSUE/05

3/9/2012 5:17:30 PM


CUSTOM SOLUTIONS GROUP HP

CIO 2 CIO

Cutting Costs in a Challenging Economic Climate Cost-cutting is not a complex conundrum to solve if one is aware of the right strategies. Taking necessary steps to choose the right vendor is one of them. MUNESH AHUJA, GM – IT & ASD, Hutchison Global Services Ahuja has worked with some of the biggest names in the service and consulting industry. At HGS, he is responsible for IT operations & Automation and Software delivery (ASD).

W

ith the global economic climate spiralling downward, and the situation in India not looking upbeat either, several organizations, regardless of their scale are looking for ways to cut costs. Another significant cause for this sudden shift of gears is the fact that industry experts do not foresee an increase in IT spends in the current year. It is now in the hands of IT decision-makers to come up with strategies that increase RoI and decrease TCO at the same time. Though difficult, it is not entirely impossible to solve this conundrum. The foremost and most effective way is switching from a Capex to Opex model, and several organizations have now started treading on the Opex path. The fact that outsourcing pays back with great business dividends is well established and is still being welcomed by a majority of the industry. Organizations are no longer apprehensive about handing over control of business operations to a third party. Irrespective of the level and number of business benefits one can expect through outsourcing, it is vital to keep in mind certain factors that determine the success of the whole outsourcing venture.

Outsourcing Operations and Ensuring Governance IT decision-makers have to choose wisely when it comes to deciding which business

Emerging Technologies and the Call operations should be controlled within the organization and which can be sourced to Center Business an external service provider. The only rule While whatever I have shared so far pertains here is, “Stick to business-critical functo the general IT community, I would like to tions, outsource mundane tasks that don’t share some other pointers specific to the call require the core IT team’s expertise.” This center business. At HGS, we are always open is a problem prevalent in almost all vertito adopting new technologies. On that note, cals. The core team feels discouraged by I would like to say that cloud computing is doing mundane tasks routinely and even not new to us. We have had our contact cenconsiders doing them a ter application running on “waste of talent.” Unforthe cloud for a few years tunately, they do have a now. The greatest benA simple strategy valid point. Why exhaust efits the cloud provides to for effective them with such tasks call centers are flexibility outsourcing: Stick when they can be carried and scalability. To extend to business-critical out efficiently by a third the same philosophy to party? Outsource. specific cloud offerings, functions, and Coming to the goverwe believe a combinaoutsource mundane nance aspect, the service tion of SaaS and IaaS can tasks.” delivery model proposed have a positive impact on by the provider must be the call center business. robust with multi-layer With the usage of IaaS, governance where the deliverables are call centers need not invest a great deal of well-defined and the SLAs are stringent. It effort in managing the basic IT setup and can is important to foster a good rapport with concentrate more on the core business. the providers, and take the necessary steps The aforementioned strategies are the to make them understand the importance of ones industry pioneers followed in order to the functions they carry out. It takes efforts pave the path for success. It is needless to from both sides to succeed in an outsourcsay that all these strategies will be fruitful ing endeavour. only if organizations partner with the right vendor. HSG’s strategic, long-term IT outsourcing partnership with HP is in line with Choosing the Right Vendor the company’s technology roadmap, and we Make sure to thoroughly evaluate the have been realizing all the expected busivendors who are willing to provide service. ness benefits. The vendor’s capability in enterprise level services, governance framework, flexibility in service delivery model and attitude should This Interview is brought to you by be the key parameters in your evaluation. IDG Custom Solutions Group Other aspects must be the capability to in association with deliver stringent SLA consistently and the ability to partner your organization in various IT initiatives and emerging technology / trends. On the cost front, the vendor must be able to reduce cost of operations and deliver more at the same cost.


Alternative Views

IT MAnAgeMenT

Is the IT-as-a-Profit-Center Strategy Just Bunk? For too long, IT has lived with the cost-center tag. Some CIOs are beating that rep by turnig their IT depts into profit centers. But is that smart? Two IT leaders debate.

I

T should not be viewed either as a cost center or a profit center. It’s a strategic department and should be seen as an investment for the future needs of the business. Usually in cases where the IT team has been turned into a profit center, it has spun into a separate IT company. In that case, the CIO running that outfit becomes a business development head. In this role, the CIO’s main focus is profitability since he’s accountable for the same. The company, however, can now question why they should give their business to them, and that they need to compete independently with other solution-providers. The IT team is no longer an investment of the company. This can diminish the competitive advantage that IT brings to the business. When a team is driven by a profit motive, they dedicate their best resources to their biggest projects, because it has a direct

impact on the bottom-line. This can result in a conflict of interest for the business of the parent company. The other challenge is keeping your team motivated. We see attrition in IT mostly because people want to evolve their skill sets. It’s the responsibility of the CIO to see that they are constantly upgraded and are not stuck with just one skill. Running a profit center dilutes the focus of the IT department. The role of IT is to keep developing new expertise, upgrade skill sets, and look out for new technologies that can help take business to new heights. The CIO should be given P&L roles, but that should be in partnership with the core business. The IT department’s function is to cut across all departments and service business. When we try to turn it into a profit center it ends up creating another silo, another business vertical. The CIO’s job is to make the company profitable, not IT.

“Running a profit center dilutes the focus of the IT department. The CIO’s job is to make the company profitable, not IT.” Shikha Rai, Sr. Director –IT, Canon India 32

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Alternative Views

IT MAnAgeMenT

C

IO’s can convert their IT function into a profit center either by charging for IT services within their group companies or by generating revenue by offering their services to other companies. If the IT-business model synchronizes with the core business of the organization, then it provides an opportunity to take the business to a global level. For example, HCC operates in the infrastructure industry and Highbar Technologies—the erstwhile IT function of HCC which is now a profit center—is in the business of providing IT services to the infrastructure industry. In such a model, the IT-business model tends to provide alternative career options to employees across the group. For example, Highbar requires a team that not only has extensive experience in the infrastructure domain but is also IT savvy. Fortunately, the HCC Group has always had people that meet these criteria, and some of them also have the desire to pursue IT as a career option. That’s why we are now able to retain them. Also, I think, the role of a CIO has transformed significantly. After an organization reaches a certain level of maturity, the CIO function ceases to be a full-time role (except for a few industries). When CIOs move to head profit centers,

“When CIOs move to head profit centers, their careers enter an orbit where the opportunities are virtually limitless.” Satish Pendse, President, Highbar Technologies & Group CIO , HCC their careers enter an orbit where the upside is virtually endless. The CEO role provides limitless opportu=nities to learn. As a CEO one is required to look into various aspects of business such as finance, marketing, sales, handling external customers, HR, legal, etcetera. I feel that the level of uncertainty in a CEO role is much higher than that of a CIO role. To conclude, if CIOs have an entrepreneur residing inside them, then they should definitely consider the option of turning their IT departments into profit centers. And to get organizational support for this proposition, CIOs need to come out with a very strong business model that resonates with the organization. CIO

As told to Varsha Chidambaram Varsha Chidambaram is senior correspondent. Send feedback to varsha_chidambaram@cio.in

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IN THIS ISSUE

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66 | TAXING TIMES NO MORE Gujarat Commercial Tax Department uses IT for VAT, making the system efficient and transparent.

70 |TAKING THE QUANTUM LEAP PR Krishnan from TCS talks about how Indian enterprises can leapfrog to the newest technology. An IDG Custom Solutions Initiative

3/20/2012 12:29:06 PM


EXECUTIVE

VIEWPOINT

INTEGRATING ENGINEERING & IT SOLUTIONS HELPS ADDRESS UNIQUE REQUIREMENTS By taking an integrated and holistic approach to SAP projects, Defiance is delivering business excellence to customers. Defiance Technologies have expertise in product design and engineering, as well as IT solution deployment. What synergies have you acquired from these two different practices? At Defiance, we aspire to be a leading business solution provider to our global automotive and manufacturing customers. Our expertise in product design and engineering helps us provide comprehensive services and solutions to our customers across the manufacturing value chain from Concept to Consumer (C2C). Today, businesses are looking for an integrated engineering, manufacturing and enterprise solution strategy for better integration across enterprise business processes instead of isolated solution deployments. For instance, a warranty management IT solution will be more effective if the reason for field failure is traced back to engineering design or manufacturing process for quick and timely control. An integrated approach will also accelerate introduction of new products and help launch them within the target cost and time. An integrated Shop Floor to Top Floor Solution will provide a seamless view of the production and order flow to the senior management and customers. By leveraging our capability to provide integrated engineering and IT solutions, we can address these unique requirements of manufacturing companies for higher levels of interface and efficiency.

data. At the same time, Indian businesses have realized the need to adopt the globally acclaimed best practices built in the SAP solutions, thereby minimizing the need for customization. For a seamless implementation, it is recommended that customers using SAP solutions, minimize the customization. This practice is widely followed by Indian businesses today.

Do you think SAP has tailored their solutions in response to the needs of Indian businesses or have Indian businesses changed their model to be in line with SAP templates? It has worked both ways. In the recent years, SAP realized India to be a significant market and has addressed the unique requirements of Indian businesses in its suite of products and solutions. SAP continues to make investments on this front by enhancing their business solution capabilities and integrating emerging technologies such as mobility, cloud and big

Businesses tend to do a lot of due diligence before selecting a partner for SAP implementation. What is your trump card? For a successful implementation and faster realization of ROI, customers need a partner who understands their unique business process. The partner needs to bring in the best-in-class industry domain knowledge in addition to a good understanding of the SAP product for minimal customization to ensure a lower TCO. Finally, businesses need to integrate emerging technologies such as mobile and cloud. At Defiance, we

SUBU D SUBRAMANIAN, MD and CEO, Defiance Technologies

have a large and experienced pool of SAP consultants with a strong industry domain focus on the manufacturing vertical. Coupled with our expertise on emerging technology such as mobility and cloud, we can address these unique requirements effectively. This enables us to be the SAP partner of choice to our global customers. Our trump card is that we take an ‘integrated and holistic approach’ to SAP projects – from solution strategy and process blueprinting to incorporating new technologies, we deliver business excellence to customers. We also have a mature template deployment service and factory model for solution extensions and customization, which will minimize the cost of deployment. We are amongst the few select partners who can provide ERP consulting and services for on-demand and on-device, besides traditional onpremise solutions. Companies in other geographies such as East Europe and South East Asia are competing with Indian solution providers on price for a piece of the global market. How will the markets evolve over the next few years? Consulting and IP-led services leveraging a global delivery model will help address the global and emerging competition for Indian service providers. Businesses will look for partners who can provide superior value. Competitive pricing will only be one of the factors. A better understanding of customers’ business, innovative solutions leveraging the industry best practices, superior knowledge of ERP and emerging technology solution, higher level of productivity and service levels through a matured and consistent delivery process will be the important factors for customers in choosing a partner for enterprise solutions. Indian service providers should invest in building industry domain consulting skills and IPs beyond the global delivery model to improve the productivity and quality of their solutions and services to their customers to remain globally competitive. These are the cornerstones of Defiance Solutions to our customers.


CUSTOM SOLUTIONS GROUP DEFIANCE

FEATURE

CHANGING THE STATUS QUO Customers, world over, are ready to adapt to new changes. Subu D Subramanian and Ramesh Babu are helping them do that. SUBU D SUBRAMANIAN, MD and CEO, Defiance Technologies Subramanian is an industry veteran in the global scale Technology Services businesses. He pioneered the unique ERP Offshoring business model and built the SAP and manufacturing vertical practices ground-up at the large India IT conglomerate and grew it to an over USD 500 million business. Formerly associated with TCS, Ernst & Young and Ashok Leyland, he started his career in the manufacturing industry and has over 27 years of global experience in the technology industry.

RAMESH BABU, Senior VP, Defiance Technologies With over 29 years of experience, Ramesh has 16 years in implementing homegrown ERP solutions for the Manufacturing Industry. For the last 13 years, he has been in SAP consulting, practice development and project and program management for several large Fortune 500 customers. Prior to joining Defiance, Ramesh has been associated with PWC, HP Consulting, SAP consulting, Tata Group companies and Satyam in a management role. He has worked with customers across several industries. n the mid 1990s, offshoring SAP implementations were something that no global CIOs could even consider. Many Indian companies were already doing quite a bit of outsourcing work for American and European companies. But, for the most part, they were not in ERP space. That is, until one evening in Atlanta, while trying to tackle the problems of a lack of talented SAP consultants at on-site locations, Subu D Subramanian had an idea. Why not engage the capabilities of Indian consultants and companies and leverage the proven global delivery model for large-scale SAP implementations?

Blazing a New Path “Since the bulk of the project is devoted to realization and customization, this was not entirely impossible. However, our customers required a huge leap of faith to take this from a concept to a reality. It was extremely crucial that we have a winning team, and Ramesh Babu was roped in to support on this initiative. The rest, like they say, is history”, says Subramanian. And creating history it was. Implementing SAP using the global delivery services model was a prime example of disruptive innovation. It took an integrated and expen-

sive service to make it simpler and cheaper, thereby attracting new customers and creating a game-changing ERP deployment plan. This also helped Indian companies establish a foothold in the market, expand that market dramatically, and then inexorably migrate up the value chain.

Moving From One Success to Another From changing a question from ‘How can SAP implementations be outsourced?’ to

“Defiance leverages its rich experience in SAP to offer consulting and IP led solutions for industry needs with a focus on innovation.” SUBU D SUBRAMANIAN “New technology adoption becomes very critical for organizations running SAP to realize value based Business benefits.” RAMESH BABU

‘Why shouldn’t SAP Implementations be outsourced to an offshore partner?’ the pair has achieved a lot. The practice set up by the team was ranked by the analysts as the leading SAP practice from India. Not satisfied with resting on the laurels of previous successes, the pair teamed together again at Defiance, taking its business to new heights contributing to business excellence program of many global majors through SAP implementations integrating with emerging technologies.

Recreating the Magic With enterprises at crossroads, and disruptive technologies such as Mobile, Cloud, InMemory Computing and Social Media sharing space with conventional solutions such as PLM and SCM, it was time to recreate the magic, and forge a new path. “Next generation innovations such as on-device (smartphones, tablets), on demand and in-memory computing solutions are the focus to run the business better in the competitive market place,” says Ramesh Babu. “At Defiance we believe that the Business Transformation initiative of manufacturing companies should include the integration of ERP to the Engineering and Manufacturing functions and effective leverage emerging technologies such as Mobile, Cloud, Big Data and Social Media wherever appropriate,” says Subramanian. Through long-term sustainable relationships with their customers, Defiance is ideally placed to facilitate and orchestrate this approach. “Our unique accelerators and methodologies, expertise in emerging technologies, highly experienced industry, business and technology consultants and global delivery capability, along with swift adaptability and a business value-driven approach, are what set us apart” he adds. At Defiance Technologies, Subramaniam and Babu are recreating the magic with organizations like Sandoz, Nissan, Federal Mogul and other marquee customers to help them reinforce their competitiveness for the next phase of their growth. This Section is brought to you by IDG Custom Solutions Group in association with

Technology for Business Excellence


Cover Story

globalization

Dhiren Savla CIO, VFS Global HQ: Mumbai, India Geographies covered : 62 countries across five continents

V. Balaji CIO, Tata Technologies HQ: USA Geographies covered : Nine countries across North America, Europe and APAC

The IT operational framework, particularly in Europe, is very mature, which can help CIOs shorten their learning curve.

Not to generalize, but people in the US expect open communication, allowing them to share their views irrespective of their level at work.

Go

Rupinder Goel CIO, Airtel Africa HQ: Nairobi, Kenya Geographies covered : 17 countries across Africa

Africa is divided into several linguistic regions, including Francophones and the Anglophones. Each approach problem resolution differently.

Il luSTraT T Io I nS by p readeep gulur

Global by y Shubhra rishi and Sunil Shah

Global CIOs used to be aberrations; you could probably name one or two, but not anymore. As more Indian IT leaders lead transnational teams they face new hurdles and challenge old assumptions. Here’s how the best among them are coping. 36

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Reader ROI: What to watch out for in a multi-cultural team The importance of navigating the standardization vs. localization debate IT management tricks that will help

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3/9/2012 6:33:27 PM


V. Subramaniam Director-IT & CIO, Otis India and Gulf Area HQ: Mumbai, India Geographies covered : Five countries

Tim Wente Director, IT International, Boeing HQ: Seattle, USA Geographies covered : 18 countries

Especially in the UAE, there is a discipline of execution with regard to speed, quality and reliability.

If there’s one thing I would have done earlier, it’s find my regional leaders. It took me four months and a lot of shuttling between offices.

Sunil Mehta Sr. VP & Area Systems Director (Central Asia) HQ: Mumbai, India Geographies covered : Five countries in Central Asia

People are generally warm and it’s easier to communicate with teams here because of a commonality in cultures.

Ashok Sethi CIO, Sapient HQ: Gurgaon, India Geographies covered : 35 countries across four continents

Australia is a technologically-advanced nation. We have to ensure a high level of IT engagement to integrate users seamlessly.

B

ehind his glasses, V. Balaji shut his eyes, exhaled deeply and shook his head. He looked around the busy terminal, passengers walking purposefully around him, their strolleys gliding smoothly behind them, their boarding passes on hand. This is going to make a great story some day, he thought, smiling wryly. Tired and caught between time zones, Balaji had tried to check into a Delta Airlines flight to India 24 hours too early. It’s hard not to sympathize with Balaji. The CIO for Tata Technologies travels a lot. So much that he belongs to the million-miler club, which means he’s literally taken 3.5 trips around the world. He is also part of another club: Indian IT leaders who have global responsibilities. And their ranks are swelling. Vol/7 | ISSue/05 ISS

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Culture Shock Ask almost any global CIO and they’ll tell you that culture was the first hurdle they had to cross in their new role. The cultural differences they talk of go beyond mastering local etiquettes like handing over visiting cards with both your hands in Singapore or cheek kissing in parts of Europe. They include, for instance, knowing how different cultures 38

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approach work because that impacts how you appraise them and how you can help them increase productivity. It includes how to get people to collaborate more without causing too much friction. It impacts strategic decisions like finding local hires or exporting talent from HQ. Mastering culture nuances can often make the difference between roaring success and below-average performance. “The key to working in a global role is an understanding of people and the ability to deal with people of different nationalities and cultures effectively,” says Paramu Kurumathur, international head of Action Aid, a federation of NGOs that has operations in 47 countries. Different approaches to work are where the rubber of cultural differences really hits the road. One Indian CIO, who requested anonymity, pointed out, for example, how workers in most parts of the world will stick to a brief given to them. That might come as a surprise to many Indian IT leaders who have come to expect a little extra valueadd from their staffs. “‘We also thought of this’. That’s a phrase you’ll hear mostly from Indian teams,” he says. A number of global Indian CIOs will also tell you that Indian teams are the only ones that multi-task naturally. Although, in the eyes of a non-Indian leader, that ability comes at a price. “Indian teams are good multi-taskers, but quality suffers sometimes,” says Jeff Kissling, global CTO for US-headquartered Online Resources, which recently expanded operations to India. Kissling also notes that Indian workers tend to need more guidance. “The attitude in India is: “Tell me what to do?” A lot of hand-holding is required. In America, the question is: ‘What is the problem I am solving and how do I solve it better, cheaper and grow through my contributions.” Dhiren Savla, CIO of VFS Global, says that in developing Asian geographies, “there’s always a hunger for more.” He notes that the commitment levels are higher. “They go an extra mile to demonstrate real hard work which is really appealing. The strength of western workers is that their professional maturity is very high.” VFS Global, is a BPO agency that specializes in helping consulates from different countries with visa application procedures. VFS Global has 526 offices in 63 countries and Savla is in-charge of ensuring the entire operation turns over like a well-tuned engine. “In some countries, an assertive approach is perceived to be aggressive, even intimidating. In others, ‘let me get back to you’ is a show of no confidence, while in others, personal commitment is more than any legal agreement,” says Savla. Without a keen understanding of cultural differences, a CIO new to global operations could likely make snap judgments about staff

phoTo by ImageS

The growing number of global Indian CIOs is part of a larger movement. As Indian companies grow more confident in an increasingly scared world, they are expanding rapidly into new territories, buying companies at great prices, and collaborating with foreign executives eager to get a foothold into a healthy market. According to the 2011 edition of the Grant Thornton’s Deal Tracker Report, there was a 240 percent jump in the number of outbound M&A Report deals (Indian companies buying foreign companies) between 2009 and 2010. Although, 2011 saw a dip, many experts see that merely a bump in the road. A Deloitte report released this month shows that Indian CFOs of companies above Rs 1,000 crore expect more outbound M&As in the following months. “This year, outbound M&A activity is expected to increase,” says Suresh Kumar, CIO & Partner, IT Advisory, Grant Thornton Advisory. All that activity is bringing more work to the CIO’s door. As Indian companies continue to expand, there will be no going back for their IT leaders. “IT is absolutely critical to enable a global strategy. This is when most organizations will look to have a truly global CIO,” says Graham Waller, VP and executive partner, Gartner Executive Programs. For IT leaders, like their peers in the c-suite, this trend is tugging them inevitably outwards and, in many cases, outside their comfort zones. The challenges of leading an IT organization complicate, ever more, when the canvas becomes global. And few CIOs will be able to scale to their new responsibilities unless they are prepared for the job. It includes harmonizing the needs of your organization with local norms, creating a matrix of cultural weaknesses and strengths to increase output in different regions without causing too much friction, balancing efficiency-bringing standardization with ground realities, creating business integration, and walking a tight rope between getting the job done and being overwhelmed by it. “The role is extremely demanding and every day is tough,” says Balaji who spent about five months away from home last year shuttling between North America, Europe and Asia Pacific. “There is a significant amount of stress when you’re working across multiple time zones, traveling across multiple territories and it takes a heavy reliance on communication,” he says.

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V. Balaji, CIO, Tata Technologies, says that cultural differences can be converted into key strengths if companies can define and develop new processes and systems.

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Globalization

performance, for instance. If you’re an IT leader who expects multitasking, you could mistake someone’s inability to take up more than one job as slacking. And that’s where the friction starts to build. The way different parts of Africa approached work made Rupinder Goel take a step back and question his assumptions, for instance, when he was made CIO for all of Airtel Africa, a mandate that covers 16 countries. “You have to make use of all the skills available to you because culturally, the way of working, interacting with people, and delivering problem resolutions varies from region to region,” says Goel. When Bharti Airtel acquired Zain’s African mobile operations in 15 countries for $ 10.7 billion dollars, the company knew it would have to send people with a proven track record to ground zero if they wanted to ramp up quickly. Goel’s 25 years of experience made him first pick, but he would still have to learn a lot on the job—including a little French. That’s because, culturally, Africa is divided into a few large regions, including, among others, the Francophone region (French-speaking

countries like Congo and Seychelles), the Anglophone region (Englishspeaking nations such as Ghana, Sierra Leone). “While the French-speaking teams have a consultative approach towards problem resolution, bringing varied skills on board, the English-speaking teams are more self-sufficient and ensure a quick turnaround,” he says. He also noticed that, in general, Africans tend to work better as teams. “They prefer to be part of a larger team, contributing enthusiastically to the roles assigned to them,” he says. To a global leader like Goel, the obvious question is: When in Rome, should I do as the Romans do? If he had gone with that strategy, Goel wouldn’t have been alone. There is a strong school of thought that encourages leaders to allow people to work the way they work best. But on the other hand, he would, potentially, create silos within Airtel Africa. Goel decided to take a third path. He says he introduced an internal collaboration tool that allowed knowledge sharing and horizontal integration across diverse teams. “The intent was to translate workflow,

Photo by S r ivatsa S ha ndilya

Cover Story

One of the benefits of working globally is that learning can be passed on, shortening learning curves, says V. Subramaniam, Director-IT & CIO, Otis India and Gulf Area.

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effectively aligning all the teams and ensuring the better selling of our products,” he says. That’s an approach Balaji appreciates. “Cultural differences are a part of every organization. They can be harnessed into a key strength if companies effectively tap into this diversity by defining and developing new processes and systems,” he says. Balaji isn’t just mouthing nice ideas. When Tata Technologies started down its globalization route, Balaji says, it flew down representatives from every single geography it was present in to India and asked them where they wanted to strike a balance between two IT philosophies: Control and governance and ease and simplicity. The BPSO (business process sign-off champion) team, says Balaji, spent a week debating every process to ensure visibility and robustness. “The good part of having cultural differences is that we were able to exchange and leverage ideas off each other for our respective territories,” he says.

Dhiren Savla, CIO of VFS Global, says that workers in developing Asian geographies have higher commitment levels. “They go an extra mile.”

Tower of Babel One way to avoid potential friction in a multicultural team is not to have one; you export trusted people from HQ to handle a company’s operation in different parts of the world. It’s an approach, the Koreans, for instance, are known for. But when Tim Wente took over as director of Boeing’s IT International group, he says they decided to locate local IT leaders. “We were very purposeful to go out and hire local people because they understand the culture, the language, and the business environment in those regions,” says Wente, who says he was excited at the prospect of leading an important group of the $1.4 billion company, which started about a century ago and today has 170,000 staffers in 71 countries. That amount of cultural diversity has its challenges. For the IT International group’s second offsite as a team, says Wente, he gathered IT leaders from across the globe in Moscow and fireworks started. “We had only been together as a team for four months. They asked me to leave the room because they wanted to discuss things among themselves. A half hour later, I got an instant message from someone in the room saying: You better come back,” says Wente smiling. He says he found them divided in three groups and were in a heated discussion. “From a defining moment perspective that really helped us appreciate that there are real differences in the way we think, the way we express ourselves, and the way we make decisions,” he says. But instead of seeing that as a challenge, Wente says that they have built a respect for cultural diversity and “the richness that it can bring

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back to an organization.” One example of how they do that is using each person’s strength to run certain types of projects. Another way to reduce potential clashes is constant communication. V. Subramaniam, director-IT & CIO, Otis India and Gulf Area, whose mantra is ‘Never Compare Cultures’ says that listening and talking are key. For three-and-a-half years, Subramaniam, whose motto is ‘Lead, Inspire, Win’ has been handling IT operations for Otis India and the Gulf including UAE, Kuwait, Saudi Arabia, and Bahrain. “Handling multi-cultural teams requires effective listening, persistent communication and the inclination to apply learnings to create an enriching experience for the team and the organization,” he says. At Boeing, Wente says he spends at least two days a week, at a minimum, with each of his direct reports, talking about ongoing issues, opportunities, and changes that have taken place. He says that REAL CIO WORLD | m a r ch 1 5 , 2 0 1 2

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Globalization

they also hold a bi-weekly all-leadership meeting, and that regional leaders get together on the phone on a weekly basis. “It’s critical in this environment. If we are not in constant communication with each other, we won’t be successful. There is just too much going on, that’s too interrelated,” he says. Tata’s Balaji agrees. “In today’s increasing complex world, you can never over-communicate to understand challenges, refine your strategy, and communicate change. One of our key vendors uses

a phrase I like: Human latency. There is a role technology can play in reducing human latency while working in a geographicallydispersed environment,” he says.

Glocalization See-Saw

From the moment he was appointed CIO for Sapient three-and-a-half years ago, Ashok Sethi knew that the challenges facing him would be far more than just cultural. When Sethi took the global job, he says he had a lot of learning to do. The $1.02 billion Sapient was in growth mode and has since made several acquisitions including Nitro Group and Derivatives Consulting Group. Sethi, who spends a lot of time traveling between Sapient’s headquarters in Boston to countries in over three continents fine-tuning an IT juggernaut, says, “For me, the challenge was to bring uniformity “Every model has to be thoughtin policies and standards from a through based on local culture, technology or process perspective. infrastructure, logistics and skills We wanted a way of working that we available and the maturity curve could adopt universally,” says Sethi, of the business in that region,” who leads a 250-strong IT team and Rupinder Goel, CIO, Airtel Africa. has a $25 million dollar (about Rs 125 crore) budget. Sethi is not an aberration. One of the strongest impulses driving CIOs is the need for efficiency and order. It’s what has driven CIOs for years to centralize and consolidate IT ecosystems—and it’s what they have been rewarded for. With a global canvas to work on, the tendency becomes stronger; there’s more to centralize, more to consolidate, and more efficacy to be brought about. “We try to put people on a common platform and on common processes, wherever possible. And where we needed to, we would make adjustments for special circumstances. If we gave everyone something different, our costs would become unmanageable. We wouldn’t be able to support that and I wouldn’t have the resources available,” says Boeing’s Wente. Action Aid’s Kurumathur agrees. “Standardization is a must for global organizations. One of our key priorities is the harmonization of IT systems so that we can get efficiencies across the organization.”

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That’s what Balaji did when he joined Tata Technologies four years ago. It had only been a few years since the Being a global leader just isn’t about getting on a plane or having a strong stomach. If company had acquired INCAT—a you’re preparing to be a global CIO, here’s some of what you have to gear up for. global product solutions-and-services provider—and Tata Technologies was in the process of re-branding itself. “An external study showed Accommodate Different Working Styles. cIos who have worked multiple regions say they that we were better than many of have to deal with different approaches to work. Some regions for example have natural multiour competitors in terms of core taskers, others don’t. Staffers in certain parts of the world need more guidance than others and capabilities but our challenge some teams like to get everyone’s opinion, others not so much. was being able to integrate our dhiren Savla, cIo of VfS global, says in developing asian geographies, “there’s always a hunger capabilities, and leverage them into a for more.” he also notes that commitment levels are higher. “They go an extra mile. The strength of value proposition for our customers,” western workers is that their professional maturity is very high.” says Balaji. V. Subramaniam, director-IT & cIo, otis India and gulf area, has another experience. “Working Management, he says, was in different time zones means you have to respect different cultures and be accommodative,” says preparing to make that jump from Subramaniam, who says he’s learnt never to plan meetings which clash with prayer timings in the being a territory-based company middle-east. on one occasion, he rescheduled a training session in the gulf from 1pm to 3pm to to a globally-run operation, a key accommodate asr sr (afternoon prayer). requirement in the re-branding. Balaji says he quickly realized that his biggest Look Spaced Out. almost constantly wondering what’s going on in different parts of the world challenge as the company’s new global can do that to you. CIO, was business integration—in a “my wife always says I look permanently jet-lagged,” says Timothy Wente, director IT company with 5,400 employees in International, boeing. “but I get that spacey look because I’m always thinking about how my nine countries. various IT leaders are dealing with new challenges. She just thinks I’ve checked out.” “We realized we needed a core set of systems that could be run consistently Multiply Your Impact It’s amazing how the success of an initiative in one country can be across the globe in order to enable reproduced across the world, compounding benefits. It’s global leadership at its most rewarding. each of our global leaders to efficiently When Sunil mehta, sr. Vp & area systems director (central asia), JWT, drove an initiative that manage their operations,” says Balaji, gave JWT the wherewithal to run its own touch up studios, he saved JWT a packet of money. “until who leads a team with 14 nationalities. then, the ad agency outsourced that work, costing it large amounts.” better still, they started In his first two years, Balaji spent doing work for others. best of all? mehta replicated that money-spinning project across all the plenty of time driving a consolidation geographies he covers. and centralization strategy across the company’s core infrastructure. “The Meet Interesting People. a global role places you at global intersections, where you meet roll out of the ‘Systems Integration all sorts. Roadmap’ was, clearly, the first biggest “I’ve had amazing conversations with people I’ve met on a plane, from ceo’s to entrepreneurs project my team and I managed across and professors. one time, I sat next to a consignment agent who procured clothing from donation the globe. We are proud to be running centers in the uS, shipped them to India for sorting, and then to africa where they were sold. The a single CRM and a single financial thought of how my daughter’s clothes, that we had donated, could travel to India and then to system in every country that we africa and finally on another child’s back amazed me and made me realize how interconnected we operate in today,” says Balaji. are,” says V. balaji, cIo, Tata Technologies. Since the that project and the re—S.r. branding, overall profitability has increased by 7-8 times, says Balaji. At Airtel Africa, for instance, there’s a greater tilt towards a Yet, that standardization approach doesn’t work for everyone— decentralized approach. For good reason: Different countries have a and neither is it the best advice in every case. different mix of the ingredients it takes to create an IT set up, including “It is important to have a standardized approach, but that’s not connectivity, infrastructure and talent. always the answer,” says Graham Waller, VP and executive partner, That’s probably why Goel, who has spent the last 18 months on the Gartner Executive Programs. “CIOs need to work collaboratively continent—they just added Rwanda to his portfolio—says he isn’t a with their business partners, and understand what parts of the believer in a cookie-cutter approach. architecture, business processes and systems makes sense to be “Connectivity and the availability of infrastructure are major standardized globally and what parts should be allowed to vary obstacles in Africa. Just because a model works in a particular based on local needs.”

Be Ready To…

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company, it cannot be blindly copied and expected to work in a global model. Every model has to be thought-through based on local culture, infrastructure, logistics and skills available and the maturity curve of the business in that region,” he says. This push-and-pull between the benefits of a standard IT environment—which can lower costs and make IT simpler to manage—and yielding to very real local needs or constraints is common theme among global CIOs. “This is a universal debate on standardization versus localization,” says VFS Global’s Savla. “Having a clear policy on global standards, we gain efficiency, cost benefit and improved manageability.” Savla is one of India’s first global CIOs. Back in 2003, he was already standardizing applications and setting up an IT ecosystem that could operate in 42 countries. In 2009, he shaved about 20 percent of VFS’ IT costs by centralizing application and infrastructure. Despite that Savla says that “it may not always be possible to standardize everything.” That’s a sentiment that Sapient’s Sethi agrees to. “We can’t always dictate standards. We need to understand the nuances 44

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of geography, the roles people play and demands from a regulatory perspective.” And if that isn’t hard enough Tata’s Balaji adds that if change is a constant ‘domestic’ CIOs have to deal with, then global CIOs have it harder. “Global standards are never static,” says Balaji. “They, along with our systems, continue to get better and better as we mature each year based on learnings and experiences.” Despite the hardships of driving a standardization mandate in an unruly world, the strategy has multiple benefits. One of them is creating a tighter, leaner, more powerful IT organization. Sethi, for instance, does that by wielding Sapient’s impressive IT needs to ensure his service providers take Sapient more seriously. “Being a global organization spread across multiple continents, we have strategic partnerships to ensure a strong association with the business and business partners. Building strategic partnership with vendors, both internal and external, is one of the toughest parts of being a global CIO,” he says. A cookie-cutter approach also has the benefits that come with mass production: Speed. By replicating an approach or IT

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Cover Story IT Strategy Ashok Sethi, CIO, Sapient, says the challenge is to bring uniformity in policies and standards from a technology or process perspective. “We wanted a way of working that we could adopt universally.”

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CUSTOM SOLUTIONS GROUP CLICK SOFTWARE

EXECUTIVE VIEWPOINT

Uncomplicating Mobility Keeping the organization’s tasks and the people who perform them at the center of a mobility deployment discussion is vital, feels ClickSoftware’s CEO, Moshe BenBassat and Senior Vice President of Product Strategy, Israel Beniaminy. PROFESSOR MOSHE BENBASSAT, PH.D. CEO, ClickSoftware

Following a distinguished academic career with stints at USC, UCLA, and Tel Aviv University, Prof. BenBassat founded ClickSoftware, and in 1996 he coined the term “Service Chain Optimization”, as an analogy to supply chain optimization. He is considered to be the worldwide subject matter expert on the topic, for which he owns a patent.

While deploying mobile solutions, neglecting field users and mobile office workers is one of the biggest mistakes enterprises make. What has been your experience in this respect? That is absolutely correct, for several reasons: First, a mobile worker who spends his working time in the field is very different from an office worker who is occasionally in the field. The mobile field user’s attention, e.g., cable technician, or insurance agent, is focused on the mobile device for only short time slots – most of their time is devoted to interacting with people, or servicing equipment, or driving, or other tasks involved in getting the job done. So it is critical to have streamlined user interfaces that require minimal typing and easily handle all backoffice communication. Without these, users will resort back to paper-work and voice communication with all their limitations, such as making the process time-consuming and error-prone. We have seen this in many types of organizations and tasks. Besides, it is not enough to design each mobile function to work well in isolation. Designers must also think of the entire

workflow, to an extent that is usually less critical in desktop applications. At ClickSoftware, we use our W6++ Platform to keep track and maintain context across multiple mobile applications, in order to make these workflows seamless and friendly. Mobile technologies change very fast. What advice do you give businesses to help them create a mobile solution strategy that remains useful over time? One thing to keep in mind: it is never about the technology, but about the tasks and the people who perform them. Mobile technology changes several times a year. People and tasks change far less quickly. If your strategy is defined in terms of what processes you

Users are much better at commenting on a working system than they are at imagining a system from scratch.“ ISRAEL BENIAMINY

Senior Vice President of Product Strategy, ClickSoftware

wish to mobilize in your enterprise, and for what employee roles and tasks, then you have a stable and useful strategy. Of course, how elements of this strategy are deployed depends on the technology available. Still, if you know what you set out to accomplish in business terms, define concrete and measurable goals, and then design solutions to meet those goals, you will have a very clear way of judging

which new technologies you should adopt immediately, and which can wait. Another important principle is to accept that mobile technology changes, and design your strategy so that it can accommodate many different kinds of technology at the same time: be device-agnostic, networkagnostic and infrastructure-agnostic. One important facilitator for this is the HTML5 standard. We have delivered large-scale mobile solutions built on HTML5 which gracefully adapt to smartphones, tablets and laptops, and these solutions will cope with new mobile technologies through quite a few future technology cycles. What are the verticals where mobile solutions deployment is proving to be crucial? Clearly, the verticals where mobility solutions provide the largest benefits are those where employees deliver their work in the field. These include: utility and telecommunication engineers, oil and gas employees, insurance claim adjustors, home healthcare providers, field door to door sales agents, pharmaceutical agents, and so on. In all of these cases, every minute saved by mobility is a minute that can be translated into productive work. It is fantastic to see how small time savings accumulate throughout the day amount to tens of minutes, sometimes an hour, or more: and that means that more time is available for increased productivity. This Interview is brought to you by IDG Custom Solutions Group in association with


Cover Story

Globalization

by putting in place a few key strategies. Despite the First among these is creating a structure that helps boost the level of hardships of driving clarity and collaboration across and standardization in down the line. Sapient, for instance, has an IT steering committee which an unruly world, comprises business unit heads, shared services heads, and IT the strategy has its leaders from across the globe. One of the committee’s aims—it meets once benefits, like cost a quarter—is to balance standards against localization guidelines. efficiencies Training is another key component of a global CIO’s arsenal. When Subramaniam and speed.

set up across multiple regions, learnings can be transferred from one region to another, reducing the time it takes to conquer learning curves. At JWT, Sr. VP & area systems director (Central Asia), Sunil Mehta, says that on some projects he has cut implementation time down by 70 percent, thanks to these passedon lessons. That was true for Otis, says Subramaniam. Among his many jobs as a global leader was to fulfill a need to create controls and compliance in the region and his first port of call was Kuwait. By the time he got to Saudi Arabia, he says, he had a better handle of what to watch out for. “The success of one initiative creates a platform to deploy a second one in a more confident manner,” he says. That’s the sort of leg-up that comes in handy when a CIO’s trying to accomplish another global mandate: Create single global user experience. Doing that is hard says Sethi who, because Sapient is present in so many regions, has firsthand exposure to the different needs of the company’s 10,000-strong staff. He says, for example, that in US, the attitude is, “’Hey, can you create a mobile application for my smartphone?’” While in Europe, he says, the focus is more on webbased applications. And India, he says, has SMS-based requirements. “It’s important to outline guidelines according to culture, regulatory compliance, maturity in business processes, and technology adoption,” says Sethi. More recently, Sethi and a group of Sapient’s senior managers put their heads together to try and figure out a way to standardize the company’s talent acquisition and on-boarding process globally. The one idea, says Sethi, was to find one model that fit all. “The executive sponsors were looking at standardizing on a global process with very limited localization, to bring in operational efficiencies and effectiveness,” he says. But before long cultural, process and regulatory governance aspects surfaced, he says. That’s when they made a decision that other IT leaders leading a global charge are beginning to see more sense in: Going cloud. One of the beauties of the cloud is that no matter where you are you get the same level of service. “We made a conscious decision to migrate from vendor-provided software solution to a SaaS-based application. The intent was to bring agility, adaptability and a lower cost of ownership within our existing enterprise application framework,” says Sethi. “Every CIO tends to standardize core services. Now instead of talking about e-mail servers or network switches, the whole stress is on PaaS, IaaS, etcetera.”

Going Gloco without Going Loco

wanted to roll out an integrated e-logistics solution for Otis’ sales, field and supply chain in the Gulf he turned to his team in India where the solution had already been rolled out. He also worked with a core team of IT staffers in the Gulf to create a training manual—in Arabic. Airtel Africa’s Goel agrees. “Training and collaboration are important aspects in the attempt to bridge the gap between transition and transformation.” That’s why he rolled out video conferencing facilities across the 16 African countries he is in charge of to conduct monthly review meetings and discuss quarterly updates. JWT’s Mehta took a different approach. He says he acquired licenses for Lynda.com where his team members can go and upgrade their skills. But sometimes there is just no alternative to jumping on plane and meeting people face-to-face—even if it can take a toll. To ensure he can accomplish what he set out to do, for instance, most of Balaji’s visits to Tata Technologies’ far-flung offices extend to between 10 and 14 days. “As a general rule, I try not to make 2-3 day visits, since I believe that if one needs to influence and participate and make effective decisions, you need more time than just what you get in meeting rooms to fully understand each countries operations and their pain points. The discussions you have over a cup of coffee, and other interactions are important to correctly understand the pain points and thus better help you make the right decisions at an overall level,” he says. For global CIOs success comes at a price. Juggling a hectic global schedule can take a toll. For Mehta, its only work, work, work, he says. There’s no time to catch up on a hobby, although he ensures his family gets time. “This is my compliance; I need to report to them,” he says smiling. “It has been demanding as a CIO and I’m fully aware of all my responsibilities. One cannot expect a global CIO to sit in a single geography and make trips on a quarterly basis to understand the nuances of different geographies,” says Sethi. Ask him when he sleeps and he’ll tell you, “When Melbourne wakes up, I’m awake. When LA sleeps, I sleep as well. ” CIO

Technology solutions are only one—fairly limited way—to deal with the chaos that can arise from a global set up. One way IT leaders with transnational responsibilities can help themselves is

Shubhra Rishi is correspondent. Send feedback on this feature to shubhra_rishi@cio.in

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CIO 2 CIO Banking on Innovation:

A Customer Centric Approach to Multi-Channel Delivery is Crucial Ajit Rath, from UBI, talks about how banks need to use tools like BI and Data Warehousing to garner new business and increase growth.

AJIT KUMAR RATH GM â&#x20AC;&#x201C; IT, Union Bank of India UBI is an early adopter of technology having computerized all its branches with a complete core banking system in place. Many innovative products have been developed using the technology platform to offer an array of choices to customers.

What are the top IT trends that you foresee playing up in 2012? IT is driving changes in Indian banks at an extraordinary pace. Most of the banks having implemented core banking solutions and internet banking, now find it easy to capture and store data. The next step is to make use of this data for strategic business positioning. With the emergence of data centralization and multiple channels for conducting transactions, the brick and mortar branch is no longer the one-stop destination for a customer. To compete successfully in critical areas like customer relationship management, data silos must be integrated across the bank using Business Intelligence (BI) and Data Warehousing tools. This will help them to profile their customers and evolve focused strategies to garner new business. RBI has made it mandatory for all Indian banks to implement Automated Data Flow (ADF). Globally too the regulatory environment continues to evolve, making it essential for banks to devise systems that can automatically help them adhere to requirements.

What do you think are some new technologies that are re-shaping the industry? Innovation and utilizing existing IT investments to its full potential are crucial for Indian banks. Most banks are building consistent crosschannel capabilities to enhance and connect various channels, which have involved considerable IT investments. Hence, banks are beginning to shift to a sales focus for the call centers and online channels - which currently focus on service transactions. Another existing platform that banks are beginning to leverage is the mobile phone. As mobile phones become almost as functional as laptops, banks are addressing these demands with increased mobile banking services to stay competitive. How does a CIO truly achieve alignment of IT with business goals? Aligning IT with business goals has always been a top priority for CIOs. However, this has become even more crucial in the current financial scenario. A CIO needs to not just look at business goals but also ensure that all regulatory compliances are met. Many CIOs from the banking sector, are investing a considerable amount of energy in new business and technology initiatives. They ensure that the business goals are well-articulated and defined, have an understanding of the required targets and focus areas, and how IT can help achieve these targets. This makes the functioning of the bank smoother and more efficient. For instance, customer segmentation helps to enhance top-line revenue growth, which is as critical as bottom-line cost reduction, and IT plays a crucial role in achieving these goals.

Can you share some examples of IT engagements aligned with business value achievement? We recognize that green initiatives are extremely important and have used technology to achieve the same. For instance, in one of our branches, customers are no longer required to fill challans for transactions such as cash withdrawal, deposit or transfer. They can simply use the kiosk to select the relevant service and make the payment at the counter. We have also deployed efficient account management systems to comply with Know Your Customer (KYC) norms for new accounts. The account management software being used is enabled with Business Process Management. The account management system coupled with OCR technology helps in data extraction from the scanned forms. Currently, we are working on a CRM implementation as well. How has your journey been with HCL Technologies particularly in terms of driving core business benefits for UBI? HCL Technologies has been a key IT partner to UBI driving multiple strategic initiatives for bank. They have strong domain and technology expertise, and we have been associated with them for a long time. HCL Technologies is implementing performance management systems that will analyze account-wise and employee-wise performance. We will be able to monitor customer accounts and understand how we can serve them better, hence increasing our profitability. On the IT infrastructure front, HCL Technologies has set the MPLS network of the bank and also help us in managing and monitoring our IT systems.


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

HCL Technologies

EXECUTIVE VIEWPOINT Creating New Efficiencies:

Business Aligned IT (BAIT)���s Promise of Competitive Advantage BAIT would help Indian CIOs reduce their total cost of operations and create new markets.

Please share your outlook for 2012 and your views on the growth of the domestic IT industry. Year 2012 has brought with it a mixed bag of uncertainty and hope. While Indian GDP growth projections have been slashed in the backdrop of high inflation and a volatile currency, the economic turmoil in the US coupled with the European crisis have triggered a bigger fear in the developed West. This tumultuous environment has made IT leaders reconsider their organization’s IT strategy, reviewing the relevance for the year ahead. From the point of view of domestic market, the growth rate would be higher than developed countries. Estimates from industry sources report that the domestic market would witness a Year-on-Year growth higher than IT exports. New technologies, innovative business models and some large government projects will continue to propel IT services consumption in the country. One theme will be common across these – value creation. Companies will invest in IT with the sole objective of deriving business benefits. IT is no longer just the business enabler, it has become a business differentiator. In what way will IT act as a business differentiator? With a changing business environment and increased competition, CIOs have started looking at technology for business benefits and enhanced customer experience. CIOs have emerged as powerful business decision makers as organizations make increasing use of technology to enable market re-

alignment, faster time-to-market and foray into new markets and channels. The role of an Indian CIO has changed in the last couple of years from being just a business enabler to a change agent. For instance, a CIO of an insurance company is interested in harnessing the power of technology to reduce the product launch time and thus achieve a competitive advantage. Similarly, a CIO of a pharmaceutical company would be keen to employ technology to help detect and track fake pills in market. The call of the hour for IT is – ‘Business Aligned IT’ – the core differentiator HCL Technologies offers to its customers. How do you define Business Aligned IT? What are the key benefits of BAIT? Increased competitive advantage, improved end-user experience and reduced capital expenditure are three definite returns that BAIT promises. Businesses benefit immensely from gaining worthy customer insights that help mine new growth spaces. Further, better end-user experience can be promised as the brand’s USP and technology has a special role in achieving that mission. By using the BAIT framework, HCL Technologies has helped a leading public sector bank in India to reduce customer waiting time by 30 percent. This helped the bank to offer more services to clients in lesser time. In another scenario, a leading media and publication organization has been able to reduce their operational expenditure by approximately 20 percent through strategic cost and performance management.

PRADEEP BINDAL President, India Business, HCL Technologies Pradeep heads the India business for HCL Technologies, which has a vision to provide “Business Aligned IT Services” to Indian clients. Pradeep is associated with HCL Technologies since the past 19 years and has been a key member of the company’s transformational journey.

BAIT also helps organizations become more efficient and agile at increasing scalability, improving margins and implementing robust governance. Do you think Indian CIOs are ready for BAIT and how can they leverage it? BAIT has tremendous potential to help CIOs across the world, as well as in India. On many parameters, Indian CIOs are facing the same set of problems as their global counterparts. In fact, a pleasant reality is that the domestic market has shown gradual signs of maturity in their services sourcing approach and governance. BAIT would help Indian CIOs in reinvestment of their savings achieved through technology adoption into business transformation projects. Besides this, BAIT would help Indian CIOs reduce their total cost of operations and create new markets thus helping their market share to grow. With BAIT, the quality of experience from the end-users’ perspective will also go up.


Cover Story

globalization

Rate Your

Cultural Smarts

?

If you’re anything like us, you probably think you are culturally aware. We do, after all, live in a connected world. Americans like to be on time, the French like long lunches. You’ve heard it before. But have you, really?

Take these quizzes from kwintessential.co.uk and find out for sure. Every year,

more Indian IT leaders are being asked to take up global leadership roles as India Inc expands business, like a circular ripple, to new shores and laps up companies around the world. But like any technology project, most of the tricky bits are about dealing with the human variable and unfortunately, in a global scenario, CIOs are even more unprepared than they normally are. By no fault of their own. Dealing with multiple cultures is hard by any measure. So where do you start? First by estimating how much—or little—you know about real people in other parts of the world. And thanks to cross-culture experts kwintessential.co.uk, you can do that right now.

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China

1.

Which of these should you try and have on your business cards?

a. Title b. Age

2. A handshake in China should be ... a. Limp and brief b. Strong and lengthy c. Firm but brief

3.

Which of these should you not do during a business meeting?

a. Address anyone but the head of the Chinese contingency b. Show emotion

4.

The Chinese prefer business communication by which of these methods?

a. Phone b. Face to Face

c. Writing

5. Who would you expect to make decisions from negotiations and meetings?

a. The negotiation team through consensus b. Most senior ranking attendee c. Your direct counterpart

6. How should one receive business cards?

a. Both hands b. Right hand c. With left hand propped by right

7. Aggressive negotiation tactics are recommended.

a. True b. False

8. It is acceptable to answer phone calls in meetings.

a. True b. False

9.

Which of these should you do when negotiating in China?

a. Inflate your prices b. Pretend to reject demands c. Concede easily to demands for concessions

10. Gifts within the business context are seen as bribes?

a. True b. False

TIP: One side of your Chinese business card should be translated into Chinese and printed in gold since gold is an auspicious color.

Italy

1.

Which month should you avoid booking meetings in?

a. June b. July c. August

2. Which of these qualities will be most beneficial when negotiating with Italians?

a. Humility b. Patience c. Aggression

3. Demonstrating urgency when negotiating with Italians is a sign of sincerity.

a. True b. False

4. Which of these is good etiquette at the dining table?

a. Passing dishes to the right

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b. Letting the host pay c. Answering phone calls

5.

Italians only shake hands when meeting.

a. True b. False

6. Which of these best describes the Italian attitude towards punctuality?

a. Italians are flexible but see deliberate lateness as simply rude b. Italians are always late c. Italians consider lateness rude

7. What is the most practiced religion in Italy?

a. Protestantism b. Methodism c. Catholicism

8. Which of these is true? a. Italians do not like close personal contact b. Italians are very tactile people

9.

What should you do at the beginning of meetings or negotiations?

a. Present literature on your company b. Set out the agenda of the meeting c. Engage in some informal chit-chat

10. What is the best way to initiate a business relationship?

a. Through a third party introduction b. By chance, for example, at a party c. Through direct contact answers on page

TIP: The concept of bella figura or good image is important to Italians. This includes dressing well and the aura you project.Pay attention to it.

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Canada

1. Which of the following may be construed as a sign of weakness in Canada?

a. A weak handshake b. Making direct eye contact c. Wearing gloves

2. In Canada business appointments are usually made in the....

a. Morning b. Afternoon c. Evening

3. Direct eye-contact shows... a. Sincerity b. Fear c. Distrust

4. People from Canada consider themselves to really be Americans and prefer this to being called Canadians.

b. False

5. Which two languages are most widely spoken in Canada?

a. English and American b. English and Canadian c. English and French

6. When doing business in Quebec it is a requirement by law that it be conducted in which language?

a. English b. Canadian c. French

7. Business associates in Canada should

8. Business gifts should.... a. Be modest b. Be extravagant c. Not be given

9.

During business negotiations Canadians often talk about their families and personal life.

a. True b. False

10. Canadians typically find it difficult to say “no”.

a. True b. False

in the first instance be addressed by....

a. Their first name only b. Their title and first name c. Their title and surname

a. True

TIP: If you’ve been invited to a Canadian home, feel free to refuse individual foods or drinks without offering an explanation, it isn’t rude.

Denmark

1.

The Danish sense of humor can be best described as...

a. Dry b. Crude c. Sarcastic

2.

What is the main meal of the day in Denmark?

a. Breakfast b. Lunch c. Dinner

3. How do Danes prefer to be addressed?

a. Mr/Mrs/Miss/Ms followed by their surname b. By their first name c. As Sir/Madam

4. What is the official religion of Denmark?

a. Liberal Protestantism

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b. Evangelical Lutheranism c. Judaism

5. When attending a Danish colleague’s/client’s home for dinner, it is best to be...

a. A few minutes early b. Exactly on time c. Fashionably late

6. Denmark’s society can be best described as...

a. Working Class b. Middle Class c. Upper Class

7. When meeting with business associates with English as their first language most Danes will prefer to speak to them in Danish.

a. True b. False

8. When meeting a Danish couple it is customary to...

a. Shake the man’s hand and then kiss the woman on the cheek b. Shake the man’s hand and then embrace the woman c. Shake the women’s hand and then shake the man’s hand

9.

The O.K. gesture (thumb and forefinger forming a circle) is considered to be offensive in Denmark.

a. True b. False

10. Before a business meeting, Danes enjoy a few minutes of small-talk.

a. True b. False

TIP: If you’re invited to a Dane’s home keep in mind: the man seated to the hostess’ left offers a toast of thanks during the dessert course.

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Australia

1.

Business decisions in Australia are often:

a. Fast paced and pressured b. Slow and protracted c. Complex and difficult to understand

2. The capital city of Australia is: a. Canberra b. Sydney c. Melbourne

3.

Australians prefer people with a sense of humor.

5. Australians place a high value on: a. Personal achievements b. Personal appearance c. Relationships

6. In legend Australia was known as: a. Unknown Southern Land b. Land of Good Fortune c. Southern Land of Good Weather

7. The expression “full bottle” in Australia means:

a. True b. False

a. 6pm and 8pm b. 4pm and 6pm c. 2pm and 4pm

10. Which of the following is an essential part of business practice in Australia?

a. Punctuality b. Good communication skills c. Proper protocol

a. No problem b. Fully informed c. The real thing

a. True b. False

4. Sydney is also known as ‘Sin City’.

9.

“Tea” would be served between which times?

8. The day of the Melbourne Cup is a public holiday in Melbourne.

a. True b. False

TIP: While an Australian may say, ‘G’day’ or ‘G’day, mate’, this may sound patronizing from a foreigner. Stick to, ‘Hello’ or ‘Hello, how are you?’

Answers China 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Title Limp and brief Show emotion Face to Face The negotiation team through consensus Both hands False True Inflate your prices True

Italy 1. August, many Italians take vacations at this time 2. Patience 3. False 4. Letting the host pay 5. False 6. Italians are flexible but see deliberate lateness as simply rude

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7. 8. 9. 10.

Catholicism Italians are very tactile people Engage in some informal chit-chat Through a third party introduction

Canada 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

A weak handshake Morning Sincerity False English and French French title and surname Be modest False False

Denmark 1. Dry 2. Dinner 3. Mr/Mrs/Miss/Ms followed by their surname

4. 5. 6. 7. 8.

Evangelical Lutheranism A few minutes early Middle Class False Shake the women’s hand and then shake the man’s hand 9. True 10. False

Australia 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Slow and protracted Canberra True True Relationships Unknown Southern Land Fully informed True 6pm and 8pm Punctuality

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VIEW

from the TOP

K.V. Srinivasan, CEO, Reliance Commercial Finance, on changing the company’s business model during a slowdown and how IT made the transition less arduous.

What do CEOs and other C-level executives expect from you? Read all about it in View from the top. Visit www.cio.in/ceointerviews

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The

Game

Changer By Sneha Jha

Austerity drives are over-rated. In a recession, more so. Sounds absurd? Then talk to K.V. Srinivasan. As profits faltered, markets crashed, and businesses folded around him, the CEO of Reliance Commerical Finance (former Reliance Consumer Finance) wasn’t interested in cutting costs or playing it safe. He was busy stirring up a new business model. “Jostling in a cluttered market and running a ‘me too’ organization did not seem like a winning proposition,” he says. That’s why from a consumer loan-provider, it went on to become Reliance Commercial Finance—an asset funding company. Today, this move has helped the company limit non-performing assets to 1.2 percent, beating the industry average of 2.5 percent. In this interview, Srinivasan shares how IT made change palatable and the journey less arduous.

CIO: Tell us about your most cherished moment in your two decades in the BFSI sector.

K.V. Srinivasan: There hasn't been a dull moment. One of my most cherished moments was during my tenure in Reliance Life Insurance. I joined the organization in

September 2005 and in two months we took over AMP Sanmar Life Insurance, a Chennai-based company. The company ranked 11th among 14 players in terms of premium size. In just two-and-a-half-years, it jumped to the fifth spot. That’s because we introduced a fair amount of automation—so much so

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K.V. Srinivasan expects I.T. to:

Aid in meeting regulatory requirements

Tap into customer insights

Photos by K apil Sh ro ff

Keep intermediaries satisfied

that, today, 90-95 percent of policies are processed without any human intervention. That level of automation and customer service is noteworthy. Bringing about these changes was a great experience. Another such moment came about when I joined Reliance Commercial Finance (erstwhile Reliance Consumer Finance) in December 2007. After six months, we changed our business model. We transitioned from being a consumer or consumption-oriented company to an organization which is focused on funding

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SMEs and creating productive assets as well as infrastructure.

What prompted you to change the companyâ&#x20AC;&#x2122;s business model? There were two reasons behind this move. Typically, consumer financing has always been the forte of very niche players. Today, Bajaj Finance is the sole player in this space. It's into consumer durables and small ticket size loans. The other players in this space did not succeed.

We also realized that it did not make business sense to cater to a sector thatâ&#x20AC;&#x2122;s already brimming with players. We wanted to carve a niche for ourselves. So we decided to look at the SME sector that contributes to over 50 percent of our countryâ&#x20AC;&#x2122;s manufacturing GDP. While there are banks to provide loans to them there is not a single non-banking player that is focused on this particular segment as such. So, in the second half of 2008, we took a conscious decision to adopt a pronounced commercial focus.

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View from the Top

But you made the move during recessionary times. I must admit, it was quite a challenging task. Ensuring smooth transition was like changing the tyre of a vehicle while it is in motion. However, we used the recession as an opportunity to turn things around. We re-looked our product portfolio and re-oriented our people in terms of skill sets. We started laying more emphasis on the bottom line. We shifted it from a ‘growth only’ to a ‘growth with profitability’ paradigm. Also, we felt that if you have to be recession-proof you have to get into a line of business where demand does not depend on the growth rate of the economy. For instance, if I have to buy a color TV and if there is economic despondency, I may put it off. But if I have to buy a truck or a piece of machinery for my plant I will do so irrespective of economic conditions. Also, from a risk perspective, the discipline of taking a loan and repaying it is better in the case of a business (SME) rather than an individual. The lifeblood of a business is about taking and repaying loans. And we felt consumer finance had questionable demand parameters. We thought it wise to move into something where demand is more or less consistent—even during troubled times. (To learn how CIOs in the BFSI sector are tackling the slowdown, turn to page 82)

Did IT play a huge role in this transition? Of course. IT played the role of a catalyst. It provided support for all the new products that we were launching. Our business rules engine was upgraded and the necessary parameters were put in place. The ecosystem around the business—call centers, leads management and collections—became very important. Collection was a big issue. So, we used mobile-based technology to make the collection process more efficient. Ours was far stronger than anybody else's in the market. Even in difficult times, our efficiency of collecting overdues was 56

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“I believe that IT is not an investment. It’s a return-oninvestment.” —K.V. Srinivasan

stronger than other players in the market.I feel that IT should never be looked at as an investment. I think that’s a very erroneous way of looking at it. I think we should look at it as a return-on-investment.

How does IT help you keep regulators happy? There are three-four basic requirements of a regulator. First is regular reporting. We need to ensure that our back office is able to generate these reports as and when required by the regulator. Also, the RBI and National Housing Bank (NHB) do a regular audit of our books and they require lots of information that we need to generate quickly. That’s why I feel, IT’s involvement is extremely essential here. We need to guard our customer’s data even if the organization is in a crisis. So, DR and BCP are very important. These are the critical requirements of the regulators. The system has to be dynamic enough to cater to dynamic norms on the fly.

raised the provisioning requirement for doubtful assets up to 100 percent while it directed Housing Finance Companies (HFC), for the first time, to set aside 0.4 percent of the total outstanding standard loans as a buffer. The new guidelines are aimed at protecting the health of HFCs when concerns over possible asset quality deterioration increases manifold amid rising interest rates. We were able to introduce those changes within 24 hours. This was possible only because our systems were very flexible and agile.

How has IT helped you tackle some of your most critical challenges? Our biggest challenge is collections. IT helped us improve collection efficiency. Today, our non-performing assets (NPAs) are possibly one of the lowest in the country—1.2 percent, as of June 2011. The industry average is 2.5 percent. Also, our intermediaries or direct sales agents do a lot of business for us. So, making payouts to these agencies is a major activity. We have created an online system which enables us to disburse loans and simultaneously release payouts to our agencies. Otherwise they would have to wait till the end of the month. This system is a wow factor for the agency. Commoditization is another challenge. To combat it, we are using BI tools that help us predict whether a customer will default or not, for example. If he is a high risk customer, the collections department will keep an eye on him. With BI’s help we can also analyze how much a customer contributes to our product lines. This enables us to cross sell our products. CIO

Could you share an example with us? In September 2011, the NHB introduced a standard provision for good assets. NHB

Sneha Jha is senior correspondent. Send feedback to sneha_jha@idgindia.com

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THe Art and

Science of Pricing

Reader ROI: Why CIOs should champion pricing initiatives Why pricing is a cultural and not a technology challenge How pricing can raise a CIO’s profile

Feature_Pricing .indd 51

Cutting spending is nice; companies can always find something to do with the savings. But increasing product prices—if customers don’t balk—brings in pure profit. The simplest way to price a product is to

cover your back-end costs and tack on a predefined profit margin. But that formula ignores customer demand. And in this age of social media, tablet commerce and shopping by smartphones, customers demand that they not be ignored. Just as important, if companies don’t figure out how to exploit a fleeting chance to fulfill a sudden customer need while pricing their product just right, they leave money on the table.

IllUSt ratIon by p radEEp gUlUr

nies d to a e p e n om s r c e ed r i d d e e a h e e t ls n IT l rovide o o ns, t o i p d s i d e at ec an c d i p t g u s i s. in step he soph er pric r profit t rt te with ke sma to grea a to m ich lead ash n . im S wh By K

3/9/2012 4:43:14 PM


IT Strategy Whatever singer Katy Perry wears to the Grammys, for example, may inspire teen girls to buy knockoffs. So “fast fashion” retailers could temporarily notch up prices on—we’re guessing here— sequinned minidresses. Good pricing combines experience and gut instinct with data analysis, internal costs and external customer behavior. But to get there takes new technology and a new attitude. “Pricing should be a CIO’s issue by virtue of being an officer in the company,” says Luis Rodriguez, senior vice president of IT at Dial Global, a radio syndication network that merged with Westwood One last October. “But also because the business may not know there are more advanced ways to look at it.” Usually the CMO or CFO manages price optimization projects to try to increase profit margins, calling on the CIO only because IT has

1602

59783

Pricing Done Right Setting prices is a strategic decision that needs C-level attention. Your profits depend on it. The problem with pricing, say consultants at Deloitte, is you. Senior executives don’t recognize the importance of a consistent and detailed pricing strategy, Deloitte says, and leave it to employees further down the chain to manage. Companies that do this pay the price in lost profits. Waste Management’s CEO and CIO work together directly on pricing strategy, with the CEO recently approving a large investment in a new decision sciences group that will work, in part, on pricing analytics. Aspen Skiing, which runs ski resorts in Colorado, uses business intelligence tools to evaluate pricing scenarios that the sales group perhaps hadn’t considered, says Paul Major, managing director of IT. For IT leaders and other top executives who want to tackle the pricing issue, Deloitte suggests revising old thinking by doing the following: Analyze what kind of transactions are most profitable to your company. Your biggest customer might be costing you money. Develop pricing strategies for different scenarios, taking into account company circumstances but also larger economic and social events. Form a pricing team of employees who like new challenges. Price for profit margin, not sales volume. Emphasize how important a consistent strategy is. Customers can accept fluctuating prices if they see the logic behind them. Aspen’s Major advises companies to stop relying solely on anecdotes from salespeople about which prices work or don’t. “The worst enemy of pricing is the perception that you have good instincts.” —By K.S.N. 58

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the keys to the corporate data, says Mark Ferguson, a management professor at the University of South Carolina. Ferguson studies how businesses formulate pricing strategy. It’s rare, he says, for a CIO to instigate the process. But that’s changing. Airlines and hotels have long used data analytics for yield management, studying and influencing what customers do so the company can extract the most profit from transactions. Now businesses as diverse as Coca-Cola, Aspen Skiing resorts, and garbage hauler Waste Management are doing it, too. But they are going further, combining statistics packages, revenue optimization software and insights picked up from unstructured social media interactions. They want to do two things. First, beat their rivals to niche opportunities that can bubble up and recede in a matter of weeks. Next, refine a long-term pricing strategy to avoid a vicious cycle of discounting and to stave off commoditization. “The financial returns associated with pricing initiatives far exceed any other IT initiatives. The benefits are substantial and sustainable,” says Puneet Bhasin, CIO of Waste Management, a $13.5 billion (about Rs 702,000 crore) trash and recycling company. “It becomes a competitive edge.”

Making Profitable Decisions Bhasin created a decision sciences group within IT where mathematicians and statisticians mine data to model, for example, the relationship between the value of a product or service and its acceptable price. The company uses Oracle databases that hold 20 terabytes of pricing data that is manipulated with SAS analytics and business intelligence tools. One essential question: How elastic can prices be in a given market at a given time? The company wants to price each product “where it’s fair to the customer and at the same time, the company is making a reasonable profit,” he says. Waste Management reports that it saw an extra $218 million (about Rs 1,090 crore) in 2010 from higher prices on its core trash collection and landfill operations. That’s about 2 percent of revenues. And when it tallies its books for 2011, it expects that its new pricing strategy will have produced another 2 percent gain. With such good results, the company remains committed to a plan of price increases that are 0.5 percent to 1 percent above the consumer price index, even in a down economy that has competitors cutting prices. The overall goal is to increase revenue by $3 billion to $5 billion (about Rs 15,000 crore Rs 25,000 crore) in the next few years through these pricing projects and other initiatives, Bhasin says. Waste Management doesn’t seem a likely candidate for a sophisticated and nuanced pricing plan. Garbage pickup, sorting paper and plastic, landfill maintenance—these are not sophisticated and nuanced services. Yet by getting employees to see Waste Management as a logistics service provider, the company has sparked creative thinking about products. For example, attaching sensors to dumpsters at construction sites has improved the speed and accuracy of scheduled pickups. Truck drivers know exactly which containers to visit and where

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Javier Polit, CIO of CocaCola’s bottling investments group, warns that pushing technology over human judgment is trouble. The best pricing strategy isn’t art or science, he says. It’s both.

they are on the grounds. Having the sensors automatically signal when the dumpster is full makes pickups go even more smoothly. That’s worth extra paying for, Bhasin says, and the decision sciences group aims to find out how much.

The Human Factor Still Matters There’s no doubt that pricing is a touchy subject. In September, after numerous customer complaints in 2010 and 2011, the Minnesota Public Utilities Commission suspended a tiered pricing program by CenterPoint Energy, a $9 billion (about Rs 45,000 crore) utility. Under the program, customers who crossed a certain threshold of natural gas usage paid more for each additional unit of gas than the unit before. That angered some people, including senior citizens who need to run home medical equipment. CenterPoint says it simply wanted to encourage conservation. How customers view your prices is as important as what you charge, Ferguson says, recalling Coca-Cola’s aborted test of variable-price vending machines in the late 1990s. The machines were programmed to change the price of a can of soda based on conditions such as location and weather. “The way it was portrayed was Coke machines would raise prices when it’s hot outside,” he says. “If they just said they would lower prices on rainy days, it might have come off differently.”

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Though analytics suggest pricing programs that look good on paper, judgment still matters, says Javier Polit, CIO of Coca-Cola’s bottling investments group, an $8 billion (about Rs 45,000 crore) unit within the company that sends soda, juice and other drinks to retail locations. Polit declines to comment on the vending machine saga, but says that in his bottling business, regularly sending employees to retail outlets helps the company not only collect data from shelves but also get a feel of what’s going on. Maybe they notice a new iced tea being stocked by a competitor or that foot traffic seems slow. Both the computer and the human are important. “This is not about technology but insights,” he says. As part of a large effort to improve sales-force effectiveness, a project called Coke One gives marketing, sales and other departments analysis tools to finely segment the customer base and “ensure consumers continue to have access to our brands at the right price,” according to the company’s latest annual report. Polit is particularly interested in learning about brand loyalty. That is, how Coke drinkers respond when a competitor makes a pricing move. If Pepsi drops its price by seven cents per can, does Coke lose customers? How about at 10 cents? The answers differ even by zip code. Knowing that, Coca-Cola can adjust prices granularly and maintain or increase market share, he says. “For us, it’s not about REAL CIO WORLD | m a r ch 1 5 , 2 0 1 2

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IT Strategy increasing price this quarter to make more profit. We do not want to lose share or volume,” he says. “We’ve been in business for 125 years and we want to be in business for another 125 years.”

Different Customers Get Different Prices Everyone says they want to understand the customer, but do they? Detailed analytics can help companies treat customers as small, special groups of people, says Ferguson, the management professor. For example, rather than doing a monolithic nationwide promotion on its entire product line, an automaker may tailor offers by demographics, geography and economic conditions. In Sarasota, home to retirees who like to pay cash for their American-made cars, General Motors may try to outrun Ford by offering $3,000 back on its Cadillac DTS—and throw in a $500 sweetener for anyone who trades in a rival Lincoln Town Car, the number one model driven by people over 65. Meanwhile, a zero-percent financing deal may work better for the Chevy, popular among younger drivers who typically don’t buy cars outright with cash. Coca-Cola erects up to nine displays in a grocery store, including at the entrance and at self-checkouts, so soda can easily be grabbed as customers come and go and at any place they might pause. The number of cases sold dropped 1 percent in 2010 compared to 2009, the latest period for which figures are available. But profits on that merchandise went up 27 percent. The right price can keep sales

results steady, even when volume goes down. That’s not because you’re gouging customers but because you’ve paid close attention to which kinds of customers are willing to pay how much, Polit says. Sometimes holding a price up feels wrong but is the right thing to do, says Paul Major, managing director of IT at Aspen Skiing, which runs four Colorado ski resorts. As the recession took hold in 2008, Aspen considered dropping prices to retain more customers, as many airlines and hotels did at the time. Instead, the company kept many products’ prices steady but offered new perks, such as a free fourth day of skiing for a customer who bought a three-day lift ticket. “The actual prices of our products did not go down, so [there was] no perceived price erosion,” Martin says, “but perceived value was high because of getting free days.” If Aspen had cut prices dramatically to keep sales volume high, profits would have been hurt, he says. Under the program it ran that season, profit per ticket did slip, he says, but not a lot. The free days also brought additional revenue to the company’s hotels, stores and restaurants. “In addition, there was no discount hole to climb out of as business improved,” he says. Depending on the industry, prices are set on stickers or by negotiation. And at many companies, there is no true price of a product, just one that a salesperson thinks will close the deal. Price optimization often comes across as software telling a salesman what to do. When a gonzo sales staff lives and dies on the line

Puneet Bhasin, CIO, Waste Management, created a group within IT where statisticians mine data to model the relationship between the value of a product and its acceptable price.

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IT Strategy

Pricing can dictate a company’s future. That’s why CIOs

which is dotted, à-la Alec Baldwin’s character in the movie Glengarry Glen Ross, a computer suggesting prices may not be welcomed. As Ferguson notes, “This becomes political.” Depending on the market, attempts to match products to customers at a profitable price, sometimes in real time, can generate thousands of combinations. “That’s a problem best fit for computers,” Ferguson says. “Airlines learned that very early, and that’s what’s happening in other industries.” Even if your products or services are sold mainly through negotiation rather than price tags, analytics will work, he says. Start collecting data on bids won but also on those lost, so the sample isn’t biased. Look at customer attributes such as frequency, budget, service calls and satisfaction, and measure how much of the product or service they buy over time. You’ll find patterns in who’s willing to pay a little more and for what. As usual, the technology part is easier than the culture change, CIOs say. Cloud computing, for example, lets a company process huge amounts of data offsite more affordably than buying its own big servers and software. Analytics tools have become more powerful and easier to use in the last several years.

even the smartest salesperson can handle. As Waste Management built its pricing strategy, Bhasin adds, the company made sure that IT, marketing and sales understood and respected each other’s roles. Representatives from each group sat on planning and implementation committees. Salespeople and IT devised the algorithms that IT codified. Bhasin also puts together pricing tests to see how customers respond to changes, to show sales what works. A control group will be quoted prices for garbage hauling or recycling services based on Waste Management’s old cost-plus-margin formula; another group gets a tailored price that incorporates demographic, geographic and economic trends. “These are real customers and real prospects,” he says. “What a sales rep is looking for is assurance that whatever price they are quoting is a fair market value. We try to demonstrate that.” After that, salespeople are given a range of prices they can quote a customer for a given product or service. The system monitors how each prospective deal plays out, including whether a salesperson deviates frequently from the range. If she does and keeps winning business, the algorithms may be adjusted. If she does and keeps losing, “we have a talk,” Bhasin says. “I’m not saying decision sciences pricing is always right,” he says. “However, when you net it out, it does better than supply-side pricing or pricing based purely on gut feel.”

involved in pricing strategy raise their own profile.

Going Beyond Gut Feel Stepping up to an empirical, data-based approach to finding the right price can easily offend an internal sales group with a deep belief in its own pricing prowess. And quantifying which promotions work best may ruffle the feathers of the CMO and his staff, who may not have had access to such data before. If a 20percent-off coupon cannibalizes future sales or attracts customers who would have bought anyhow, marketing looks bad. What’s critical to emphasize during all this automation, says Rodriguez of Dial Global, is that technology can enhance even the greatest of instincts. Metro Networks, a division of Dial Global, recently installed revenue-management and inventory-optimization software to find the most profitable places to schedule ads, based on several moving variables. Two key factors: How much airtime is available for the target audience and how in-demand is that audience. As the presidential race intensifies, advertising time on radio programs that deliver certain demographics will carry a premium. If Barack Obama wants to reach southern voters age 21 to 40, he might want to buy some Saturday night spots on “Country Gold with Rowdy Yates,” a Dial Global show on 100 stations. An experienced ad sales manager will have her own ideas about how much to charge, but the revenue-management system also considers customer requests for over 75,000 ads a week, such as that the ad not play on religious stations, that it run only on Mondays, or that it not air near a rival’s ad. The more such constraints Dial Global can accommodate, the more valuable its airtime becomes, CIO Rodriguez says, adding that the system can now accurately handle 20 to 30 variables, more than

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Bring it to the CEO’s Attention Pricing has up to four times more impact on profitability than other investments, according to a study by Deloitte. A one percent price increase can boost profits by more than 12 percent, Deloitte found. “With so much money at stake, it’s hard to understand why so many companies neglect pricing,” the report says. At companies where pricing strategy isn’t elevated to the C-level but is left to sales or even accounting, inconsistent pricing emerges, Bhasin says. Or, worse, employees change prices in reaction to market events when riding them out might be more profitable. A business-minded CIO with views into every department should bring pricing to the CEO’s attention, Bhasin says. “Pricing strategy touches every aspect of Waste Management’s business, including what products and services are bundled and sold, and to which market segments.” Because pricing can dictate a company’s future, he adds, CIOs must take it on. Polit, who sits on the sales force effectiveness committee at Coca-Cola’s bottling investments group, says CIOs involved in pricing strategy raise their own profile. But he warns that pushing technology over human judgment is trouble. The best pricing strategy isn’t art or science, he says. It’s both. CIO

Send feedback on this feature to editor@cio.in

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casefiles real people

* real problems * real solutions

Telepresence

R(ore)s

In a world which asks telepresence to pipe down, Vedanta has unleashed the technology and taken it to new heights. Why? By Shubhra Rishi Agucha in Rajasthan, Konkola in Zambia, Rosh Pinah in Namibia, Tipperary in Ireland, Tasmania in Australia, Black Mountain in South Africa, and Liberia in West Africa. What do these townships have in common? They all are pieces of the Vedanta Group’s large empire; one of the world’s fastestgrowing natural resource companies with interests in zinc, copper, aluminum, iron ore, silver, lead, power, wind power, oil and gas, and a presence across India, Zambia, South Africa, Ireland, Namibia, Liberia, UAE, and Australia. For those who track the group, it’s no surprise how huge the company is, given its hunger for growth. Recently, it has received plenty of media attention for acquiring 58.5 percent of Cairn India and the merger of Sterlite Industries with Sesa Goa, which it acquired controlling stake of in 2007. But size comes with a price. If you ask Vedanta’s top executives they’ll tell you that like any large company, keeping the $ 70 billion (about Rs 350,000 crore) ship on track is hard work. To ensure that it’s over 32,000 employees and offices in four continents push in the same direction, Vedanta organizes monthly review meetings, both at the group and the plant level. It’s a complex, and time-consuming operation, but the faceto-face time was crucial. Perhaps more obviously, it was an expensive way to do business. “People were putting a lot of time in traveling and incurring huge expenses,” says Pawan Nijhawan, VP-IT of Hindustan Zinc, one of Vedanta’s group companies.

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To Nijhawan, it was obvious that the ability to conference virtually could save the company buckets of money, many hours of its top executives’ time, and quicken decision making. But for such a solution to work, the experience it offered had to match the expectations of Vedanta’s sophisticated globe-trotting managers; the technology couldn’t come in the way, in fact it couldn’t get noticed at all. That ruled out video conferencing, in fact, it ruled out every type of collaboration solution except full, immersive telepresence. That’s where Nijhawan’s problem lay. Not only did telepresence have a bad rep for being very expensive—a problem he was trying to rid the company off—it also required a ton of bandwidth, which wasn’t easily available in the remote locations where Vedanta’s mines were. And although he didn’t know it yet, there were other challenges Nijhawan would need to overcome if he wanted to implement a telepresence solution and take Vedanta’s efficiency to the next level.

Pawan Nijhawan, VP-IT, Hindustan Zinc, saved the Vedanta Group millions by deploying a telepresence solution.

Bespoke Efficiency is a big deal at Vedanta. The company takes it very seriously. It’s how, for instance, Hindustan Zinc—India’s only and the world’s largest producer of zinc—has managed to be one of the lowest cost producers of zinc in the world. Yet the way the company ran its monthly review meetings wasn’t as efficient as it was required to be. Each meeting called for the presence of 150 of Vedanta’s executives positioned around the globe. Almost all of them had to fly to one location, and put up in hotels for the duration of the meeting. Unwilling to live with the status quo but reluctant to jump into an expensive telepresence solution immediately, Nijhawan first started toying with the idea of conducting meetings using video conferencing. He says he juggled between different services to find amicable solutions. But all these solutions, he says, suffered from some deficiency or the other-and that

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wouldn’t cut it with Vedanta’s top management. The only option left was telepresence, so he attended several presentations from different vendors, and visited customer sites, making notes each time in order to pick a solution which came close to Vedanta’s requirements. “I was looking for a telepresence solution which could ape the in-person experience as much as possible,” says Nijhawan.

The other challenge Nijhawan faced was finding the right design for the company’s telepresence rooms. “In our meetings with several vendors,” he says, “the boardroom designs we came across gave the feeling of being seated in a cockpit.” Telepresence room configurations typically fall into a few—fixed—categories. Some are built for four to eight participants,

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Case File | Vedanta

and others, more classroom-style, can house 30 participants. But for the most part, vendors offer cookie cutter designs and refuse to build customized rooms. Nijhawan wasn’t prepared to be limited by that approach. He didn’t want the rooms to be too big—and pay unnecessarily—or to be too small. They had to be designed to the needs of Vedanta. “With so many group companies and multi-party conferencing which involves connecting 10-12 participants simultaneously, I did not want to compromise on the size of the boardrooms or the quality of telepresence.” And he made his decision of who to partner with based on that. Additionally, Nijhawan wanted to optimize his solution so that interoperability was possible between a telepresence user and someone using video conferencing. Today, his pushing has paid off. “The solution lets participants connect to any VC machine inside a mining plant office or anywhere else in the world,” he says. It also enables employees at Vedanta to conduct meetings with outside vendors, customers and consultants even if they are not equipped with a telepresence facility. One of the biggest challenges Nijhawan faced was finding a network service provider who could give Vedanta a 15 Mbps broadband line to connect its remote mines to its offices in London. In India, he says, Airtel was able to help at most locations. Vedanta’s bandwidth costs, per location, are about Rs 10-12 lakh annually. “But the major challenge was finding the best possible bandwidth in Zambia,” says Nijhawan. Even the Zambian government knows bandwidth infrastructure is a problem. According to Dominic Sichinga, permanent secretary in the Ministry of Communication and Transport, Republic of Zambia, “Zambia’s Internet access and connectivity has been quite low, with some parts of the country having little or no connectivity.” The search for a provider in Zambia, says Nijhawan, delayed the project as the IT team

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“The initial costs of the solution are more than made up for in long-term savings, making it a viable business decision.” —Pawan Nijhawan, VP-IT, Hindustan Zinc

searched for alternatives. But in the end, he had to make do with a 2 Mbps line. “Initially, we decided to build a telepresence variant that uses only one codec with a single screen and reduced the 1080p definition resolution to 720p. But post-implementation, we’ve made many adjustments which allow us to use all three codecs with lower resolution. The point is that user experience is much better than using video conferencing,” he says.

No Breaking the Bank The other challenge was management thought process. “It’s a well-known fact that the initial cost of investing in a telepresence solution is very high, keeping in mind the cost of the purpose-built rooms and network connectivity. It was important for me to win the confidence of my top management for such an investment,” says Nijhawan. The average capital cost for each room, says Nijhawan, depending on its size and the cost of customization varied between Rs 60 lakh to Rs 1 crore. To mitigate the risk of such a large investment, Nijhawan decided to implement the project in phases. “In the first phase, we included only five locations. On successful implementation of phase-I and looking at its overwhelming results, we went ahead with other phases,” he says. To his management’s credit, the upfront cost of the project didn’t bother them as much as whether the investment could be used optimally. That’s surprising because it’s the upfront cost of telepresence that has made many managements stay away from it. During his initial talks with Vedanta’s management, Nijhawan says that their biggest concern was investing in a 15Mbps network line and utilizing it only for a

couple of hours for the meetings. Nijhawan says he told his management that the unused bandwidth could be used for audio, IP-telephony and managing other enterprise application traffic. But what really won them over was straightforward math. Nijhawan says he, along with his IT team, laid down the significant benefits of reducing Vedanta’s huge travel costs to almost zero and the positive effect the project would have on the company’s carbon footprint. “The initial costs of the solution are more than made up for in long-term savings, making it a viable business decision,” says Nijhawan. Today, Vedanta has 16 telepresence rooms across India, one in London, one in Zambia and another one in South Africa. The smallest telepresence room at Vedanta, he says, can accommodate six people and the largest one can accommodate 25. The telepresence solution is so popular at Vedanta, says Nijhawan, that it’s tough to book the rooms, he says. The demand for telepresence even forced him to create an application where people could book the rooms in advance. The facility is being used for training and collaborating with vendors and customers. Employees, he says, can now sit for meetings within the office—ensuring that they are available if their presence is required in an emergency. “My advice to other CIOs investing in a telepresence solution is: Hire a proficient network administrator in order to monitor and tune the network, keep the bandwidth available at all times and make sure that your vendor is reliable,” he says. CIO

Shubhra Rishi is correspondent. Send feedback on this feature to editor@cio.in

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AN IDG CUSTOM SOLUTIONS INITIATIVE IN ASSOCIATION WITH

TRANSFORMING BUSINESS THROUGH JUDICIOUS APPLICATION OF IT

PLUS

The monsters of the heavy tax forms and headaches about duplicate data entry are things of the past. Gujarat Commercial Tax Departmentâ&#x20AC;&#x2122;s IT implementation for VAT makes the system efficient and transparent.

INTERVIEW PR Krishnan, Senior VP and Global Head IT (IS), TCS, talks about how Indian enterprises have the opportunity to leapfrog to the newest technology.


TRANSFORMERS CASE STUDY

TAXING TIMES NO MORE Customer Gujarat Commercial Tax Department, Government of Gujarat Industry Government Offering Revenue and Taxation Solutions

The monsters of the heavy tax forms and headaches about duplicate data entry are things of the past. Gujarat Commercial Tax

Departmentâ&#x20AC;&#x2122;s IT implementation for VAT makes the system efficient and transparent.


CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES

I

t is the bread and butter for Indian States and Union Territories: tax collection. Commercial taxes form the most important revenue base, often accounting for 60-70 percent of total internal resources generated. When the Government of Gujarat adopted VAT on 1st April 2006, it was keen to get its act right from day one. Realizing that an efficient tax collection system was imperative to the smooth functioning of the state, the government decided to automate the entire VAT-related business processes at the time of adoption of the VAT Act itself. Besides, it would further help boost the image of Gujarat as an attractive business destination. During an open bid, TCS qualified as software vendor based on its proven track record of delivering IT solution based on best international practices to meet the administration’s demanding service delivery needs.

THE TAX STRUCTURE The Commissionerate of Commercial Tax is the nodal agency for the administration and collection of various taxes in the State of Gujarat. It functions under the Finance Department of the Government of Gujarat, and is responsible for the administration of certain tax acts such as the Central Sales Tax Act, the Value Added Tax, the Profession Tax, the Motor Spirit CESS Act and many others. The Value Added Tax (VAT) was introduced in the Indian Tax system from April 1, 2005, and the Government of Gujarat adopted VAT a year later. The Government decided to automate the VAT-related business processes at the same time. To digitize the entire project, the Gujarat Commissionerate of Commercial Taxes asked TCS to develop and implement a VAT Information System (VATIS) that was efficient and cost-effective. One of the most significant government-tobusiness (G2B) e-governance initiatives by the state government, the VATIS project was aimed at Due revenue Collection, efficiency in tax administration, transparency in operation, widening of the tax net, cost-effectiveness, controlling tax evasion and ensuring higher compliance levels. For citizens, the s ystem had to provide reduction in touch points, location independence, 24x7 availability, data reliability, quick remittance of refund and e-communication with the department for queries.

Process re-engineering and an efficient IT application enabled tax administration has brought down cost of compliance and cost of collection“ HARIBHAI PATEL (IAS) Commissioner of Commercial Tax Govt. of Gujarat.

Document Management System and performance reports were required to help improve process efficiency and service delivery. The VATIS project was designed to bring in increased accountability, as well.

THE SPADEWORK To chart out a path for the deployment of the new system, the project team studied the gap between the defined objectives and the current state of business processes within various departments. The best practices adopted in other states and countries were also studied. “Process re-engineering and an efficient IT application enabled tax administration has brought down cost of compliance and cost of collection,” said Haribhai Patel (IAS), Commissioner of Commercial Tax - Govt. of Gujarat. TCS carried out Gap Analysis to determine the changes to be made to the current processes and functions in order to achieve the tax department’s goal of improving citizen services and the department’s internal efficiency. The GAP Analysis was done keeping in mind three states: “AS-IS” state that defines the current processes and performance levels “TO-BE” state that defines a feasible and practical situation derived by applying conditions local to Government to the “CAN BE” state; local conditions including availability of resources and growth plans

Document Management System and performance reports were required to help

improve process efficiency and service delivery.


TRANSFORMERS CASE STUDY and the “CAN-BE” state that defines a near-ideal situation which is derived using benchmark analysis and environment analysis by applying best practices.

FOCUS ON OPEN SOURCE

center was built with skills on Struts and Java.

TCS provided the Gujarat government with an integrated tax administration system for VAT, along with the automation of business p ro ce s s e s a n d a w e b portal for the Commercial Tax department that offered eServices to the taxpayers. The system is highly configurable. Other features included development of a hybrid model (both decentralized and centralized), a robust, secure, scalable and maintainable n-tier architecture, 24x7 availability through portal, real-time integration with banks’ net banking system, integration with Tax Information Exchange System (a centralized exchange of all interstate dealers spread across states and UTs) and integration with the IFMS (Integrated Financial Management System) of the finance department. VATIS was built with a vision “to improve the prospects of sustained economic development by reducing fiscal deficit through buoyant tax revenue”. It is a generalized solution for revenue / taxation authorities to serve all tax administration needs of Commercial Tax Department in the Government of Gujarat, while addressing the customer service requirements of taxpayers. The system can be upgraded and helps supports the tax and revenue management life cycle at lower risk and cost. The major components of VATIS are multi tax support, Web based interface, e-services,

KEY HIGHLIGHTS VATIS supports administrators in decision making. It has helped divert manpower from manual issuance of forms to more intelligent work of Return Scrutiny. Registration Certificate and CST Forms are issued under Digitally Signed Certificate but no dealer or officer is required to procure Digital Certificate. Signer Code is being used to sign the document Crosscheck of Input Tax Credit for refund and assessment to be done instantly through electronic invoice matching Internal Controls and audits have been strengthened.

automation and reengineering of business processes, audit trails, multilingual support and dealer integrated view. The major business processes covered in VATIS (Application for Departmental Users) are registration, returns, payments, scrutiny and assessment, refund, recovery, appeal and revision, penalty, enforcement, checkpost (GISGoods Information System), MIS and management dashboard, system key value-adds and features and statutory forms control system (SFCS). The eServices on the web portal include eRegistration, eReturns, ePayments, Online Issuance of Digitally Signed CST (Central Sales Tax) Forms and ewaybills, eAmendment, eNotices and eRefund. TCS implemented the project in an onsite/ offsite mode, with resources stationed both onsite at the client’s office and at the TCS development centre in Ahmedabad. The expertise and services of the Performance Engineering Group and Performance Engineering Labs were utilized to improve the performance of the system in the production environment. A Framework Oriented Approach was adopted, and TCS customized and improvised the TCS Taxation Framework to cater to the requirements of the Gujarat Government. The web technology center was built with skills on Struts and Java. The VATIS framework was developed on open standards − Java/J2EE technologies using MVC concepts which provided scalability, maintainability, modularity, reusability, portability, performance, security and industry-wide support. The framework also provided web-based access and SOA support. The open source technologies used are: Barbecue for generating barcodes, C3P0 for connection pooling, Cewolf for generating Charts, JXL for reading Excel files, Digester for parsing XML files, iText for writing PDF files, JasperReports for generating Notices, Log4J for logging purpose, PramukhLib - Javascript library for multilingual writing, and jQuery - Javascript framework for GUI. The TCS team followed the TCS Quality process and managed the project flawlessly to ensure ontime delivery of the solution. A well-established methodology for transaction volume analysis was used to calculate a broad estimate of the hardware specifications that were needed to support the

The VATIS framework was developed on open standards. The web technology


CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES

PATH BREAKING APPLICATIONS TRACE: Time honored Registration and Amendment done Centrally & Electronically

OASIS: Online Application and Scrutiny of Inter-State transactions

New registrations, amendments, cancellation are done through the system Process re-engineering Dealer not required to visit VAT office for Provisional Registration Number (PRN) and RC. He can download and print from website. PRN and RC bear bar code, department’s logo, water mark, seal and digital signature. However, no dealer is required to obtain digital signature Not possible to tamper, forge or duplicate documents

enterprise system in the production environment for at least three years. The data migration activity was also carried out using a time-tested approach; security testing, stress testing and performance testing were performed on the application as per standard processes so as to ensure the security and robustness of the solution in the production environment.

BENEFITS Perhaps the greatest beneficiary of the VATIS is the common man. Citizens are happy on account of the simple and easy tax compliance processes, the availability of multiple channels to access and use the eServices, better availability of the services via the 24x7 web portal and an improvement in the communication channels by the inclusion of new mediums such as web portal, emails and SMS. The portal has also provided improved transparency and helped disseminate information using features such as ‘Track My Status’ which provides the status of any requests of a tax payer. The system also effected a reduction in the turnaround time through reduction of tax touch points and improved process administration. A greater number of online procedures have

Forms C, F and H under CST No separate application No human intervention Details of purchases and procurements to be given in e-CST return Forms can be downloaded and printed from web site Forms bear seal, logo, bar code, water mark and digital signature No dealer is required to obtain digital signature Misuse of forms controlled. Saves time and resources Inter-State cross checks have become easy for tax administrators of other States also.

helped reduce the amount of time for physical filing of forms. With VATIS, the authorities have better control on tax evasions. The system’s computing and analytic capability has also helped widen the tax net. It has provided for efficient tax administration through automation of the business processes, and reduced the time the staff spent on activities that did not add any value to the process. Manual errors are also reduced. The system has also enabled better decision making through creation of over 200 types of MIS reports and near real-time and accurate information availability. Automation has played a significant role in increasing efficiency. Some of the processes that have been automated include pre-formatted document printing and generation of exception reports. A tax calculator is also available. Operating costs were lowered due to use of open source technologies, high level of automation for routine operational activities and use of the onsite/offsite model by TCS, by optimizing resource utilization. TCS’ rigor in implementing the VATIS system helped Gujarat lead and excel in the automation of the tax administration process in the country.


TRANSFORMERS INTERVIEW

TAKING The QUANTUM LEAP PR Krishnan talks about

how Indian enterprises have the opportunity to leapfrog over successive generations of technology to the most recent version, making them a force to reckon with.

PR Krishnan,

Senior VP and Global Head IT (IS), TCS


Custom Solutions Group TATA CONSULTANCY SERVICES

What are the latest technologies in ITIS? Is India coming of age in the ‘hosted solutions’ and ‘business process management services’ space? Virtualization has been the basis for technological evolution over the past few years. It laid the foundation for the development of the infrastructure space. BYOD, mobility solutions, social media, analytics and big data comes next. These have caught the imagination of CIOs today. The advantage that Indian organizations have is that they can skip legacy, which many of the Western countries cannot. In India, many initiatives are green field operations which enable them to start with the latest technology since many delivery models such as SaaS and IaaS are evolving. Indian companies can probably make quantum leaps in the way they deliver services to their customers because they are quick in adopting the latest technologies. The Indian market was traditionally focused on “tower-based engagements and SI engagements”. Today, we have the opportunity of taking up a cloud service or creating a transformation model, which will enable “Anything As A Service”. By creating innovative delivery models, it would enable them to pay based on transactions or business processes. That is the advantage the Indian market has today and if customers can leverage it, they will experience its benefits. What are the major verticals in this space? What are the reasons for these verticals to opt for ITIS (endto-end) rather than stand-alone solutions? The verticals where we see maximum traction for IT IS in India are BFS, Telecom and Government, followed by Retail. The BFS sector finds it important to adopt infrastructure management services to serve their customers on an integrated platform and provide different solutions within their portfolio. It helps them to increase operational efficiency and streamline processes. At the same time, they can also provide new solutions to their customers because their go-to-market strategy is enhanced as a result of their unified platform. The telecom sector on the other hand, witnessed a very rapid growth and it was not able to implement proper processes and disciplines. Today, they have to not only reduce their IT infrastructure footprint but also improve their delivery and services. This can be achieved by having a single point of ownership for end-to-end infrastructure management, SLA-based accountability, and a standard operating environment in the IT infrastructure space. Outdated IT infrastructure is making it difficult to exploit new technologies such as cloud computing and virtualization. How can enterprises overcome these challenges? Outdated IT infrastructure definitely hinders the adoption of new technology. However, an important aspect of cloud computing is that it forces standardization. The primary reason for cloud computing to become a viable and alternative delivery model is virtualization. It gives a certain amount of flexibility to customers as they can use CPU or storage, based on the usage. Another reason is that it is an opex-based model

and customers need to pay only for what they have consumed. These aspects make cloud computing attractive and enterprises believe that this platform will give them agility and adaptability. But applications that have a constant utilization during their lifecycle cannot benefit from cloud computing. This technology can be useful only for those applications that have peaks and valleys of consumption. Organizations have to decide where to exploit this technology and where not to. That is what is our advise to our customers. How can enterprises identify the right pricing models for different types of infrastructure services? Pricing models, especially in infrastructure outsourcing contracts, are crucial in making outsourcing progressive, agile, and flexible. In large infrastructure deals, the pricing was based on the number of CPUs, servers and the terabytes of storage consumed. The pricing model in the infrastructure space is more mature than the end-to-end outsourcing or process or application-based pricing. With cloud computing, cloud providers are likely to have a variety of pricing plans based on a number of variables typically driven by how the services are consumed. Cloud providers also will have to track in detail the actual consumption by customers, which historically was not a concern for traditional hardware and software vendors. This becomes increasingly complex, when there are back-toback contracts with product vendors, hosting providers and warranty support bundled into one transaction price. How do you differentiate between innovation and continuous improvement for providing business value, as opposed to providing technical value? The fundamental premise for continuous improvement is based on the fact that there are inefficiencies in the existing model and they can be improved. Based on our experience, we focus our efforts on removing the operational inefficiencies, which are an inherent part of all organizations. Given that we have a mature model of solving these problems, we provide continuous improvement. Continuous improvement is a part of our contractual commitments to our customers. In the case of innovation, we encourage quantum jumps in what customers can achieve with their IT budget. It can be TCO reduction or solutions that decrease go-to market timelines. Most innovative efforts are focused on making technology operations more efficient and effective and are transformational in nature. With innovation, we take a proactive approach and reach out to the customer with new delivery models, which may not have been used elsewhere. Transformers is brought to you by IDG Custom Solutions Group in association with


casefiles

Genpact

In recessionary times, customers are dearer. Genpact knew that and to provide more value to its customers, it did something unusual: It cut IT costs.

Sanjeev Prasad, Global CIO, Genpact, cut IT costs by Rs 50 crore and passed on the benefits to customers.

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*

By Sneha Jha

The Organization: It isn’t surprising that Genpact is India’s largest BPO service provider. A look at its operations—spread across 17 countries—and a workforce that’s over 54,000 strong is enough. It boasts of over 600 clients including, Nissan, AstraZeneca, eBay, Hyatt, GE, Hertz, KimberlyClark among others. The Rs 8,320 crore organization was on a roll. But when the waves of recession touched global shores in 2010, cutting costs assumed greater significance.

Business Case: It was around this time that Sanjeev Prasad took charge as Global CIO of Genpact. “As the market situation unfolded, I realized that to ride the downturn, we would need to find ways to deliver our services more efficiently and pass on more value to our customers,” says Prasad. Cutting IT costs was one way to get there. The company wanted to reduce IT costs by $10 million about (Rs 50 crore) annually, and pass some of these benefits to its customers. The Project: That isn’t a negligible amount. It would take all that Prasad had to reach that target. It meant revamping the company’s entire IT infrastructure in six months—a deadline he set for himself. He challenged his team to consolidate, virtualize, rationalize and optimize the company’s IT infrastructure. This strategy would impact servers, databases, storage, network, desktops, bandwidth, and telecom. Prasad and his team consolidated 40 internally developed applications and virtualized over 1,500 desktops. Among other operations that were optimized, Prasad used logical partitioning to reduce the number of telecom PBX systems. This brought the number down to six. The company also introduced telecom resellers—who provided

better rates than principal carriers—to reduce costs without impacting the quality of service. By December 2010—exactly six months after it was launched—the project had reached its conclusion. A remarkable feat considering Genpact’s global footprint and the scope of the project. The Benefits: Prasad’s efforts raked in a bunch of benefits for Genpact. VDI improved the company’s seat utilization by 5 percent, directly contributing to the effective use of assets. Consolidation reduced application footprint by 10 percent, trimming support costs. The entire cost optimization exercise freed up over 130 servers, 70 databases, 15MB of international MPLS and 150MB of domestic MPLS bandwidth, 10TB of storage space and 40 PRI lines (Primary Rate Interface). It also brought in more customers. The number of clients increased from 108 in 2010 to 177 in 2011. “In 2011, we have been able to clinch more deals with our customers. It has been a remarkable year from the customer service point of view,” says Prasad. CIO

Sneha Jha is senior correspondent. Send feedback to sneha_jha@cio.in

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Forging

the Vendor Colle ColleC Cti tiV Ve Shell and other big businesses use their clout to get normally hyper-competitive vendors to work together on IT projects and reveal their R&D plans and other benefits.

g

By Kim S. Nash

etting the best ffrom your IT suppliers takes more than

sharp contract negotiations. Top-tier CIOs are forming vendor collectives wherein rivals such as Oracle and SAP, Cisco and AT&T, Hewlett-Packard and IBM tamp down their competitive instincts to work together on business problems both fundamental and futuristic. Traditional methods of managing IT suppliers—mainly playing rival vendors off each other and negotiating ever-tighter contract terms—stymie creativity and ultimately limit the business benefits both sides get from the relationship, says Alan Matula, CIO of Royal Dutch Shell. Also, select IT providers, including Cisco, HP, IBM and In a bid to uncover game-changing IT, Matula and Xerox, have come to know P&G processes so well that other CIOs are getting vendors to abide by new rules for they’ve helped cut in half the time it takes the $82.6 billion their behavior when delivering technology, collaborating consumer-products giant to acquire and divest companies, on business problems and, as the collective gels, opening he says. up research and development work. Robert Webb, CIO of Hilton Worldwide, Filippo Passerini, group president of Reader ROI: a privately held global hotel chain, says that global business services and CIO of Procter The future of vendor he expects his five major vendors to work & Gamble, credits the close collection of his management with each other and with Hilton’s internal vendors with helping save the company The multiple benefits of IT to imagine new technology or methods $900 million (about Rs 4,500 crore) in vendor collectives “well beyond contractual terms with operations costs in the past several years Why it’s important to those providers.” while increasing service levels to employees. change mindsets Vol/7 | ISSUE/05

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Of course, when your company is a household name and you Getting Started wield an IT budget in the billions, suppliers listen. But the vendor In 2008, Matula created an ecosystem of 11 IT suppliers, including management techniques underneath these high-powered collectives AT&T, Cisco, Microsoft, Oracle and SAP. They are a raucous and are beginning to spread. powerful group culled from the hundreds of vendors Shell used “CIOs will increasingly have to rely on ecosystems to do the to use. work they need done,” says Chris Andrews, an analyst at Forrester “We wanted the best in the industry and we wanted access to Research. “This is a big shift,” he says. scale and reach. We also wanted new ideas,” he says. The idea for Ralph Szygenda, who, as General Motors’ first CIO from 1996 the collective came out of his frustration with vendor research and to 2009, created one of the first development and Shell’s own need major IT vendor collectives, now for breakthrough technology. consults with vendors big and “Innovation [for] the small about how this kind of deep, enterprise has been sucked out of and sometimes uncomfortable, Silicon Valley,” he says. Vendors partnership leads to more are directing brainpower revenue for them. Why? Because, to consumer technology at he says, CIOs need the help. the expense of innovation Cloud computing, outsourcing for enterprise computing, and hosted applications make the he says. Shell doesn’t ignore Shell’s Ecosystem Guiding Principles mandate how its 11 CIO’s job far more complicated consumerization; it uses internal core vendors should treat Shell and each other. To mitigate than it was 10 years ago, Szygenda social networks and personalized competition between suppliers—on Shell territory, at least—CIO says. If IT vendors work with, employee news feeds, for Alan Matula has banned most salesmen from his offices and not against, each other to make example. But bigger issues loom. demands Shell and vendor staff respect the culture and heritage a common customer more “Consumer stuff has its value of each other’s companies. profitable, the money flows to and CIOs have to accommodate Other rules of engagement include: everyone, he says. “Customer consumer innovation,” he says. Senior executives must set a positive example for everyone else, companies become amazingly “But bringing iPads into the in part by actively advocating for the ecosystem relationships. more efficient, the CIO has enterprise is not going to move helped the CEO grow, and the IT my needle.” Staff must work to solve problems at the lowest level possible, vendor sells a bunch more to that In the 1990s, Shell worked using escalation as a last resort. company because if it’s good, the with IBM to design chips for CIO wants more of it.” high-performance computing, Vendors must understand that although Shell wants to For CIOs, the payoff is in both the Matula says. Since then, though, concentrate IT spending on ecosystem members, there are no smoother delivery of technology CIOs have generally rewarded guarantees of contract awards. and services and the potential to commoditization of IT, forcing Information gained through the ecosystem should not be used discover new technology—or ways vendors to compete primarily on to win additional business at the expense of another member. to use it—before competitors do. product price. “We rode that curve But cultivating these relationships really hard for a number of years, Vendors should respect the intellectual property of other takes dedication and big chunks but we lost that intimacy between members and consider it confidential by default. of time from the CIO. Special staff their R&D and our R&D,” he says. positions and different hiring One reason Matula wanted to All participants must do 360-degree reviews of each other priorities are also required. award the majority of his budget and Shell. So is insight into the strategic to fewer vendors was to be able Managing vendors by building relationships, rather than pushing direction of your company; you to influence not only product and pulling on contract terms, gets Matula early access to want to recognize a competitive features, but also the direction strategic technology, he says, and promotes collaboration among leg up when you see one in an IT of their R&D, he says. “If I could IT suppliers on Shell’s behalf. But to build the trust and discipline supplier’s existing products or get even 5 percent of the R&D needed takes time, he admits. The first time he met with all 11 early ruminations about plans for budgets of [my vendors] targeted vendors, no one wanted to interact. “Silence,” he says. But clear the future. for differentiating possibilities and enforced standards for behavior, over the course of 12 to 18 “It takes an enormous amount across my businesses, I’d months, helped the vendors get comfortable working this way. of energy and a lot of lead time,” be ecstatic.” “There are lots of people who want to mimic what we do but Matula says. “I consider this a Shell sorts its 11 suppliers into haven’t gone through the journey.” competitive advantage.” three categories—foundation

RULES OF ENGAGEMENT How Shell gets 11 vendors to play nicely together

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technology, infrastructure, and applications—and stipulates that they cannot poach business from a fellow ecosystem member. Fellow foundation vendors Oracle and SAP, for example, cannot go after ERP or financials business that the other company already supplies to Shell. In a given year, Shell awards ecosystem suppliers between $1.8 billion and $2 billion, or about half of its annual IT budget of approximately $3.6 billion. Spending so much with so few vendors buys Shell access to those vendors’ best talent and lets it influence their product features and larger research efforts, says Boris Van Der Weele, supplier manager of Shell’s consulting providers, such as Accenture, Deloitte and McKinsey. All 11 ecosystem vendors meet with Shell every quarter, in person and via telepresence and Web conferencing, to update Shell’s IT governance committee on significant projects. Every month, Matula holds his “one-pager,” a meeting where his supplier managers update him on any problems and on what’s going on with each ecosystem supplier’s work, in a summary kept to one printed page. Once a year, one of the vendors hosts fellow ecosystem members to discuss their work at Shell. Microsoft hosted in 2009 and SAP hosted in 2010. One initiative that came out of these annual brainstorms was a project between HP and Microsoft to devise ways to better configure SharePoint, Microsoft’s collaboration software, for HP machines, Matula says. Hilton has an Innovation Collaborative of five vendors. It started with traditional outsourcing agreements, mostly five-year deals. As the suppliers proved themselves during the past two years, though, Webb has come to trust them more and involves them in work strategic to Hilton’s future. Ongoing projects involve both the tactical, such as revamping Hilton.com to improve mobile access, and more far-reaching work in customer and revenue analytics, Webb says. Early on, though, a migration of Hilton’s datacenter to IBM’s hit snags that delayed the project. Webb’s team wanted more testing of the servers and applications before pressing ahead—a situation that Webb says IBM failed to plan for. Hilton extracted financial penalties stipulated in its contract with IBM, but it also learned to communicate better about its own risk tolerance, Webb says. “Good partners hold each other accountable for promises made and kept.” Passerini doesn’t want P&G’s IT staff to do too much mothering of suppliers, preferring to discuss business issues the company faces and what his expectations are for how the vendors will conduct themselves. The vendors have to take it from there. “If we become too involved with instructing our partners on how to do their jobs, we lose the benefit of working with best-in-class technology partners,” he says. “Our job is to make sure they are connected to the business, understand the challenges and have clear direction on what is needed.” P&G’s annual Goldmine event gathers the CEOs and others from its key vendors to refine the process of working together and discuss core P&G issues. Fifteen CEOs attended last year’s event, including those from Accenture, Cisco, HP, ­InfoSys, SAP and Xerox, Passerini says. “We expect these partners to cooperate, one with the other, to deliver solutions that will improve P&G’s business. They are willing

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“We decided to hire the enemy, and that has provided an enormous advantage,” says Alan Matula, CIO of Royal Dutch Shell.

to do so because they know that there is value in it for them and we help them grow.” Indeed, vendors also have to get something out of a collective or they wouldn’t cooperate. Often CIOs will agree to be a reference for a given product or service and to participate in white papers and media interviews. But there are more valuable benefits to trade. In 2009, P&G didn’t buy Cisco’s latest telepresence technology for just a handful of sites; it promised to go big. P&G deployed telepresence in 43 locations around the world immediately; it’s now in over 80. The implementation saves P&G $4 in travel costs for every $1 it spends on telepresence, Passerini says, but also promotes innovation among product developers across the globe. Cisco, meanwhile, gained a respected customer reference, valuable field testing for a large rollout, and feedback that it incorporated into product upgrades. In a similar vein, Hilton is a test bed for new analytics technology from IBM—a marquee implementation that informs product design in a technology segment that IBM has declared a strategic priority. REAL CIO WORLD | m a r c h 1 5 , 2 0 1 2

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Find the intersection of what your company wants to accomplish and where your vendor wants to go, advises Craig Jones, Shell’s senior supplier manager handling HP and Microsoft. “Aligned interests lead to a project you both agree is important,” he says. “You both are responsible for the success or failure.”

Hire the Enemy Making a collective work isn’t simply a matter of issuing new edicts and seeing traditional competitive behaviors among vendors vanish. IT organizations first have to change their own attitudes and, perhaps, job descriptions. “There are people who will say you shouldn’t be too cozy with suppliers. Suppliers will take advantage of you,” Van Der Weele acknowledges. But without an atmosphere of trust and civility, bigger things aren’t possible, he says. “The Shell ecosystem aspiration is to be a system based on equality and trust and having a positive, respectful interaction,” he says. “That isn’t always easy because originally we were old-school and hard-nosed in procurement. I’m not saying we’ve cracked the code, but our ecosystem is striving for it.” Szygenda’s consulting work focuses on the gap between vendor sales and IT practitioners. Most sales agents haven’t managed IT groups and most CIOs have not sold products, he says. Helping each side figure out what motivates the other can lead to the discovery of areas for common benefit. Matula agrees. To close the knowledge gap, Shell created the position of supplier manager and filled the jobs with technical sales and account managers from IT vendors. Van Der Weele was a global business manager at Microsoft. Jones was a global account manager at BMC Software and a director of strategic planning at Logica. He also did political fundraising for 10 years. Gregg Parsley, who manages the Shell IT sourcing strategy, spent 16 years at IBM and five at BMC. “We decided to hire the enemy, and that has provided an enormous advantage,” Matula says. People with that background bring insider knowledge about the sales process, quota pressures and how vendors segment and view deals, says Webb at Hilton. He, too, has hired vendor employees for such insight. Then he sends his IT staffers and vendor representatives to training in topics such as communications, personal style and change management. “We know there are tensions. Many of them are caused by people thinking that it’s just about beating up the supplier or nickel-and-diming the customer,” he says. “It takes time to develop and absorb a common process for how we will work.” Training in clear communication, on top of creating a process for interacting, leads to smoother projects, says Shell’s Jones. Shell has asked HP and Microsoft to work together to improve the end user experience for Shell employees, combining HP’s end user compute services, client hardware and Microsoft software. Every quarter, staff from the two vendors and their counterparts on Jones’s team jointly update the oil company’s IT governance group on what they’re working on. With all parties in the room, everyone hears the same story, he says. “In my career, I’ve seen 78

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Robert Webb, CIO of Hilton Worldwide, works with vendors in areas of mutual interest, giving Hilton the chance to influence product direction.

plenty of examples where it’s not like that and the story takes twists and turns.” Shell also expects vendors to minimize their sales presence and interact just technologist to technologist. Matula notes that one by-product of the up to 10-year contracts Shell has signed with foundation vendors Cisco, Microsoft, Oracle and SAP is that those vendors know they don’t have to compete again every year or two to continue working with Shell. “We do long-term deals because we don’t want salespeople [here],” he says. Instead, Matula asks vendors to send technical architects and other experts. For example, on a project with HP to develop seismic sensors for finding oil, Shell works with a team of scientists led by an HP Fellow who is also an “enterprise services futurist” specializing in how IT shapes business, society and culture.

A Window Into the Vendor’s R&D The past five years have been tumultuous for Shell as a global recession and wars in the Middle East have caused its revenues to yo-yo from $319 billion (about Rs 15,95,000 crore) in 2006 up to

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$458 billion (about Rs 22,90,000 crore) in 2008, down to $285 billion (about Rs 14,25,000 crore) in 2009 and up to $368 billion (about Rs 18,40,000 crore) last year. Net profit margins are about two-thirds of what they were in 2006. Shell is by no means floundering; it’s the second-biggest oil company in the world, behind Exxon. But to reach Shell’s goal of becoming “the most competitive and innovative energy company in the world,” as CEO Peter Voser puts it, it must not only be more efficient but also more imaginative. CIO Matula contemplates big questions vital to Shell’s future. In scenario planning out to 2050, for example, the company forecasts a decrease in the use of oil worldwide, replaced in part by natural gas. The trick is getting that gas. Frequently, rock beds that are considered too difficult to mine for coal hold natural gas, but the fuel industry hasn’t perfected the processes of assessing its quality and extracting it. The more educated an oil company can be going into exploration, the more effective— that is, lucrative—new ventures will likely turn out. Through the vendor ecosystem, Matula’s staff learned of sensor technology that HP Labs had been developing that are 1,000 times more sensitive than those on the market today. Shell’s IT group, like many, understands the large business issues their company faces. But unlike other IT groups, Shell’s has a window into vendor R&D work. The ecosystem engendered extra collaboration with HP, called the Voyager project. “We only found it because we described a problem,” he says, a giveand-take allowed by Shell’s close ties to its trusted IT vendors. Early field tests have shown promising results, a Shell spokeswoman says. What Shell wants to do is foreign to some vendors. Microsoft, for example, was at first reluctant to open its R&D doors, Parsley says. He says Shell persisted with its R&D requests and eventually Microsoft agreed to share information about its research. Microsoft now runs a program to connect major customers to its R&D group that Parsley considers “quite promising.” Microsoft, Cisco and AT&T engineers are working together to improve the compatibility of their unified communications products for Shell, Jones says. So far, the three vendors have developed technology to integrate video from Microsoft’s Office Communicator with Cisco’s telepresence system, underpinned by AT&T’s network, he says. At Hilton, Webb sets aside funds for exploratory work in areas of mutual interest, such as analytics with IBM and location-based services with AT&T. Influencing product direction can be a big advantage, Passerini adds. P&G last year worked with Xerox on mobile printing software for the iPad, iPhone and iPod Touch. Xerox will sell the software to other customers, but P&G got it first and got it built the way it wanted.

The ownership of the intellectual property that results from such collaborations varies. Shell usually lets the vendor have the intellectual property as an enticement to collaborate, Matula says. It will sometimes retain rights to how software is configured, but not to the application itself. Sometimes Shell will keep the rights to software extensions that it considers a competitive advantage, such as one developed for Microsoft SharePoint that analyzes patterns in oil and gas well data to predict failures. Shell recently posed what it calls a Grand Challenge, a simple question with big implications. How can Shell improve its application development? In the past, Van Der Weele, who is supplier manager of the key vendors working on this issue, might have asked each vendor to do its own analysis, then had his staff compare the four reports and draw conclusions. Instead, he asked the four to collaborate and write one report recommending improvements. Since each vendor

If IT vendors work with, not against, each other to make a common customer more profitable, the money flows to everyone.

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had worked in different areas of Shell, together they covered more ground than any would have alone, he says. “Even if you get the best subject-matter expert from McKinsey or Gartner, he can have great ideas but not [know] how to do it at Shell,” he says. “This was best-in-class consulting from people who really know Shell inside-out.”

The Wave of the Future Although forming a vendor ecosystem may seem like something only elite, big-spending CIOs can do, it’s how vendor management will evolve in the next several years, says Andrews from Forrester. Business shifts will demand it. As companies embed technology into products and services, IT needs help keeping up, he says. Then, to get any competitive advantage from technology-laden products, CIOs will want access to vendor R&D. “If vendor management means only cutting costs, it won’t happen,” he says. Still, a change in approach has to be wholehearted and not just used as a tactic, Matula says. Collaboration—vendors with the IT group and vendors with each other—requires ongoing meetings where business goals are shared by all parties and everyday behavior reflects those changes, he says. (See Rules of Engagement.) “The industry doesn’t naturally collaborate,” Matula says. “But for us, it happens more because we’ve built a social fabric.” CIO Kim S. Nash is senior editor. Send feedback on this featured to editor@cio.in

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EVENT REPORT

Three Ways to Tackle Cost Management Pressures

CIO, in association with Telstra International spoke to several CIOs to understand how cost pressures impact IT, and how to deal with it. They

discussed the merits and demerits of a completely opex model, and other creative ways to minimize costs while maximizing value creation.

t the beginning of every year, analysts, CIOs, and other C-level executives debate the threats and opportunities of the coming year. They try to uncover technologies that will help their organizations rise above the state of today’s economy. CIO magazine’s State of the CIO 2011, survey found that CXOs recognized IT’s role in creating competitive advantage and enable business innovation. However, the effectiveness was challenged by cost management and reduction pressures.


CUSTOM SOLUTIONS GROUP TELSTRA

CIO, in association with Telstra International spoke to several CIOs from leading Indian companies to understand how these cost pressures impact IT, and how CIOs are dealing with it. Among the key takeaways was that there was a distinct shift to outsourcing and cloud as a means of increasing agility and business responsiveness. The CIOs also discussed the merits and demerits of moving completely to an opex model, and other creative ways to minimize costs while maximizing value creation.

The time is ripe to exploit existing IT solutions to provide more easy, flexible and interoperable solutions. A scalable, agile infrastructure which is on a pay-per-use model would help organizations achieve this.” RICHARD DUGGAN,

Head of South Asia,Telstra International

Renegotiating Contracts In a normal business environment, contracts get renewed on a pre-determined schedule, however, there’s nothing usual about today’s high-pressure business world. Businesses have started to question contracts like never before, in the face of tough economic conditions. According to Sudhir Pal Arya, VP - Corporate IT, Amtek Group, flexibility is difficult to achieve in an outsourcing engagement unless the organization and the service provider work together to make it happen. That’s why Arya decided to scrap the annual maintenance contract on non-core areas. “Renegotiation can greatly cut down costs, provided that contract parameters are chosen correctly. Our vendors were supportive of

to stretch the budget is to shift capital expenses to operating expenses. “In fact, the first requirement for a vendor is to provide the service as an opexmodel rather than involving an upfront investment”, he says. Apart from this, Vaidyanathan also ensures that process improvements driven by IT are a regular feature at the manufacturing company. While shifting to an opex-model has its benefits--low upfront investments, payper-use model, and a lack of obsolete IT infrastructure--there are still a few takers for the capex model. Atul Luthra, group CIO, ABC CONSULTANTS says that the

Cloud computing is well positioned to assist forwardthinking businesses to adopt a more strategic, business-focused approach while at the same time reducing costs and improving efficiencies.” PHIL MOTTRAM,

Executive Director, Global Sales, Telstra International this decision,” says S. C. Mittal, senior ED (MS&IT) & Group CTO, IFFCO, “A slowdown in the economy puts the limelight on CIOs to cut costs. The ability to renegotiate vendor contracts effectively is a crucial skill for IT organizations.” Every CIO should look at licensing expenses as an avenue to reduce costs, he adds.

Capex Vs Opex According to Muthukumar Vaidyanathan, VP - Technology Information, Moser Baer India, one of the most effective ways

recession didn’t put technological advances on hold. Mobility, virtualization and cloud computing have evolved during this time period, with the promise of increasing productivity, agility, and cost savings. “Even in these times of rapid technological change, we would make purchasing decisions based on capex alone, provided it is given at the right price,” says Luthra.

Benefits of the Cloud According to Richard Duggan, head of South Asia, Telstra International,

the time is ripe to exploit existing ITsolutions to provide more easy, flexible and interoperable solutions. “This would help in enhancing standardization and integration in distributed networks while allowing individual participants to maintain their independence and competitiveness by focusing on customer needs,” he adds. In a world where ICT innovation often outpaces the technology refresh cycle, it’s increasingly difficult to manage, maintain and upgrade technology. To face these challenges organizations have to become more flexible, adaptable, and integrate with partners. According to CR Narayanan, CIO, Tulip Telecom, cloud computing in a hosted environment or otherwise helps businesses to concentrate on their core professional skills and core capabilities. “They gain from synergy and reduce costs due to benefits of scale. Enterprises can also fill gaps of missing resources faster by collaborating with a business partner,” he says. According to Phil Mottram, executive director, Global Sales, Telstra International, cloud computing is well positioned to assist forward-thinking businesses to adopt a more strategic, business-focused approach while at the same time reducing costs and improving efficiencies. “These are the companies which would have the first-mover advantage,” he says.

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


money Talks In the fourth edition of Money Matters BFSI CIOs discussed startegic and tactical ways to cushion their businesses from recessionary pressures. Here’s what transpired.

"We want to leverage IT in new avenues to access customers, give them good service, and still keep costs under check.” Sandeep phanaSgaonkar, preSident & Cto, relianCe Capital

"We had 57 disparate legal entities. We decided to create cohesion, demise legacy systems and unify platforms." deveSh Mathur, Coo,hSBC 82

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History is repeating itself too soon. It was just a little over three years ago that the world witnessed the worst slowdown since the Great Depression of 1929. And we thought the worst was over. But today, the global economy is already in the midst of another crisis. India seems to be hitting the slowdown roadblock sooner and harder than expected. Export growth will be weak and corporate spending will witness steep cuts. Also, the strengthening of the dollar will have an impact on the overall imports in India. And like it did in 2008, the BFSI sector in India is feeling the heat—again. Today, the sector is battling hard to cushion its business from the recessionary pressures. VO l/7 | ISSUE/05

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Event Report I Money Matters To help CIOs shield their organizations, CIO conducted an event—Money Matters—focused primarily on the BFSI sector. Here are the highlights.

Tech Reactions to a slowdown There’s no doubt that IT will have to play a more instrumental role in helping the business tide over the recessionary wave. It was this thought that reverberated during the event. During a session titled Tech Trends and the BFSI Response Sandeep Phanasgaonkar, president and CTO, Reliance Capital, demonstrated how IT goes through gut-wrenching changes in a slowdown. He showed how during the 2008-09 recession Reliance Capital was forced to go back to the drawing board and take a sharp look at its systems and processes. “In the last recession, I was asked to cut opex costs by 40 percent,” he said. He said he emerged wiser from the experience. Such pressing business imperatives spurred a wave of innovation that have been institutionalized over time. Customer centricity became the driving force for business at Reliance Capital. “We have also identified the need to access the customer through multiple channels using IT. We want to leverage IT in new avenues to access customers, give them good service, and still keep costs under check,” he said. To that end, the organization is focusing on projects around BI, CRM and online channels. He urged other CIOs to look for new opportunities for innovation during testing times. He added that even incremental innovation can be a key competitive tool. He also suggested that CIOs focus on collaboration during a slowdown. “We are using Google apps to boost collaboration between employees, senior management, distributors and customers,” he said. He also acknowledged the fact that a lot of new technologies, which show promise, have come on the horizon. Virtualization and cloud computing have now become mainstream technologies and can be leveraged by BFSI firms to build a sustainable IT infrastructure.

outsourcing strategy Dogged by harder-to-achieve profits and the need for increased efficiency, CIOs in India’s BFSI sector are turning to outsourcing. But what are the real benefits? And what should they watch out for? At a panel discussion on the sidelines of the event, Indian CIOs from the BSFI sector bounced some of these questions around. At HSBC, COO Devesh Mathur said they adopted an outsourcing strategy that made sense in the beginning, but it quickly tested their assumptions. “In our case, we needed to operate seamlessly as a global organization with 57 disparate legal entities under a single brand. So, we decided to create cohesion with a five-year-plan and aggressively demised legacy systems and unified platforms,” said Mathur. (HSBC has a captive outsourcing set up.) But the needs of a global organization strained against the bridle created by the strategy. “We realized that a one-size-fits-all model didn’t work as some genuine local needs started to emerge. At least 40 percent of the work done in India didn’t have any applicability outside the subcontinent,” said Mathur.

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HSBC then had to adopt a solution which had an aggressive localsourcing component, he said. “We are back in business…trying to do things locally." At Reliance Commercial Finance, the decision to outsource noncore processes was easy, says VP & CTO Shashi K. Ravulapaty. “We are a lending business and interest rates play a pivotal role in determining resource requirement. In the current economic climate, it wasn’t a tough decision to outsource internal IT. We had both human and technology resources on board earlier. Over time, it amounts to a fixed cost we couldn’t afford and hence the decision," he said . Another twist to the outsourcing story in BFSI is the impact of regulatory agencies on outsourcing. IRDA, for example, created rules around what could and could not be outsourced. According to Srinivasan Iyengar, COO, Aegon Religare, there has been a significant change in how sourcing and delivery of IT is handled today. But he says that thanks to IRDA’s regulatory measures, the industry has seen a lot of clarity. "Debates may continue but it still sets out a path towards the right direction,” he said.

"In terms of outsourcing regulations, IRDa has brought in a lot of clarity. It sets out a path towards the right direction." SrinivaSan iyengar, Coo, aegon religare

"In troubled times, a CIo's role is not about generating IT solutions. He needs to be a proactive business strategist." pravir vohra, preSident & group Cto, iCiCi Bank

“Banks deal with sensitive customer data. If they don't take reasonable security measures the law exposes them to legal damage." pavan duggal, advoCateSupreMe Court of india & preSident, CyBerlawS.net

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Event Report I Money Matters One example of what he means is building a common platform— created by service providers—that cuts across industry players and gives consumers a single, consolidated view of their portfolio. “This opens new avenues for IT service providers. We can then outsource operational activities and concentrate on real valueadds,” he said. That’s a sentiment that Anantharaman Sreenivasan, vice president, Financial Services, Global Technology Services, IBM, seconds. “Outsourcing is not new to India but the concept of good customer service is,” he said. “We must ensure that we continue to intensify the value of our services through innovation that helps keep our costs low. The current economic situation requires us to higher levels of cross-channel integration, real-time BI and flawless execution to stay competitive and relevant.”

Sameer PendSe, FRM AVP-BFSI PReSAleS, SolutIonS & AllIAnceS, eMeRgIng MARketS, MPhASIS; S. anantharaman, VP, FInAncIAl SeRVIceS, gSt, IBM

The new CIo avatar a Recessionary times call for change. Change in strategy, change in technology, and change that impacts how business is done. But to make real changes that can successfully help a business thrive during a downturn, CIOs must first get the ear of their managements. That calls for more than buddying up with them. And that means, this time around, CIOs should prepare themselves to move beyond their roles. During his hour-long interactive session, Pravir Vohra, president and group CTO, ICICI Bank, delved into what this entails. Vohra said that a CIO's role is no longer about merely generating effective IT solutions—he needs to be a proactive business strategist. “Sure, you have to keep the lights on but as a CIO, your agenda should align with your organization’s agenda,” he said. Vohra stressed that it’s time for CIOs to undertake new business focused responsibilities and effectively bridge the technologybusiness gap. If an IT leader has to deploy progressive IT solutions he should have a fundamental understanding of the culture, ethos the DNA of his organization, he added. This will help him devise solutions that are best suited for the company, he said. And that increases a CIO’s credibility. “We get thrilled about dealing with technology. But that alone cannot buy trust. Winning trust and credibility requires us to forge strong partnership with business,” Vohra said. According to Vohra, change management is going to be another important aspect of a CIO’s responsibility. Two things make change painful, Vohra said. One is the fear of the unknown and second is the anxiety associated with job security. That’s why it’s very hard to make change palatable. “We are animals of habit and instinct. People loathe uncertainty. Overcoming resistance to changes seems like an insurmountable challenge. ” he said. Vohra was of the opinion that CIOs must be able to consume, absorb, and digest change internally only then can they overcome resistance to change.

law of the land Slowdowns provide fodder for security breaches. Be it disgruntled employees, or just vulnerable networks, security is often compromised in hard times. 84

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And new technologies aren’t making things any easier. “Misuse of corporate networks and computer and communication devices can jeopardize your company,” warned Pavan Duggal, advocateSupreme Court of India and president, Cyberlaws.Net. Addressing an audience of Indian BFSI CIOs—the information watchdogs of perhaps the most sensitive financial data of a billion people—Duggal said that it’s high time that CIOs paid more attention to security. That entails understanding the Information Security Act. "Indian banks deal with some of the most sensitive personal data of their customers. If you do not take reasonable security measures the law exposes you to unlimited legal damage,” said Duggal. One of the ways that a CIO could ensure compliance to the IT act is through ISO 27000 certification. However, that alone won't suffice, he said. Also, according to the Act’s latest amendment, any company that provides IT connectivity to its employees is an intermediary and therefore liable to answer in criminal cases relating to digital data. “The moment you provide network connectivity to your employees you become a network service intermediary; the moment you become an intermediary a world of new vulnerabilities open up,” said Duggal. But the more worrisome fact was that the law now makes CEOs, CIOs and CTOs liable for running the affairs of the company declared an intermediary in a case filed under the IT Act. But all is not lost. Duggal said that as an intermediary, organizations have options to protect themselves. The most potent option was compliance to the IT Act of 2000 and willingness to remove or block access to any content labeled illegal. Duggal put the consequences in perspective. “If you don’t comply, you could be sued for damage up to Rs 5 crore per contravention; your top management—including you—could be fined Rs 1-10 lakhs. You could also be sentenced—from three years to life imprisonment.” The session concluded with Duggal saying that the law is now turning out to be a double-edged sword. But it’s upto CIOs to protect themselves and their organizations.

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Essential

technology

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The Mobile Web By Jennifer Lonoff Schiff

Mobile Apps | About two decades ago, there was no company in the world that didn’t want an online presence. The Internet soon became the most sought after platform to generate revenue and provide better customer service. In no time, companies that developed websites and followed their customers online— enabling users to download information, interact and transact—were winning more sales and lowering business costs. Today, every company has a team responsible for harnessing the power of the Web in a secure way. But today, the Web has given way to another platform that has a wider reach: The mobile. According to ComScore, more than 40 percent of your customers, your employees, and your partners are using their mobile devices to browse the web (and shop online) and download apps. And that percentage is expected to increase. However, a majority of businesses have failed to "mobilize," that is create a mobile version of their website, or a mobile app. Does that mean that every business or organization needs a mobile website? No. But if you currently have a B2C or B2B digital presence and/or the people you do business with are mobile, it's time you had a mobile strategy.

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image by photos.com

Mobile is what the Internet was two decades ago. And that means your customers, and partners expect you to be there too. Here’s what you need to know to create a strong mobile strategy.

A CLOSER LOOK AT Mobile Apps

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Need a Mobile Website? According to Ted Schadler, a vice president and principal analyst at Forrester Research who covers enterprise issues, you can determine if your organization needs a mobile website by asking these questions: Does the organization currently have a website that is regularly used by customers? Do the people you are trying to reach use smartphones or tablets on a regular basis? Can mobile provide opportunities that a traditional web presence can't or doesn't do as well? Would customers (or employees or partners) benefit from having information at the moment of decision? If you answered "yes" to two or more of these questions, you should probably (if not definitely) have a mobile presence (either a mobile website or a native app, or possibly both). Think of mobile as "a system of engagement," as a way to improve the way you engage with customers, and employees

should include viewing and testing out several mobile websites (or apps) the mobile solution provider developed—on a variety of smartphones and tablets. "How is the user experience?" says Mike Craig, the co-founder and VP of marketing at Ruxter. Does it have a good UI? Are pages quick to load? Is the site easy to navigate? In addition, Craig recommended reaching out to organizations with mobile websites and/or apps you like and asking how many people visit the site—or have downloaded the app—and what the analytics are. Equally if not more important, find out if the mobile solution provider can help you develop a mobile strategy, as opposed to just a mobile splash page or basic app, stated Dan Liliedahl, CTO at TandemSeven, a mobile solution provider and user experience expert. Do they have both the front-end (that is, design, user experience) and backend (integration) expertise to make mobile truly successful for your enterprise?

One of the biggest—if not the biggest— mistakes organizations make when developing a mobile website or app is making it a standalone project. and partners, explained Schadler. For example, let's say you run a real estate company, or are a developer. Prior to mobile, if a customer wanted information about a house, she'd have to call the real estate agency or look up the information on her computer. With mobile, however, you can provide prospective buyers with the information they need on their smartphones, when they are right in front of the house.

Picking a Provider When selecting a mobile solution provider, "you should go through the same vetting and RFP process as you would for any other type of software," says John Epperson, the CEO of Ruxter, a mobile marketing company. And part of the vetting process 86

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Developing a Mobile Strategy One of the biggest—if not the biggest— mistakes organizations make when developing a mobile website or app is making it a standalone project, Schadler says. That is, not integrating your mobile website or app—your mobile strategy— into your broader marketing, sales, and customer (or CRM) strategy. Instead of just thinking mobile, "think in terms of multi-channel," Liliedahl says, "where mobile is just one channel." That said, when developing a mobile website or app, "you need to understand your customers' goals—and what devices they are using," Schadler says. What looks good on a large monitor is not going to work on a smartphone. Similarly, don't assume

Better Get Going Now Today’s market leaders are now leveraging the capability of increasingly powerful mobile devices, whether through apps or the mobile Web. Consider referrals. They’re the most powerful form of marketing, because an existing customer is telling a potential customer to do business with your company. With sales of smartphones and tablets skyrocketing, the odds are greater than ever that a prospect referred to your site will be using a mobile device to access it. You should compare your Web development budget with your mobile development budget. It’s time to put the money where the business is. It’s time to redesign your website to conform to the needs of mobile customers to make sure they have a good experience. This is just the first step, however. You also need a budget for researching, developing and testing mobile applications. With more than half a million mobile apps, there’s a lot of capability you can use if you know about it, and if you also know how to test it, integrate it and make it secure. Not only will you need developers to make external apps function for your needs, you’ll most likely want to write your own apps that help customers enjoy doing business with you. It will also provide a competitive edge for your business. Today, thinking you won’t be developing mobile apps is as unrealistic as thinking you wouldn’t be developing a website was in 1995. It’s time to act. To the early, aggressive adopter go the spoils.

— Adam Hartung

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essential technology

Case in Point

that what looks good on an iPad is going to look the same on an Android device or a BlackBerry. So, when creating your mobile website or app, make sure it looks good and is easy to navigate across a variety of mobile platforms. Unlike traditional websites, with mobile it's all about streamlining information. So "figure out what are the five or six items that are the most vital to your customers," advises Craig, and get rid of all the extraneous stuff that could slow them down or distract them. Finally, make sure to test your mobile website or app before you release it publicly.

Time and Cost

Send feedback on this feature to editor@cio.in

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Mobile App Books Profits applications | InterContinental Hotels Group (IHG) is rolling out smartphone apps because internal data shows that customers who use mobile apps are more loyal. The $1.6 billion company, which owns the InterContinental Hotels and Resorts, Holiday Inn and four other hotel chains, has rolled out mobile apps for BlackBerry, Android, iPhone and Windows Phone. The strategy: IHG will build native mobile applications offering unique capabilities that aren’t suitable for its website, says Bill Keen, director of mobile solutions, Web and interactive marketing. Native applications are faster, he says, and can take advantage of special features in each operating system, such as location-aware capabilities. Plus, IHG’s internal data shows that customers who use mobile apps are more loyal than those who don’t.“We want to turn lookers into bookers and turn bookers into loyalists,” Keen says. By analyzing how customers book rooms—such as through a mobile device, on the Web, or using a call center or travel agent—IHG has identified patterns that now inform its strategy for mobile technology. For example, IHG found that although some customers may book through the website or call center, many others use a mobile device to navigate to the hotel once in the vicinity. Perhaps more startling, IHG noticed that its mobile customers are big on last-minute booking, with 65 percent of them reserving a room within one day of arriving. Figuring its mobile users often operate in real-time, IHG plans to build locationaware features into its mobile apps to generate maps, directions and real-time coupons for customers approaching a hotel property. The app might communicate a message tailored to the guest’s circumstances, Keen says.“You just landed, it’s late, you can check in from here. The restaurant stays open until midnight. Would you like a discount?”Another new feature is a button that allows users to place a one-click call to the hotel’s front desk. Such mobile amenities, he says, will yield repeat customers.“If we can get the app on the deck of their phone, we can deepen the relationship.”

Illust ratio n by p radeep gulur

Depending on the amount of work that needs to done, and what you already have in place, it will likely take three to nine months to develop a good mobile website or native app. Three months if your enterprise already has a good service-oriented architecture in place and the mobile website or app is not too complex—"we're talking a straight build out, HTML5 with a wrapped app," Liliedahl says; nine months if there's no real infrastructure in place—that is, you need to build a serviceoriented architecture. As for the cost, while there are sites out there that allow you to create free apps, expect to pay at least $20,000 (about Rs 10 lakh) to design and deploy a professional-looking, customized, native apps, say both Liliedahl and Craig. If you want to create a multiplatform mobile presence that looks good on the front end and provides a positive user experience and integrates with and leverages your back end systems, expect to pay upwards of $200,000 (about Rs 100 lakh). That may seem like a lot of money, but the number of mobile users are growing, and that ROI can make mobile well worth it. Also, you don't have to do everything at once. "Start with a small project," Epperson suggests. "Find out how people are consuming your data." Then build from there. CIO

— Kim Nash REAL CIO WORLD | m a r c h 1 5 , 2 0 1 2

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essential technology

Charity Begins on Mobiles Non-profit organizations test smartphones and credit cards and churches test pledging by phone as mobile payments take charities by storm. By Matt Hamblen

Mobile Innovation| The earthquake that devastated Haiti nearly two years ago was followed by a massive relief effort that was supported in part by millions of dollars in donations by people who used mobile phones to text $5 (about Rs 250) or $10 (about Rs 500) to disaster aid groups. Since the earthquake, mobile giving has moved beyond disaster aid. Now, people

using technology from mobile payment startup Square. Users in four cities can make gifts via credit card and smartphone as an alternative to dropping coins in a red kettle, says Salvation Army Major George Hood. Mobile giving has also gotten religiousâ&#x20AC;&#x201D; literally. Some churches in Los Angeles and parts of Arizona have recently tested systems that allow their members to use

image by ph otos.com

Charities are using new mobile capabilities,including social media apps,to not only raise money but also better engage supporters. make all kinds of charitable donations and pledges through wireless smartphones and tabletsâ&#x20AC;&#x201D;and the donations don't have to be done by text, according to industry officials The Salvation Army, a charitable organization in the US, is testing smartphones that accept a credit card swipe 88

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cellphones to make their Sunday-morning offerings virtually. "The minister will say, 'Normally I tell you to turn off your cell phone in church, but now you can turn it on' to pledge," says Douglas Plank, the CEO of MobileCause, which has sponsored several mobile tests with churches and temples.

"People forget to bring their checkbooks, so using the phone makes sense," says Plank. "The ministries that have tested it have seen a 10 percent to 15 percent bump in giving when they do it." Plank expects mobile pledging to "really take off" once the software is perfected and becomes widely available. The mobile giving concept makes sense because smartphone adoption is exploding and smartphones and tablets can be used to make gifts via text message or over the mobile Web and through mobile applications, including social networking apps. Also, new tools make it possible to make generous donations via an SMS message or a smartphone app linked to a credit card or other account, says Plank. MobileCause, which has worked with 1,000 charities to set up mobile giving programs, hopes to take advantage of emerging technologies such as NFC to quicken the pace of mobile payments, says Plank. "All that NFC stuff is really fabulous for non-profits, as a useful tool to reach their constituents," says Plank. "But we don't want to replace traditional communications tools, so this is addictive." How "addictive" the mobile giving technology tools become is the big questionâ&#x20AC;&#x201D;one that the Salvation Army and others will monitor closely. Last year, the Salvation Army set up traditional credit card terminals near its well-known red kettles, but those terminals generated only $60,000 (Rs 30 lakh), says Hood. That's a drop in the bucket compared to the annual red kettle take of $142 million (Rs 710 crore) nationwide and the annual $2 billon ( about Rs 10,000 crore) the Army gets through all contributions, including online gifts from desktop computers.

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essential technology

The credit card terminals were cumbersome, says Hood, and it was especially difficult to use them in cold, inclement winter weather. They "were not very popular," he says, "and the average gift was extremely small compared to online giving." Square's technology is being used by Salvation Army bell ringers in 10 locations each in Dallas, San Francisco, Chicago and New York. It's expected to be a "quicker and easier and less cumbersome" alternative to credit card terminals, says Hood. Square provides a postage-stamp-size magnetic strip credit card reader that plugs into the headset port on Android smartphones. Sprint donated phones for use in the trial, and those phones are each

away from texting toward use of mobile Web media. The poll, conducted by the Association of Fundraising Professionals and Kaptivate, a technology consultancy for non-profits, also found that charities are using new mobile capabilities, including social networking apps, to not only raise money but also better engage supporters. The survey noted that there had been "considerable disillusionment with mobile fundraising" in late 2010 and early 2011 based on verbatim comments the researchers received. But it also found that 70 percent of respondents had a growing interest in mobile media and activities. The kinds of non-profits with the greatest interest in mobile included

In addition to receiving the donation, the SalvationArmy can also collect contact information from the donor for use in future fundraising campaigns. equipped with an app from Square and one from the Salvation Army. Users swipe a credit card, then sign on the smartphone's touchscreen and finally decide how they want the receipt—either through text or e-mail. In addition to receiving the donation, the Salvation Army can also collect contact information from the donor for use in future fundraising campaigns, says Hood."People see it and say 'Wow, that's interesting!' and want to try it," says Hood. Part of the goal behind the effort was to connect an established charity—the Salvation Army has been around since 1865—to younger people who use smartphones and mobile devices. "We try to get into the heads of emerging generations and want to build relationships with a younger audience," says Hood. "We have to keep pace with them." A June 2011 poll of 233 non-profit organizations found that mobile adoption continues to grow and that there is a shift

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arts and religious groups as well as those in healthcare and education. Two years after the text-giving successes that emerged from the Haiti earthquake, Plank says he has noticed a shift in how charities regard mobile devices as a way to seek pledges and connect with their supporters. His company has observed that religious groups, especially, are making efforts to go beyond fundraising via text to other mobile technologies that support ongoing pledges—and larger contributions. Non-profits have moved beyond being the cutting edge early adopters with mobile, he says. "They are becoming leading edge, and there's a higher [mobile] adoption rate in churches where the young people are the early adopters." As Plank sees it, "Mobile giving is growing up." CIO

Send feedback on this feature to editor@cio.in

Fast Mobiles, More Sales Crutchfield, an electronics and auto stereo retailer, has found that the easier a smartphone payment technology is for buyers to use, the greater the number of sales. Crutchfield implemented a two-click mobile payment system from online payment provider PayPal. The system, called Mobile Express Checkout, eliminates the time and effort needed to input a shipping address and the payment source for a purchase, which are already securely stored with PayPal. Crutchfield has seen a 34 percent increase in converting shoppers to buyers on its mobile website since implementing Mobile Express, says Todd Cabell, senior manager of e-commerce at Crutchfield. Because PayPal has more than 95 million users globally, that large customer base has helped Crutchfield. A full 65 percent of those using the PayPal Mobile Express Checkout were new customers to Crutchfield, Cabell said. Crutchfield still offers mobile checkout via a conventional credit card and sells its products online from desktop computers as well as over the phone from two Virginia-based call centers and through catalogs. The electronics retailer has thousands of items for sale, including many of them costing hundreds of dollars. Customers commonly use online and mobile payments for their purchases, and the size of mobile orders is similar to desktop computer orders, Cabell said. Stephen Strauss, senior manager of PayPal Mobile Solutions, said it took about two weeks to integrate MobileExpress at Crutchfield. Hundreds of companies use the tool globally, including some large retailers in the US such as Sears, Buy.com and 1800 Flowers.

— Matt Hamblen REAL CIO WORLD | m a r c h 1 5 , 2 0 1 2

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bookclub club whAt we’Re ReAdINg

by Vijay RamachandRan

* The LiTTLe BLack Book of innovaTion

Innovation Master Class An action-oriented book on how to get the gears of innovation turning at your organization and go beyond status quo. IN SUMMARY: Innovation is a much abused word. And, when the going gets tough out comes the mantra—innovate. As far as I can tell, adversity breeds the best form of innovation. Take World War II, for instance. In a situation that can only be described as dire, the Allies and Axis powers pulled off many technological miracles. Both sides were short on everything—money for sure, but low timelines were typical. Yet, in six years of conflict, the crucible of war spewed out radar, sonar, microwaves, synthetic rubber, antibiotics, jet engines, computers, alternative fuels, and I’m not even bringing up weaponry. And, it was in the depths of the postwar recession that AT&T’s Bell Labs cooked up not only the transistor but also the cellular network for mobile phones. It seems that a can-do attitude, a shared goal and being first to market were among the ingredients that helped to get the innovation magic going. So why should these mantras not always work for organizations? Simply put, innovation within businesses is fraught with difficulty. It’s hard for organizations to think out of the clichéd box. And, true, game-changing innovation brings with it the risk of catastrophic failure. How many companies are willing to take that risk? Scott D. Anthony tries to unravel these issues among others in his book The Little Black Book of Innovation. Basing

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it on personal experience, Anthony shares what he’s learned about what innovation is and isn’t and how the skill of innovative thinking can be mastered. And he does this by keeping the tone of the book chatty yet authoritative. Beginning with setting the foundation for an innovation journey, he quickly differentiates between creativity and innovation by pointing to two geniuses da Vinci and Edison. In the book only Edison is the true innovator since he was able to ensure that his inventions had immediate impact. Innovation is neither the stuff of dreams nor is it an academic exercise. Anthony’s focus thus is on releasing our inner Edison. The fourth chapter, Innovation’s Seven Deadly Sins, should be mandatory reading for all leaders. In fact, I’d recommend beginning with this chapter, since it goes over what holds organizations back— home truths that you’ll recognize. Impatient for growth? Anthony dubs this a manifestation of ‘Greed’, and warns that this often leads to prioritizing lowpotential markets. As he put’s it: “Greed has its advantages, but innovators need to make sure that they are greedy for the right thing. Often, innovators get greedy for growth. They want something that is as big as possible. So why is that a problem? If you look at quick growth, you are forced to look at what exists.” And booming growth in existing markets doesn’t come easy, he says.

the LIttLe BLACk BOOk Of f INNOvA vAt vA AtION: hOw It wORk kS, hOw tO dO It

Publisher: Harvard Business School Press Price: Rs 750

Once you’re past the first four chapters, Anthony launches into the second part of his book a 28-day systematic program to grow innovation in your company. Each week of the program goes over a different thread, from discovering opportunities and blueprinting ideas to assessing and testing them and moving forward. Each day of the program begins with the central question that the day’s training addresses followed by its answer. My favorite question is the one from Day 3: What indicates an opportunity for innovation? His short answer: “Look for an important, unsatisfied job to be done, or a problem the customer can’t adequately address today.” Anthony, of course, elaborates with case studies. He also peppers each day with how-to tips to put the day’s idea into action. He has little use for things that can’t be put into immediate practice. I commend this book to you. If there’s one book on innovation that you read, make sure it’s this one. Sounds interesting? We invite you to join the CIO Book Club. CIO Send feedback to editor@cio.in

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CIO March 2012 Issue