...About Challenges Before The Enterprise

There are going to be fundamentally four

distinct, and yet simultaneous issues that will scream for attention in the next few

years, not so in the realm of information technology per se, but more in the area of

management of information technology for the corporate governance. These changes will take

place not suddenly, but more or less gradually. But as changes go, they will surprise the

Indian CEO as much as it were sudden. That infotech is required for corporate survival

will not be questioned, but as any functional expertise, organizations which have a better

fix on the role of IT will function better than others. Organizations with CEOs who have a

better fix on IT will outshine and outperform those whose CEOs still regard IT and

investment thereof as a necessary evil.

Let me illustrate with an example.

Traditional Indian mindset of viewing any investment as a cost center and the marketing

function only as a revenue center has been seriously threatened by MNCs or globally

experienced companies who have taken a more matured view. In that context, it is only now

that spending on IT is being referred to as 'investment' rather than 'expenditure'. The

'cost' is now seen as an 'investment'. However, that still does not deter many of my

friends in the corporate IS to succumb to the temptation of trying to create a profit

center out of what is essentially a factor of production. This 'profit center' concept has

led to many an IS chief and the related IS department to go on what is essentially a wild

goose chase leading nowhere. Past practitioners of this strategy will realize the futility

of trying to convert an investment into a working capital and trying to derive profits

directly from this spend.

That is the current problem. In the future,

it is possible that the business paradigms and the concomitant changes may lead to a close

integration of IT and business. For instance, one of the major changes that I foresee in

the next few years is that organizations will have to go away from the 'broadcast' mode of

selling and surviving and will have to use technology (and nothing else!) to create what I

loosely define as 'virtual communities'-which will be a forum where the producer of goods

and services will have a constant dialog with the consumer. IT might initially be a

company-specific and might evolve into a product-specific forum. For instance, a Hindustan

Lever will create a virtual community of detergents, beauty soaps etc. This will be the

new marketing model as technology will make it effortlessly simple for the creation of

these communities and will get driven by the enormous penetration of PCs into the

community. It is open to question whether Internet, in the avatar as we know it, will be

the media for the creation of these communities or not. It might even be private networks

which a company might drag to have its own communities, with the exclusion of anybody

else. It might be the result of a closer marriage between IT solutions vendor and the user

of the solution. For example, Dr RH Patil, MD of National Stock Exchange, wants NSE to be

known as an IT company. In this scenario, it might not be very outrageous for NSE to

create a virtual community of NSE members, tier customers, FIs etc., and create a forum

for stock broking which will have a far wider each than what both BSE and NSE are

providing today.

That this transformation will take place is

without doubt. However, what is also happening simultaneously are two other far-reaching

changes-efficiency improvement and effectiveness improvement. Consider the situation when

the virtual community is up and running. In ways that the current marketing manager cannot

even fathom, there is created a potent tool which not only allows the organization to talk

to the customer but also provides a platform for what we fondly called education of the

customer, somewhat akin to schooling a customer in what we want him to know, not because

he is a fool, but because we have a lock-in time with the customer, something that every

marketing manager would give his arm for! Not that this is going to be easy. For example,

what this will mean is that today's situation of a plethora of products and services will

get replaced by a plethora of communities and the choice of products by a choice of

communities. However, for that to happen, it will take some time and, I feel, that early

birds in this game will reap the maximum rewards. The organization's dollars per customer

or per hit, as some traditionalists would call it, is now rendered meaningless. Remember

we are also talking about a time when bandwidth will be more ubiquitously available than

what the situation is today, and the cost definitions therefore, will have to be reworked

all over.

This, I think, will also have a

far-reaching impact upon the efficiency of the organization in bringing new products and

services to the market. By subliminally involving the customer in your marketing

conversations, what you are also doing is that you are taking his feedback on what your

future is going to be.

The last question that comes up then is

what is the optimal knowledge that a CEO must have and by extension an organization must

have, to play in such dynamic markets. I don't think that the CEO has to really know the

bits and bytes. I think that he needs to know what IT can do for him and, more

importantly, what is that he needs to have as strategic information tools to compete

effectively. At the same time, I can't think of any business that can perform without a

modicum of IT. I am often asked as to what would a small lathe manufacturer in Gurdaspur

need IT for, when he does not need sophisticated techniques of ERP etc. to stay ahead. My

answer, is probably more rhetorical. I don't think there is anything called a 'small'

lathe manufacturer, period. If he is thinking 'small', he is anyway history.

I think IT is primarily a growth driver in

the hands of a CEO. IT will drive new businesses and provide him with new tools to drive

old businesses. IT will help the erstwhile organization, with entirely inward looking

business practices which design to serve the customer's needs from the innards of the

company, to come out and gain a crucial mindshare in the customer's mind. The question

will not be how do I sell more soaps, but rather 'How do I ensure that my customer comes

into my community and talks to me more'? In that sense, I think that the current large

users will be creating virtual communities that will be as large as any created by an ISP.

In fact, I think these will be the latter-day ISPs.

At the same time, I am told about how a

particular CEO is fanatical about IT, so much so that he focuses on that to the exclusion

of anything else. For those CEOs, my only advice is damned good, come into the IT

industry. If you can't, then focus on your business, IT will only be a factor of

production, nothing more, nothing less. It helps to have a knowledge of IT, but being

fanatical about it is tantamount to a bean counter running marketing company with a tight

fist.

Ganesh Natarajan

evangelizes IT in enterprises when he is not busy running Aptech, where he is the Managing

Director. This is the first in a series of 24 articles that Natarajan will pen for DQ on

IT, enterprise, and strategy. Please send your comments to href="mailto:ganeshn@aptech.ac.in">ganeshn@aptech.ac.in