…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

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 ganeshn@aptech.ac.in

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