Are Indian CIOs More Business Savvy?

The title chief information officer became widespread in the Indian

enterprises only a few years backand more than a decade after they became

mainstream in the developed markets. That has not deterred Indian CIOs from

playing a more proactive business role within the enterprise. In fact, if

anything, that has helped them leapfrog. According to the respected annual

Capgemini Global CIO report 2009, which classifies the enterprises into three

clusters based on the role IT plays in their business, most Indian enterprises

feature in the most mature categoryBusiness Technology. These are enterprises,

which says the consulting firm, where IT is partnership oriented; CIOs have

business process expertise and are close to the CEO. As many as 55% of the

enterprises that the firm surveyed in India, fall into this category. The global

average is just about 37%.

Capgemini calls the other two categories Technology Utilityfirms where IT is

cost and new technology oriented, and is close to the CFOand Service Centerwhere

IT is service delivery-oriented, with clear SLAs defined, and the relationship

with business is that of supplier-buyer. The former, of course, is the least

mature model of IT deployment.

While Capgemini defines these as two distinct categories, on closer look, one

would tend to believe that the second is just a more evolved form of the first,

without anything fundamentally different. The thirdBusiness Technologyon the

other hand, is a fundamentally different way of looking at IT. One would even go

on to argue that some enterprises may remain in the second category for ever,

without ever evolving to the third, while improving on many of the parameters of

efficiency.

Daya Prakash, CIO, LG India	SS Mathur, GM, IT, CRIS	Upal Chakraborty, CIO, DLF

The Capgemini survey that started in 2002 was different in two ways this

year. One, for the first time (since the survey began), the global economy was

going through a severe slowdown. And two, for the first time, it included a few

emerging countries, India being one of them.

The 2009 survey focused on three underlying themes of managing IT for value

IT value management systems in place and on-going initiatives: The objective

was for CIOs to position themselves and to define the degree of usage and

success they have deployed in four practices:

• Fundamentals
• Levers between Business and IT
• Roles and responsibilities of CIOs
• IS governance

Impact of 2009 recessionary economic condition: The objective is to

understand how CIOs react to 2009s challenges in three fields:

• IS governance
• IS cost reduction
• IT organization

Capabilities to create business value using IT: The objective is to measure

the usage value of the company through three capabilities:

• IT Management
• Information Management
• Information Behavior and Value

The survey had many interesting findings. And many of them had to do with how

Indian CIOs compare with global CIOs when it came to their approach towards IT.

John Varghese, global practice network, Capgemini	David Briskman, CIO, Ranbaxy	Ashish Kalay, director, COLT Telecom

Capgemini decided to release the India-specific findings in India. And the

firm chose Dataquest as partner to organize an exclusive round table of selected

Indian CIOs who were presented the survey results, followed by an interactive

and informal discussion on the findings, and related challenges and

opportunities.

John Varghese, who coordinated the survey in India, introduced the findings.

Ten CIOs from large and fast growing enterprises across different verticals took

part in the discussion. They were Upal Chakraborty, CIO, DLF; David Briskman,

CIO, Ranbaxy; Hilal Khan, CIO, Honda Siel; Atul Kumar, AGM (IT), Syndicate Bank;

Subodh Dubey, Group CIO, Usha International; Daya Prakash, CIO, LG India; S. P

Arya, CIO, Amtek Auto; Rajesh Munjal, CIO Carzonrent, Ashsish Kalay, Director,

COLT Telecom, and SS Mathur, GM (IT), Centre for Railways Information Systems.

Sabyasachi Choudhury, head, consulting, India represented Capgemini on the panel

discussion, which was moderated by Shyamanuja Das, editor, Dataquest.

Verghese outlined the areas where Indian CIOs showed marked differences with

their global peers. These were:

Distribution of the three IT function clusters

Outsourcing of IT and consequent Integration of IT function with business

• IT spend
• IT value chain
• IT functions as a leverage to innovation
• HR as an indicator of the integration of IT function and business
• Response to the current economic context

The most important finding, of course, was the distribution of enterprises

among the three clusters defined by Capgemini, as outlined above. The finding

showed that more Indian enterprises belong to the most mature clusterBusiness

Technologywhere IT and business act as partners. Most CIOs agreed with this

finding and highlighted the reasons behind it.

They said that in the developed market where the business value essentially

comes from efficiency and cost reduction, ITs function has been reduced to

that. In contrast, in Indiaa growth marketmost businesses focus on topline,

innovative products and services at affordable prices and managing scalability.

IT is expected to achieve these business objectives and since many businesses

are new or are re-engineering themselves, IT is woven into the business right

from day one, rather than being an after-thought. That is not how IT started in

developed markets. Most CIOs agreed that the relative clean slate helps them to

take a more strategic look at business.

Rajesh Munjal, CIO, Carzonrent	Hilal Khan, CIO, Honda Siel	Atul Kumar, AGM, IT, Syndicate Bank

"The main aim of a CIO is to align IT with business, and has to have a

strategic direction in place along with the domain expertise," says Daya Prakash,

CIO, LG India.

However, a few questioned the applicability of findings. "Twenty (that was

the number of CIOs who took part in this survey from India) is too small a base

to conclude anything," said David Briskman of Ranbaxy. While acknowledging that

it is a small base in terms of pure statistical significance, Capgemini

clarified that the results indicated a trend rather than definite findings.

SP Arya, VP, corporate IT, Amtek Auto	Ranjan Tayal, VP, Capgemini	Sabyasachi Chaudhury, director, Capgemini

Some panelists also questioned if the perception of CIOs and other CXOs about

the role of IT are in sync with each other. "It depends on whom you ask," said

Ashish Kalay of COLT. He argued that the CIOs in India often had a better

perception about their own roles, as compared to what is the reality.

Subodh Dubey, group CIO, Usha International

Subodh Subey of Usha International made a pertinent point. "The #1 brief that

I have is to think of IT solutions that would enhance topline," he said,

summarizing probably the most important difference between Indian CIOs and

developed market CIOs. Few CIOs in the US or Western Europe can say that.

The other difference between Indian CIOs and their global counterparts that

caught the attention of almost all CIOs in the discussion was the distribution

of IT resources within in-house and outsourced teams. In fact, almost half of

the discussion time was spent on this issue. While a few like Atul Kumar of

Syndicate Bank said that most IT vendors still do not understandor even bother

to understandthe business needs, thus making outsourcing a dangerous option,

those who defended outsourcing aggressively included Upal Chakraborty of DLF.

"That is why you should outsource non-core functions," he said. He said that

unless the CIO releases day to day supervision of the back-end infrastructure to

an outsourced team, he can never be free to concentrate on aligning business

with IT. Interestingly, most CIOs decided to highlight the same point, rather

than focusing on cost, even when outsourcing to a third party. That also showed

why Indian companies outsource vis-a-vis why the American and European companies

do. "Outsourcing has helped us in lowering the downtime", says Upal Chakraborty,

CIO, DLF. Outsourcing helps time in saving on training costs since there is no

separate investment in manpower.

While by and large, Indian CIOs have not chosen the service center model, one

organization where it has worked very well is Indian Railways. "Indian Railways

has outsourced its IT part to CRIS, a separate unit under itself. This

outsourcing has worked well for years", said SS Mathur, GM, IT, CRIS.

Interestingly, most CIOs took the middle pathof keeping the applications

inhouse while outsourcing infrastructure management. "We are in a growing

market. It is important to consider changing market dynamics. I would prefer to

look more into strategic part and partner with experts in the industry to take

care of the technology implementation and maintenance," said Hilal Khan of Honda

Siel. Echoed SP Arya of Amtek Auto, "We want to focus on business related

activities because we are in evolution phase so we would like to outsource the

infrastructure part."

Shyamanuja Das, editor, Dataquest and Sabyasachi Chaudhury, director, Capgemini

The only CIO who differed from this approach was David Briskman of Ranbaxy.

"I would like to leverage the internal team to manage the IT infrastructure.

This is the ideal situation for Indian CIOs," he said. A strong and

knowledgeable internal IT team reduces dependencies on the external providers

but also assists them deliver quality service as per the contract.

Another difference that the survey pointed out between Indian CIOs and their

global peers was the budget allocation to operations, strategy and development.

Indian CIOs, according to the research, Indian CIOs spend 65% of the budget on

strategy and development while only 50% of the global peers do. Most CIOs

attributed it to the phase of evolution. "As most businesses are new, or are

redefining an existing business, the need to innovate is more," said Rajesh

Munjal, CIO, Carzonrent. Most CIOs were not surprised by the finding but did not

attach too much importance to it, considering that the Indian economy and

business maturity are in very different stages of evolution as compared to the

developed markets.

One surprising finding was that despite featuring in the highest maturity

cluster of technology usage, most Indian enterprises took to far more aggressive

cost cutting than their global peers. According to the survey, while the global

cost reduction target level was 16%, it was 21% for Indian CIOs. So what

explains this anomaly? "Cost-cutting has been the mainstay of IT strategy for

the developed market CIOs for last few years. On the other hand, Indian CIOs

took to it for the first time, in a major way. So, simply the scope was far

more," said Shyamanuja Das of Dataquest. "Also, when you are in a mature running

stage, you cannot just lower your infrastructure costs drastically. Many Indian

CIOs had the option to defer the new investments, which looked like cost

cutting," he further added.

The other point that got passionate responses from the panelists was about a

finding that despite having highest maturity, IT function exposure as part of

career path is still low. The discussion focused on the role of CIO as a

business manager vis-a-vis the role of business manager as an IT-literate

person.

"We are going through exciting times. The whole model of SaaS and cloud

offers immense opportunity for all of us to look at IT in a fundamentally

different way," said Sabyascahi Choudhury of Capgemini, while summing up the

discussion. The executive summary of the research can be downloaded at



http://dqindia.ciol.com/events/capgemini/default.asp

A DQ report



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