CORPORATE PROFILE: The ‘5-F’ Mantra

When he arrived on the scene in March 2001, he found it all wrapped around

the 5 ‘F’s. But Ganesh Natarajan relished the chance of using his 5F-theory

once again. He avers that his ‘5-F’ theory can be used to tackle any

business situation. The simple theory is read to mean Focus, Fast, Flexible,

Friendly, and Fun.

Ganesh was the brand-new CEO appointed at Zensar Technologies, a decade-old

company with the strong lineage of Fujitsu, Japan and the RPG Group, India, but

perched precariously on the brink of an imminent paralysis. "Many from the

senior management including the CEO had left and business strategy was

impacted," says Sunil Kunte, COO, Zensar who at that time was heading the

company. The slowdown in the global IT services market deepened the crisis.

For one, Zensar had some intrinsic strengths in the global IT services

business. A listed company, it was already of a significant size, had the

history of ‘never losing a single customer’, had a healthy geographic

spread, ran ODCs for large clients, and became the world’s first company to

get SEI CMM Level 5. But employee morale was sagging. Utilization rates were low

at 52 %, operational loss of nearly Rs 1 crore in April-June 2001 quarter was

incurred, growth rate had slowed down, and the dotcom bug had sapped some of its

financial resources without commensurate returns. Therefore the business,

solutions delivery, and marketing strategy required a radical rethink. A year

and few months later, Zensar seems to have transformed itself to save the

situation. A refocused business model, strengthening of verticals, identifying

specific value propositions, bring about a cultural shift, and gathering a crack

team of senior management professionals–are the parts that make up the Zensar

story from the start of 2001.

Getting It Blue



The cornerstone of Zensar’s success in the past one year is its solutions

blue-printing (SBP) approach. SBP has become the mantra at Zensar and Zensarians

are univocal when asked about it. SBP is a method to build or re-use frameworks

where the entire solution could be visually modeled, and the code generated and

tested–all automatically. This helps the company develop solutions faster and

cheaper. The timesaving is upto 30 % and cost-saving upto 50%, for most

projects. Says Ganesh, " The SBP is giving Zensar a decisive edge when

pitching for fresh development and migration projects". Says Aamod Wagh, VP

and Head-Operations, EMEA, "We bagged one of the largest insurance

companies through this approach. We have big wins in Japan, US, and Europe

solely because of the SBP approach."

Primarily business architects who understand the workflows, the security

issues, the KPIs, and the like make up the SBP. At this stage it helps Zensar

show the client what business impact the solution would have by ‘talking’

their language. The technology layer is then overlaid depending upon what the

platforms are and what technologies are best suited. SBPs help arrive at

frameworks, which are partially completed applications. "A demonstration of

such frameworks and the SBP helps us start off at a much higher level with the

client organization," says Wagh.

Continues Wagh, " Interestingly, we haven’t spoken about technology at

all and more than half the case is won". The impact of the SBP goes beyond

the initial effect of winning over a customer to being able to complete the

project sooner and at less cost–both very decisive parameters in winning a

contract. Currently, there are over 25 SBPs ready and reusable in various

verticals and business cases, reveals Dilip Ittyera, CTO, Zensar, and the

originator of the SBP approach.

The Model



In terms of the sales strategy, the focus shifted from horizontal alignment

across technology areas to vertical business areas. Further, the company decided

to focus on few key verticals like retail, telecom, utilities, and BFSI.

Business specialists with high levels of exposure lead the business in these

segments. These are essentially sector experts rather than people with technical

expertise. Says Wagh, " Everyone has a vertical focus but we have an

inside-out view–ours is from within the sector, led by people who have spent

several years in the industry". Further, with the SBP approach, the company

has to go through far lesser number of design iterations and is able to provide

proof-of-concept faster. Says Ganesh, " In the last one year itself, we

have done over 50 pilots, which are now moving into the program management

stage."

PeopleSar A culture transformation is visible at Zensar. Employee motivation levels are high. Zensarians talk of “feeling very much involved with the company”. Says Shridhar Sarlashkar, a software engineer, “ The company’s vision is very much clear now, the communication from the top management is clear. There is a lot of enthusiasm around.” Shridhar has been with the company for over seven years. The ‘bosses’ are very approachable say others. Says Rajat Ajmani, a software engineer, “ The culture has really become open…. I am free to walk into Ittyera’s (his boss) room anytime with any kind if issue”. Employees who deal directly with the client are specially empowered and trained. The 100 odd people who directly interface with the clients are called the “ The Power of Three.”  Some of the key HR Initiatives: Development of competency model across the levels in collaboration with Saville & Holdsworth Ltd (SHL). Institutionalizing the 360-degree feedback process based on the Managerial Competency profile developed by SHL Assessment of leadership potential through development centers for senior managers. Redefined Performance Management System Performance-related compensation Integrating HR systems and processes through PeopleSoft

The company added 34 new clients in the year 2001-2002. Key amongst them are

UK-based United Utilities, Ingersoll Rand of Hong Kong; AskMe Enterprises,

Global Payments, Hyperlink, American Insurance Group, and Credit Suisse Private

Banking. Nearly 15 customers are $ 1 mn plus, and six are $ 3 mn plus. In the

first quarter of 2002-03, 16 new customers were acquired. Says Ganesh, "

This is the proof-of-concept for what we have been doing. Look at the new

customer acquisitions and compare it with the median industry value of 8-10 per

quarter".

The delivery strategy is a practice-based model with practices in the area of

consulting, package implementation, application management, custom solutions,

and program management. BPO will be added to the practice portfolio shortly.

Offshore development continues to be the key focus area. In fact, Zensar has

been one of the first Indian IT services companies in its league to really

exploit the power of dedicated offshore development delivery centers. Says Parag

K, equity analyst with Equicorp, " Zensar’s experience and maturity in

handling work out of an ODC is a differentiating factor." Currently there

are eight ODCs for Cisco, Transco, P&O Nedlloyd, and Sprint, each of them

being multi-year contracts. The customer relationship is based on mutually

shared metrics of fixed costs and shared risk. With each ODC customer a full ROI

plan for on-going cost reductions on mutually agreed terms is worked out.

Another smart move by the company has been in the area of knowledge

management. Zensar managed to brand its KM offering as "KM in 30 Days"

and the move has fetched the company a good amount of visibility. Says Ganesh,

" Both SBP and ‘KM in 30 Days’ have worked out well in terms of revenue

traction." In this offering, the company makes and implements a KM pilot

for its client within 30 days. A demonstration of the KM effect on business is

therefore better appreciated. Says L Subramanyan, Head (Marketing and Strategy),

Zensar, " We are the first ones to draw KM out of the esoteric and fuzzy

conceptual framework and simplify it." Jahangir Kaizumi, Head KM, avers,

"For the client, it is a very risk-free proposition. And most often we are

able to demonstrate a strong case for KM."

While the company continued to reduce its dependence on the US, the epicenter

of the IT services slowdown, it expanded operations to cover wider areas in

Europe, Asia-Pacific, and Africa. Can China be far behind? Last year itself,

Zensar formed a joint venture with Han Consulting, a company co-owned by the

Legend Group. The JV christened HanZen has a development centre at Zhuhai in

Mainland China. The Chinese connection is being leveraged by Zensar in making

value propositions to its existing clientele in USA and Europe, who are

interested in spreading their operations in China. Through its alliances with

large global SI companies, Zensar has offered the attractive option of running

ODCs for them in India, it being more cost-effective for them to use India as a

development base. With software product companies too, Zensar has successfully

exploited the ODC model with five such engagements.

Transformed as yet?



As part of its growth strategy, the company has been actively looking at

acquisitions, strategic alliances, and tie-ups. The company’s entry into the

BPO space is likely to be through acquisitions or joint ventures. Though the

acquisitions bit has been talked about for quite sometime now, none have

happened yet. Acquisitions have been planned for new market access also.

Says Ganesh, " We are actively looking at acquisitions in the $5 mn to $

10 mn range". But for a listed company like Zensar, its visibility on the

tech stocks roster is inadequate. Counters Subramanyan "We are a cash-rich

and debt-free company. At a time when the stock markets tanked, we were doing

P/E multiples of 29, today it is 22 P/E forward when the average is 15-20".

Says Ganesh, " I would say that the business model is in place, the

transformation is being seen, and results have begun to happen." Overall,

the business model has been ‘fixed’, says Ganesh. Successive quarters have

been better. From a 2000-2001 revenue of Rs 242.4 crore, the company fell to Rs

201.5 crore in 2001-2002. The company focused radically on manpower utilization

rates and brought it up to 78%. Says Sunil Kunte, COO, "From an operations

point of view, the meltdown brought in tremendous business focus. We were forced

to improve our processes and went ruthless on operating expenses". At the

same time, the company increased its expenses on sales, business development,

and training. Says Subramanyan, "We have been able to create

differentiators. We are getting to be known as a focused company that has got a

solid point of view. SBP and ‘KM in 30 Days’–these messages make a lot of

sense in today’s market, avers Subramanyan.

Easwardas Satyan

One-on-one With Ganesh Natarajan

l What did you

find when you got here?



In March 2001 when I came in here, I found a company with good people but

working in a defective business model. The company was heavily dependent on

onsite revenues. There were no clear differentiators in terms of value

proposition. It was just like another me-too company. And there was a fourth

quarter operating loss of nearly a crore.

l What steps

did you take?



Hired a number of high caliber senior people, strengthened the verticals–finance,

telecom, and retail, looked for specific value propositions. The SBP and ‘KM

in 30 Days’ are the examples. Both have resulted in significant revenue

traction. We had to ensure that our share of business in the core customer group

only increased and never fell below the competition’s share. This was possible

through intense focus on customer satisfaction and quality. Motivating the

entire team was also a challenge. I had to give them a feel that they are

working for a growth company and not a decline company. It took me about 6-7

months and October 2001 onwards the results were visible. I have now come to

believe that the 5F-strategy is a sure recipe for success in pulling any company

out of a negative situation.

l What do you

say are your key differentiators?



The differentiator that we want them to sense is–‘We are a company large

enough to deliver, small enough to care’. Large enough would mean access to

resources, maturity in handling processes, and quality. Small would ensure

personal attention and the ability to bring innovations. This is the

differentiator that works…. All others are parts of this one. We have the case

of one of our largest customers taking business away from one of the Top 3 and

giving it to us. Today, the whole theme with CIOs is faster, better, cheaper. So

if we address those nerve points, we win. SBP and KM are examples of this.

l What are

your plans in the BPO area?



There are two-three options–decidedly we will not get into stuff like

call-centers or payroll processing. We are looking at managed services–help

desk services and others that fall within the ambit of the IT function. In fact

we are already doing it for two of our clients whether we separate it out as a

subsidiary, have a joint venture, or buy out an existing BPO facility. In the

next 3 months, we will finalize our BPO strategy.

The SBP story

Dilip

Thomas Ittyera is the chief technology officer and architect of the SBP

approach. A man of pithy humor, Ittyera started out about 15 months ago to

fulfill a mandate given to him by Ganesh and Harsh Goenka, chairman, Zensar. The

task was to figure out a way to make software engineers more productive. There

were no additional resources allocated for this task. So, Ittyera put together a

team pulled from various departments. Says Ittyera, “ The average experience

of the team that did this exercise was three years”. The result was SBP. 

Says Ittyera, “ A core object-oriented design is there for any project….

Overlaying it with business rules and workflow makes it more powerful and

useful.” The team took 6-8 months to develop the SBP. The EJB Center at

Fujitsu has validated the SBP. Ittyera would be doing SBP presentations

worldwide on behalf of Fujitsu.