So Go Forth Yonder...and Earn

"How many dollars did you say?" said the CFO.

"$30 billion" I said. "That’s our estimate for India’s ICT
industry.""Oh," he said. Then: "I wonder what’s the
three-year RoI on that?"

Now when I repeated this to a group of CIOs and IT vendors at another DQ
breakfast, very few found it funny. I think we’ve all lost our sense of humor
after the three-year cash pressure. We don’t find RoI jokes funny any more.

I’m sure RoI is a Good Thing. Nowadays I can’t help pulling out my mental
RoI calculator when I’m paying for cable TV, or giving a restaurant tip or a
fiver to a beggar at a Gurgaon crossing (to keep their dirty rags away from my
car windows).

But too much of a good thing, like chocolate or pizza, can clog your arteries
someday.

Today’s pressure on business, revenues, and returns is doing a lot of
things to raison d’etre of the CIO and the IT department. Mostly good, some
bad.

One evolution for the IT department is the "profit center" model.
"Instead of being a big black hole which just sucks in funds, go forth! and
charge user departments and group companies for services. Make a P&L
spreadsheet." That’s logical.

The next step is bigger: extend your ICT services to the outside world, and
bring in some real revenue. This is happening both in the public and the private
sector. If you’re ICICI, maybe some banks will pay for your expertise and
services, if you spin off the IT department from the bank. If you’re ITI,
maybe MTNL or BSNL would pay a few hundred crore to roll out their broadband
networks…

There are impressive precedents here, from big services players that have
spun off from in-house tech divisions (TCS, Wipro Tech) to the holy grail, the
product that descended from in-house services (i-flex).

But none of these are overnight miracles. They represent decades of
evolution, investment, ups and downs. A CIO rushing down that path driven by
revenue and bottom-line pressure, rather than by a careful business plan and
five-year goals, can trip badly.

And as the eminent Warren McFarlan of HBS tells Dataquest in this issue, this
intense pressure on RoI could make IT so severely tactical and short-term that
key initiatives are missed…affecting long term efficiency and competitiveness.
And force an aversion to technology. Just 6 out of 95 CIOs at a recent CIOL-DQ
conference had experienced Wi-Fi, and most of the rest did not know how usable,
useful or cheap it was.

The key, of course, is in the balance. And in not sacrificing IT strategy for
RoI.

Prasanto K Roy