The Men Behind HCL Comnet

From satellite communications to e-security and network intelligence to
remote management of networks, HCL Comnet’s has been a journey marked by
changes that have underlined a swift response to changing market and economic
conditions. And with ‘cost-effectiveness’ being the new enterprise buzzword,
the key drivers at Comnet today are managed IT services and a strong push aimed
at growing the overseas business

With an average employee age of 24 and a breezy irreverence for blind
tradition, HCL Comnet embodies the aspirations of Generation Y. Spunky,
opportunistic and on the move, this is no place for age-old business
propositions that don’t sell anymore. But if it’s out of the box and follows
the money-trail, the idea is grabbed outright and the pretty head that conceives
it soon wears a crown.

Explains CEO Vineet Nayar–"Actually, age 24 itself is upsetting. I
would like to see the average age drop further!" Nayar is quick to add that
he has nothing against older professionals (Nayar himself joined the HCL group
as a senior management trainee in 1985), but it’s just that the best ideas
seem to come out of reckless young minds untouched by the baggage of tradition.

The TOP BRASS: (standing, from left) V-P (technology) S Barathy, V-P (HR) DK Srivastava, CEO Vineet Nayar, V-P (sales) J Kalyanaraman, V-P (sales, Americas) R Srikrishna and COO (Asean) Sanjeev Nikore. (sitting, from left) V-P (managed services) CRD Prasad, country manager (Asean) Pradeep Bindal, COO (global operations) Anant Gupta and V-P (finance) Sandip Gupta.Â

Fact Sheet

Subsidiary of HCL Technologies Established in: 1993 Revenue: Rs 186.8 crore Employees: 650 Areas of operation: Very small aperture terminals (VSATs), managed IT services, network security, network intelligence, end-to-end infrastructure management encompassing network devices, security, databases, systems, and Internet site operations management

Adamance in the name of focus?

Nayar is also proud that the company has exited almost every area of business it
explored since its inception, preferring to move on to the next area of
interest.

"As a policy, we enter those businesses that are strategic to our
customers and are significant to them. New investments are made in business only
if they meet the above criterion. Old business may still be part of the offering
but are not the areas we proactively invest in for growth," he says. For
instance, Comnet was one of the frontrunners in the structured cabling business
in the early 90s. Quality and certification were key drivers of business.
"But once these became a standard, we exited the segment," says Nayyar.
Similarly, the company diverted focus from box sale of low end networking
components and setting up office LANS once the criticality of these functions
reduced.

Another area Comnet ventured into in the initial days, was the ISP business.
Comnet exited this business because "performance guarantee to customers was
an issue that would have lead to huge customer dissatisfaction".

"Uptime was critical for customers and VPN has no answer till robust
backbones are in place. We transformed the VSAT products business into a
solution business based on new applications (distance learning/disaster
recovery/backup) and based it on multi media (VSATs/leased lines/VPN) using the
best vendors in each class," says Nayar.

The company altered its general purpose networking product sale to a focused
solution business around contact centers and WAN QOS implementation for
enterprises and Telcos. The security product business too expanded to cover
security assessment and management and then, managing security.

For, change as they say, is the only constant in the world of business. Even
as IT’s roller coaster ride sweeps companies up into the crest of success at
one instant and deposits them at the bottom of the trough at the next, it is the
company’s ability to roll with the times that carries it through. The strategy
adapted by Comnet is to anticipate change and be proactive in reacting to it.

Agility is King

The ‘98-2001 period saw the company’s purposeful but seamless transition
to e-frastructure services from its area of expertise–satellite communication.
With a stronghold in installing VSATs (very small aperture terminals) since the
early 90s, the company was quick to decrease its dependence on the VSAT
business. Satcom soon gave way to a foray in networking. Networking spanned out
into a bouquet of ‘e-frastructure’ services. When investing in network
security was unheard of, Comnet took the plunge by launching e-Secure, its
network security division. It was during a brainstorming session on
diversification that a senior management trainee came up with the idea of
offering network security services and E-Secure was formed.

In the belief that if a market starts shrinking, it’s time to expand the
portfolio, Comnet moved on to networking. Comnet stepped into the network
intelligence space when buying bandwidth was a major expense for companies.
Chief information officers (CIOs) had problems figuring out how much bandwidth
was needed and did not know which users and applications were consuming how
much. In such a scenario, providing a blueprint showing exactly how much
bandwidth was being consumed where, helped.

Today, Comnet’s transition is from the technology heavy networking services
area to a concentration on managed IT services. The company sees managed IT
services as the biggest growth driver through 2002-03, simply because it
involves a 50% reduction in operational costs for a customer–precisely what
companies reeling from the bad times are looking for.

Another example of the company’s quick reaction to change, is the
development of its second OMC (Operations Management Center) in New Jersey. (The
first OMC was opened in Noida three months ago). Why invest in an OMC overseas
when the cost advantage of Indian OMC is well known? "To assure business
continuity to customers" says Nayar.

The brewing of Comnet…

The idea of a foray in network communication took root in 1992, when Nayar
was asked to head HCL Technologies’ task force on strategic diversification
under the chairman’s office. In 1994, he was nominated CEO of HCL Comnet.

"I was just one of the bunch of people at HCL Technologies who became
the first few employees of Comnet. It was a team effort. We have no culture of
placing individuals before companies, " he says brushing aside any mention
of his ‘founder’ status.

"Actually, Comnet was created from what we decided we will not do. We
said we will not sell hardware (PCs peripherals etc.) We decided to walk the
tough path by being a pure-play networking company. They were tough times. We
were not selling hardware. We had no branding in the market. Nobody wanted to
work with us," he recalls. The turning point came in July 1995, when HCL
Comnet won the contract for handling the National Stock Exchange of India’s (NSE’s)
operations in Mumbai. Even today, Comnet services NSE’s 3,500-site VSAT
network.

Customer on a pedestal

Comnet commissions an IMRB survey every year to gauge the satisfaction levels of
its customers. It is mandatory that each year, the unique score arrived at in
the survey, is improved by 30%.

But when it comes to handling global viz a viz Indian customers, Nayar says
that Indian CIOs are more demanding.

"Given that we are not so well known in the overseas markets, it is
difficult to get overseas customers. But if you deliver what you promised, they
are far easier to handle. Indian customers have some ‘non-contract ‘ needs,
which need to be fulfilled. Global CIOs are extremely competitive in cost
reduction and will work hard with you to make it work," he says.

Barely 10 months ago, Comnet was concentrating on the network integration
business, which relies heavily on technology. "One of the young
professionals in the team came up with his solution to beating the slowdown–"Let’s
go back to what the customer wants. Right now, he just wants to cut costs,"
he said. We decided to do just that-manage networks remotely and cut costs by
50%.

The concept of annual maintenance contracts has undergone a sea change with
service providers gradually moving up the value chain, from repairing faulty
equipment to fully setting up and managing a complex network. And that is the
managed IT services opportunity Comnet wants to tap.

The road ahead

Out of its 62 customers currently, seven are global accounts worth a million
dollars each. The rest are customers from India and other Asian countries
(excluding Japan). Considering that the size of a single global account is close
to 10 times that of a domestic account, it makes sound business sense to shift
focus to the global front. The target is to have 70-80% of the company’s
business coming from overseas customers and the rest from domestic customers.
"While the focus is on the US and UK, Indian CIOs play a significant role
in the strategy for Asian markets," says Nayar. Even as the client base
tilts globally, the change will reflect on work patterns at Comnet back home.

"Right now, the proportion of employees working days and nights is
50:50. With more global clients, we’ll need to have more people working at
nights" explains Comnet’s VP, global operations R Srikrishna.Nayar
believes that he learnings from servicing these clients will help business
overseas. "This does not imply that domestic customers can do with
sub-standard service. However, if we do slip up in serving a customer here, we
could always visit the customer and make amends, but if it is an overseas
client, a slip up could mean the loss of a client," he explains.

On the people front too, there are plans of rapid growth with 150-200 of the
company’s 650 employees having been added during the past year. Out of the
company’s revenues of Rs 197 crore, Rs 127 crore comes from the materials
business (which includes VSATs and other equipment like Cisco routers) and Rs 70
crore from the services business (consultation, network management and IT
infrastructure management).

"We want to convert all satellite communication customers to managed
services customers and move out of selling equipment as the margins are so
low," explains I V Rajesh, general manager.

Bless the slowdown

Even as HCL Comnet pushes the cost advantage factor today, (which is the key
driver of its managed IT services and remote network management initiatives),
there has already been a quiet realization that in due course of time, people
will come back and buy big and cost will not be a crucial factor.

The focus on cost-cutting comes with the understanding that this phase too
shall pass. And the secret of brisk business lies in creating for tomorrow and
building up responses in anticipation. Even as Comnet makes hay while the sun
shines on managed services and in fact, takes advantage of the cost
consciousness that the downturn brought in, the change management machinery is
ticking away in Comnet’s backyard. Another team of the brightest and the best,
yes, some of them Comnet’s famed Top Guns (see Box), have started working on
projects that aim to meet the demands of the industry 12 months down the line.
As was the case with global head R Srikrishna and his team while working on the
managed services prototype a few years ago, without the knowledge of even most
other employees of the company, this new team too is in hibernation.

So what’s cooking? Obviously, Nayar and his team will not tell. But it’s
got to be something big to sell to companies when they celebrate the departure
of the downturn in its entirety. As Nayar says, "No service or commodity
can piggyback on the cost benefit forever. Soon, there will be a time when
companies will want to spend big on fancy technology. And when that happens, we
want to make sure we have it packaged and ready to be sold." Just like the
Chinese say, as long as you sniff the money trail, you’ll never go wrong!

Manjiri Kalghatgi in New Delhi

People@Comnet

The Apex Council comprises heads of SBUs, finance and HR. The council drives
strategic initiatives and planning of future growth opportunities, while
focussing on operations and customer satisfaction

	Sunita Dharwarkar, GM, R&D The tech savvy lady of Comnet has been the founding member of Comnet’s Product Initiative. Sunita heads the R&D initiative and is responsible for developing products for advanced visibility of IT Infrastructure —enabling better utilization of IT Investments

	Sanjeev Nikore, COO, ASEAN operations Head of the Apex Council, Nikore has been associated with the company since its inception and drives the ASEAN business for Comnet. He has successfully steered the company’s domestic operations to attain a dominant leadership position in India

	IV Rajesh, GM, customer programs Rajesh is responsible for all customer centric programs which include strategic consulting for Operation’s costs reduction and improving the ROI on dollars invested in IT infrastructure. He also heads the Audit cell for independent assessment of customer satisfaction along with IMRB

	R Srikishna, V-P, sales (Americas) Srikrishna is part of the start up team at Comnet and is driving Comnet’s growth in the US geography. He is also the key driver of Comnet’s Next Gen Plan to be launched in 2004. He is based out of NewJersey, US
	Anant Gupta, COO, global operations Anant has been associated with the company since its inception and started the company’s ‘Exploration’ initiative. Anant also drives Global Operations and continues to head the Strategic Initiatives and Exploration teams.
	C Vijay Kumar, Director (IT infrastructure management services) Vijay has been a founding member of Comnet’s IT Infrastructure Management Services initiative and has been responsible for improving end-user response time of the Data Centers by proactive infrastructure management. He heads the global SBU for Data Center and Internet Site operations

Challenge #1

COO Sanjeev Nikore on winning the NSE deal, which changed the
fortunes of the company

Behind every win there is a fear to lose. And that is what
propagates the desire to win further! Winning the NSE order was a make or break
for us, adire situation! Winning the account entailed a mega opportunity and a
firm foundation for us to stabilize our business. Losing it would have meant
another cycle of toil till we succeeded. The competition was tough. Major
players like AT&T, Hughes, Telstra, Comsat Max, GTE, Spacenet and Gilat
consortium were fighting for the business. Being so new in the business, we were
clearly the underdogs! But we had what they lacked–enthusiasm and passion to
bring a significant difference to our customers!

A huge effort went in understanding NSE’s requirements as well
as researching the technology solution that suited it best. We were intent on
establishing ourselves as solution providers and not VSAT sellers. We had
already tied up with GTE spacenet/Gilat consortium who were amongst the top
three providers of VSAT networks globally apart from Hughes and AT&T.
Although NSE had initially stated a requirement of only 250 sites in RFP, we
created a scalable model of upto 5000 sites and ensured that the solution
delivered ‘economies of scale’. At that time in India, the knowledgebase of
IT was a rare commodity and we invested heavily in technology training of our
project team. Looking back, NSE was a warlike situation–a do-or-die spirit
instilled in the core team. I still remember the sleepless nights and toil that
went behind that account. The biggest moment for us was eliminating Hughes from
the list of semi-finalists to land up in direct competition with AT&T. In
the end, we did win the account, but what NSE taught us can never be forgotten.