The Strategist

Several instances are quote- worthy today where CIOs pitch
in as important cogs in the overall business strategies of their organizations.
The story of VVR Babu, the man heading the IT operations at ITC Group, is a case
in point. Babu's stint at ITC has spanned over two decades now. He is not only
the group CIO of the Kolkata-based ITC, but also the senior vice president of
ITC Infotech, the software subsidiary of the group. ITC has ten diversified
businesses in sectors such as retail, FMCG, agri-business, travel, and
hospitality. While tobacco still drives the business, the ITC flavor has touched
paper, candy, shirts, soaps, et al.  

The Challenge @ ITC

The information technology in a diversified setup of ITC seeks management at
both the macro and micro level. FMCG, a key thrust area for the group, is about
ensuring adequate stock availability-anytime and anywhere. It just gets a
little more complicated when you are dealing with multiple products such as
cigarettes, staple foods, ready-to-eat foods, matches and stationary. The sales
and distribution managers have to forecast demand and ensure supplies of these
products across 2 mn outlets in the country. Each of these products is sourced
from multiple manufacturing facilities (company owned, company leased,
outsourced manufacture) located across India. Therefore, “supply network
planning and product development are the key challenges,” says Babu.

What makes the retailing business significantly different
is the need to move with the times and cater to contemporary styles of designs.
Merchandise planning and procurement has to be enabled for just-in-time
manufacturing and speedy replenishment of the retail shelves. Then again the
paperboards business involves the complications of continuous manufacturing,
very different from that of discrete manufacturing. The business needs to
forecast sales requirements and then plan for its manufacture using block
planning and optimization tools.

The agri-business (ITC's e-choupal is one of the most
reputed IT projects worldwide) and hospitality just adds some more spice to the
operations of ITC. Says Babu, “The objective is to tailor IT to meet the needs
of every individual business and then align this to meet the overall business
needs of the group.” Babu's experience of over 27 years at ITC (he joined
the company way back in 1979) is paying rich dividends. A multi-functional team
that comprises business and IT managers draws up the comprehensive blueprints
for each business division. Based upon this, software tools and technologies are
whetted by the technology standards committee.

Says Babu, “To adequately address the business challenges
faced by the different divisions of ITC, we created the IT architecture and the
IT management framework as part of the blueprint.”  The underlying principle of this was to create IT business
solutions that addressed the pain points of each of the business segments, while
at the same time leverage a common IT infrastructure. This helped Babu and his
team take some key business-led IT initiatives across group segments to handle
competition better. For example, the deployment of SAP in the FMCG business
provided the transaction processing backbone for the business. This
implementation in 2000 was probably the largest ERP deployment in the country.
SAP is currently being upgraded to the latest version, which will help in
extending the system to business partners. SAP's IS retail and Ramco's
VirtualWorks ERP has been implemented in the international business division of
the agri-business to enable its foray into rural distribution. For the
paperboards business, Optivision, a manufacturing execution system that
integrates sales with production planning, was adopted, while an industry
specific ERP called Movex was brought into the lifestyle retailing business.

Consolidation of corporate accounting was achieved through
automation at the macro level. Today, the manual consolidation activity using
Excel spreadsheets has been replaced with Oracle's OFA tools to automate this
activity.

Moving on IT

Today, ITC has one of the largest computing infrastructures in the country
with over 10,000 PCs and hundreds of servers spread across 400-odd direct ITC
locations (urban, semi-urban, rural and remote locations) and 5000-odd e-choupals
connected via a 200 Mbps virtual private network comprising redundant, fail-safe
leased lines, ISDN lines, radio frequency lines, and VSATs. 

A comprehensive IT security layer complete with firewalls,
intrusion detection systems and anti-virus software has been put in place to
ensure integrity of the infrastructure and prevent unauthorized access. During
the last three years, the group spent Rs 25 crore on security alone. The result:
no security breach in the last three years and the IT security strategist award
by Synergist last year.

In line with global IT directions, ITC has created a shared
services team, which manages cutting-edge data centers with complete disaster
recovery, a 99.9% uptime VPN available on 24x7x365 basis, organization-wide
helpdesk, corporation-wide mail messaging, IT security, enterprise management
tools, and support for business applications. Two data centers-one each in
Bangalore and Kolkata-house the common IT infrastructure of the company and
act as disaster recovery sites for each other. These data centers host the ERP
applications, web portals, and centralized storage infrastructure of the
company.  Other applications are
being gradually moved into these data centers.

The shared services team is responsible for providing IT
infrastructure and software applications to the businesses of ITC.
Says Babu, “We have been able to organize IT services delivery into a
central shared service model through the use of Enterprise Class IT tools and
solutions.  For example, it is now
possible to install certain software on desktops from a central location-no
more waiting for the hardware/software engineers to physically come and install
the software. The shared services team is providing the IT infrastructure
services on an SLA basis with well-defined deliverables and accountabilities. 

Towards a New Organization

ITC Infotech has played a pivotal role in most of the important IT
initiatives taken at ITC. Needless to say that Babu, in his dual role at both
the organizations, has spearheaded these initiatives. With creation of Central
IT Shared Services in ITC for IT infrastructure management and application
support services, it has been possible to model the IT organization on the lines
of front office and back office functions of a services industry like hotels.
The IT front office engages in the customer facing activities and is staffed
with people adept at business understanding and client servicing skills. The IT
back office, comprising data centers, VPN network, security, enterprise
management tools, etc. is a hardcore technology function and is resourced with
people skilled in specialized technology administration and management aspects.

Traditionally, the MIS function in businesses had
end-to-end responsibilities to not only manage the IT infrastructure (back
office), but also to identify and architect IT solutions for business advantage
(front office). With IT infrastructure becoming complex, a large part of the MIS
time was spent on managing the back office activities. This led to a dilution of
focus on implementing new value added IT initiatives for the business. Explains
Babu, “The objective of this new organization model is to free IT
professionals to focus on working with business managers to identify and address
the business challenges by designing and developing comprehensive, value
enhancing, and business transforming IT solutions.”

The New Role

The role of the CIO has undergone huge transformation in the last five
years, particularly in the Indian context. While the chief of IT continues to
provide support in small organizations, he is playing a more strategic role in
large enterprises. Earlier, “the role of the CIO was essentially that of a
solution provider for separate departments or units,” says Babu. Now
“increasingly, as a CIO I am spending time with customers and thinking of ways
in which IT can contribute to the business' revenue growth, improve business
processes, reduce operating costs, and supporting product and service
innovation. This is radically different from my role in the distant past where
my time was spent in optimizing IT operations and delivery of services to the
business,” he adds.

Today ITC has emerged as one of the best case studies for
some of the key deployments in the country. Says Babu, “I have been lucky to
have colleagues who have understood my vision.” The operating managers at ITC
realize the qualitative and quantitative benefits and value that effective IT
solutions have brought to their business operations. 

Implementations of ERP in two businesses of ITC are
currently underway. In addition, the SAP 4.6B implementation of the FMCG
business is being upgraded to mySAP Business Suite 5.0. An ERP deployment for
corporate finance, and accounting and treasury functions is also on the anvil.
Active directory services and desktop standardization at over 400 locations of
ITC, and an enterprise-wide archival solution are two key infrastructure
projects that will be completed during the next financial year. In addition to
these large initiatives, each of the ten SBUs will implement specific business
value enhancing IT solutions. IT, beyond doubt, has emerged as a business
enabler for ITC.

Bhaswati Chakravorty

bhaswatic@cybermedia.co.in