‘There has been terrific work done in the last two years with respect to customer responsive processes’ – Ranjit Limaye, MD and CEO, Tata IBM Ltd and IBM Global Services India Pvt Ltd.

-Ranjit Limaye, MD and CEO, Tata IBM Ltd and IBM Global Services India Pvt Ltd.

Ranjit Limaye, who took over from Ravi Marwaha as
the MD and CEO of Tata IBM Ltd and IBM Global Services India Pvt Ltd, is known as the
‘turnaround manager’ among his colleagues. Limaye, who joined IBM in January 1970
following his graduation in Mechanical Engineering from the University of Pune, has worked
in the country and abroad with IBM in various functions, including sales, marketing,
finance and planning, education and general management. Prior to his current assignment,
he was General Manager, Personal Systems Group, IBM Australia/New Zealand, based in
Sydney. Since joining, he has worked in India for eight years, after which he left for an
overseas career with IBM in Australia. As globally IBM financial performance speaks
volumes of success, Indian performance too seems to be looking up. Does this mean IBM in
India is finally back on track? And what does Limaye have in mind for Tata IBM’s growth in
the country? Limaye shares with L Subramanyan and S Meera of DATAQUEST his strategies for
IBM’s growth. His dream: To see IBM as #1 in the country. Excerpts:

IBM is nowhere near achieving
its target of being a $1 billion company in the country set three years ago. Does the
target still remain?
Target in terms of market share is a question of mathematics. I cannot comment on how
valid the predictions are. They must have been based on the market growth at that time and
may have been valid at the time. What is more relevant is the market share and not if we
achieve $1 billion. The industry didn’t grow at the expected rate. We didn’t grow the way
we planned. If we had achieved 10% market share, we would have achieved $250 million by
now. If we had a market share between 10 and 12%, we would have been #1. Right now, we
enjoy only 5% market share. Although not in one year, but in the foreseeable future, we
expect to achieve this target. That is my mandate.

The company has transformed its focus from numbers to solutions to e-commerce in the
last seven years. Being a numbers man, will your focus be back to numbers?
The three complement each other. We are a solutions provider and have done exceedingly
well in India in this area. In terms of customer need, e-commerce is the biggest area of
opportunity. It is growing fast. A large part of our integration will include e-business.
For growth, the numbers have to come. It’ll not be one at the cost of the other. You won’t
see a flip-flop between the three.

Are you looking at a strategy
wherein you trade off profits for a long-term business growth?
There is no easy trade-off between profits and growth. For growth, you need
investments, which can happen through cross-subsidization between divisions within limits.
For that you need more profits and not ‘no profitability’.

There’s a nagging feeling that
the mindshare that IBM enjoyed among the country’s IS community, even way back in 1991,
has not been converted into market share. Your comments?
The latest data shows that we have converted the mindshare into market share. In the
first quarter of 1999-whether you call it the numbers focus or the customer focus-we have
grown by 60% over the same quarter last year in India. We are making progress, and I am
delighted with customer reaction. We have bagged good contracts. RBI, a premium
organization, has placed its trust with IBM for its entire check clearing operations. Last
year, Siemens tied up with IBM for outsourcing. It has been implemented this year and
Siemens is happy with that.

In the PC segment, IBM is not
the most preferred brand-not even the most preferred foreign brand. What do you plan to do
about it?
I agree. We know our market share in the PC business and we are looking at it
carefully. I know we can take the lead. Before Compaq took over Digital, we beat them in
Australia. I know it can be done [in India too].

In India, the branded segment is just under 40% of the total PC market. It is the reverse
in the rest of the world, with the branded PCs being dominant. Therefore, it is the market
dynamics and we cannot change it. However, Aptiva is not doing well due to commercial
reasons. We are looking at that closely. I cannot talk to you about that, but you can look
to our participation more seriously.

Do you think it is because of
the pricing that Aptiva has not been doing well? Which price segment will you be
We are yet to work out the price segment we will be participating in. However, we are
not looking at volumes but value market share initially.

We in fact have a success story in India. We shipped 1,000 Netfinity servers-which are PC
servers-last year and the magnitude of growth is tremendous. It is value growth, again. We
are doing very well in mobile computing as well.

That’s an incremental change in
the case of Netfinity. Why do you think it happened now?
It takes focus and understanding to grow a market. It took us some time to get the
message across for PC servers. We have Netfinity specialists who work with the customers,
understanding their needs and helping them understand the advantages of the server. That
activity has gone very well. It had been going on since 1998, and the result was realized
in 1999.

The other reason is that our business partners have conveyed the value proposition to our
customers well. Business partners are very important for large-scale growth. I know how
much value a business partner can give. We are focusing on small and medium businesses and
business partners and are working on enhancing that channel. I have been conducting
sessions at IBM’s National Business Councils for the business partners since February.
They have responded very well, which has resulted in a good quarter.

Despite the need for high-end
servers, AS/400’s growth does not seem to have been good. What do you think has happened?
If you mean growth in terms of numbers, then yes. But, we have made the product more
scalable-available to low, medium and high end range instead of just the high end. We do
need to look at the market share as well. We will look at selling it as an internet [box]
instead of just a plain box. However, we are happy with the growth, though it may seem to
be plateauing. For that we need to get into the next level of e-business. We expect to do
it soon.

Initially, RS/6000 was
positioned as a workstation, and then it was transformed as a server. Is there any
strategy in this? You also lag behind Sun. Are you looking at niche markets?
RS/6000 has always been both. It is a very strong success story. We were flattening
initially, in the first quarter of 1998. Since then we have grown well. We achieved a
significant success at Telco with 6,600 installations. RS/6000’s growth has exceeded

For this product, web serving is a strong focus. In India, the ISP business is going to
grow, and that is a major opportunity segment for us. In terms of product capability, I
don’t think it is second to anything. It is used in scientific environments, weather
forecasting and the academic world. Apart from this, the commercial market itself is a big
opportunity, where we are doing well.

What is the game plan for IBM
Global Services?
We treat each customer need as unique and respond accordingly. In Australia, we have
tie-ups with companies like Telstra. The model will not necessarily be replicated
elsewhere. As long as we grow through a particular strategy, it is right. We will do
whatever is the appropriate thing for the customer.

Will you also add consulting to your business?
We have expanded quite a lot in India. We have added 1,600 people here. That is because
India has the skills. We are also expanding in Pune and Delhi. We plan to grow that way.
And we have a consulting wing. Though we aspire to be in the consulting business,
customers have the choice of choosing any consultant and we will deliver the solutions as
per the requirements. We do have IBM Consulting expertise available in the Asia Pacific
region and plan to rope in this expertise.

Don’t you intend to look at consulting seriously as it brings in more revenue per
Consulting does bring in more revenue per person, but it has its own market. So, we
have to enter it not just for the sake of consulting or revenue. IBM Global has its
successful model. In India, we will follow the same model.
Your concern could be because of the image that we only export our services. It is now
changing and we plan to focus on the local market as well. How much we participate in the
domestic services market is more important to me and we are looking at that.

There is a perception that IBM has more of a box focus and that its software is not so
visible. Is it by design?

It is definitely not by design. We
have significant focus on software. We have an independent software division, of which
Vishwesh Padmanabhan is the VP. He has specific revenue targets. Apart from this, we have
Lotus Domino/Notes, which is a strong platform. Besides, we have sold several licences of
Tivoli software.

We also have a commitment to tailor software products to the Indian needs. These products
are mostly other people’s products that work on IBM platforms. In addition to
Padmanabhan’s division, we also have a solutions organization to port the software for
local needs. Projects have already started. These are not IBM products, but the team
ensures that they work. We expect to see a strong focus in this area.

How has Lotus gained through
association with you?

In a very big way. The performance has
skyrocketed as Lotus products are sold as part of IBM products.

Despite this, Microsoft is
towering and there is a differential of only 5% in the market share between the two
products. Your comments?
I cannot comment on that. According to industry information, Lotus continues to remain
very strong in areas it performs. In the Indian context, I can comment on it only after
two quarters. But, right now we are very happy.

Tivoli was completely integrated with IBM. However, Lotus seems to have been kept at an
arm’s length. It even has its own office in the country. Is there any advantage in this?
There are differences. You have to do what is appropriate for the customer. Tivoli was
totally integrated because it was appropriate. In case of Lotus, its channel strategy was
good and was retained. As a result, we sell Lotus products not only through IBM, but
through their channels as well. However, integration between the teams has to happen and
it is happening. Only the frontline has been left intact.

Are you looking at manufacturing
or made-to-order manufacturing in the country?
We review this aspect regularly. For inventory management, it is easier if
manufacturing is done at fewer locations. IBM’s global manufacturing is well integrated
and it makes more sense to restrict manufacturing in terms of locations.

In India, the duty structure is also different. India does not have any plans to scrap the
duties. But we’ll be reviewing again for India. Also, we need to grow in numbers to
justify manufacturing in the country.

You were known as the
‘turnaround manager’ in your previous posting at New Zealand. What is your mandate for
It’s probably a lot of flattery [laughs]. IBM has the advantage of strong customer
relationships. In India, there has been terrific work done in the last two years with
respect to customer responsive processes. Ravi [Marwaha] again gave me a good footing for
that. Apart from the skills, the foundation for the turnaround was there. As a result, I’m
going to be on the growth phase on par with global business.

Have you made profits in the country?
We made strong profits in the first quarter of 1999. Last fiscal saw profits for the first

Apart from the name, what does
Tata bring to the table in this venture?

Tata’s is a strong business house. It
has great strength. It provides us with advice and guidance. That is a real benefit as we
had been away from India for some time.

That’s surprising since Tata’s
IT companies have done better when focused outside rather than on the domestic market.
What value do they bring to the relationship?
Whatever I just told you.

Can you hypothesize a situation
where IBM in India does not have the Tata name?
We cannot comment on that. We have a partnership with Tata that is strong.

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