The chief information officers (CIOs) at enterprises such as Maruti Udyog Ltd, Elbee Courier and Hero Honda Ltd have evolved from being mere IT managers in charge of desktop and server management to strategic resources that help their companies leverage business benefits from technology solutions.
Mint hosted a teleconference with Rajesh Uppal, CIO of Maruti Udyog; Shirish Gariba Elbee CIO and S.R. Bala, former CIO of Hero Honda and founder-president of India’s leading CIO association, Information System Managers’ Forum.
Let’s start with understanding your IT budgeting process, and also the different drivers behind your technology purchases.
Uppal: At Maruti, technology spending is a very simple process. It’s a zero-based budgeting (process—this essentially means that the department has to explain all expenditure every year, or six months, depending on the frequency of the budgeting process).
Traditional budgeting processes only require departments and functions to explain the incremental amount over the previous budget that they are asking for), where I have a round of discussions with my business users to find out the projects and processes to be taken up next year. We then put all these in form of a presentation with my managing director.
Looking for the best bet: Maruti Udyog Ltd chief information officer Rajesh Uppal
Our budgeting process brings lots of business users in the loop and their involvement definitely helps. It’s also a challenge for us to get IT budgets approved at times because of capital investments for new plants coming in, but we have been managing around 15-20% growth in our IT spending every year.
Technology comes later. What I look at are the new processes or new investments coming up, and analyze how technologies such as RFID (radio frequency ID—small chips that can be used for such functions as inventory management) could help.
Gariba, you once told us that you get your business users to present the IT budget at Elbee. How does that work?
Gariba: We still follow the same process—the business users come and explain to the management what they need in terms of IT every year, or even every quarter. I also work on a zero-based budget because the business sponsors get their budgets approved.
For instance, this year we have a huge request coming in from our operations, sales and marketing divisions to invest in mobile solutions. It all started with very simple “push mail” service, and after experiencing the early results, these guys are now asking for more.
We are at a stage now wherein we will get proposals for mobility solution from different telecom providers and device manufacturers in a week’s time. We would like to publish alerts for instant delivery of consignments on the Web, wherein these devices will send an update to my server as soon as the delivery is made. This initiative will take around three to four months for a complete rollout across the metro locations.
Bala, do you view the involvement of business users as an evolution of Indian CIOs?
Bala: You’re right. The role has been changing for the past few years, and CIOs would do well by involving the actual users in the decision-making process.
Now, CIOs can devote more time talking to business users only if they outsource some of the routine IT tasks. Outsourcing has become a fad these days, but such decisions need to be taken with maturity. Outsourcing has to be practised well.
Taking the bottom line of business needs: Former chief information officer of Hero Honda S.R. Bala.
At Hero Honda, we had an established IT department, so we outsourced the first levels of data centre management and desktop management, while still managing some of the high-end tasks in-house. We also hired research firm Gartner to advise on new technologies. However, at Chambal Fertilizers we outsourced most of the IT functions since the IT department was not as established.
The bottom line is that the business need has to be the driver for technology buying. At the same time, it’s important to experiment with new technologies for gaining a competitive edge.
Uppal, what have been your experiences with RFID so far?
Uppal: RFID was a mixed bag of experience for us at Maruti. We wanted to use RFID for the supply chain and track all the suppliers and the shop floor. Unfortunately, the technology proved to be very costly for our supply chain, and the whole business case was being defeated. We are now trying to see if there are alternative ways of deploying the technology for our supply chain.
However, there was another business requirement coming in for the technology for shop floor tracking to understand the movement of our equipment. There was also a need to track all our quality parameters for the finished product. After doing a few trials with RFID for our shop floor, we believe it is quite useful.
What are your thoughts on the insourcing vs outsourcing dilemma faced by CIOs?
Uppal: As Bala mentioned, even we look at each and every part of IT and analyze whether it’s routine or strategic. At Maruti, anything strategic will include technology solutions that require domain knowledge. So, we outsource routine IT jobs such as data centre management apart from certain levels of software coding for the applications developed in-house. Our outsourcing budget is around 25-30% of the total IT spend.
Gariba: You can call me an outsourcing man, because we are a team of two members taking care of IT at Elbee. Software coding is outsourced, but we lay down the specifications; the domain is kept in-house and the choice of relevant technology is made internally.
We outsource software and application testing, support and facilities management. Also, most of the new technology solutions we are now going for will be delivered under software-as-a-service mode (under this, firms? are? charged only for what they use).
Analysts are talking about service-oriented architecture (SOA, where a collection or group of services communicate with each other) as the next big disruptive solution. What are your thoughts?
Uppal: We have been tracking SOA for quite some time now; nobody has any doubt that its deployment will make our life at Maruti better. We are evaluating several areas for deploying SOA projects, and the discussions with several vendors are on. But we need to see if the technology is mature enough for a business case before making any decision.
Bala: There’s been a lot of talk around SOA, and I do not think it’s just another technology. It’s something more fundamental and requires a certain amount of vision from the CIO in terms of understanding the organizational need.
To conclude, what business problems would you be solving with the help of technology this year?
Gariba: The logistics and distribution business we are in is getting redefined, and it’s no more about package delivery—it’s now information delivery. We now have to deliver this information really fast to our customers. With the help of technology, we are going to ensure that our customers get real-time information of the package they are shipping.
As mentioned earlier, mobility solutions will help us capture information while on the move. If we could achieve this, everybody will be happy.
Uppal: Managing growth is our biggest challenge, and that’s where we are going to leverage technology the most. There are new plants and various distribution channels emerging, which we need to integrate. Another big challenge emerges from the fact that we do not deal with our customers directly. Mapping each and every end customer by understanding their needs and preferences, and also tracking the processes of channel partners for ensuring quality of service are some of the areas where technology is going to help this year.
With the kind of growth we are?witnessing, in terms of people as well as plants, managing internal knowledge systems is another big issue. This year we will be looking at knowledge management systems.