Day Three/Panel Discussion

How to plan IT purchases during the Slowdown

CIOs weighed in on how they managed to drive innovation during a slowdown in a panel discussion

The morning kicked off with a panel discussion moderated by Dr. Nitin Paranjape, Chairman and Managing Director of Maestros Mediline Systems Limited. The panelists were Manoj Chandiramani, Senior Vice President, APAC Head IT OP’s at MF Global; Pratap Gharge, CIO, Bajaj Electricals; Udai Singh, Executive Vice President at NIIT Limited; Sunil Mehta, senior vice president and area systems director-central of JWT; and Sathyaseelan PA, Senior Director, Enterprise Solutions, Dell India.

Nitin Paranjape: I’m going to start with Manoj of MF Global and ask him how has the slowdown impacted his business and I’m going to pass on that question as the panelists are from different industries and the way in which the economic downturn has affected each of them may be different.

Manoj Chandiramani: I represent the Financial Services industry. We are primarily into the brokering business. People talk about markets and if you see they way in which they have moved in the last one and a half years, the way in which people are holding on to all the equity that they have, the turnovers have certainly gone down, but again it depends on what is the mix of the portfolio that you offer, what kind of clientele do you have. For if you fully focus on the retail segment then those FSIs were badly hit but if you have varied clients, if you have institutions, you have retail, you have private client groups and in this downturn what plays an important role is what kind of products you can offer and how quickly can you get them to market. It has indeed impacted us but not as much as the FSI was affected in the US or UK. Asia still remains the focus for everyone around the globe. Top people across the world talking about Asia being the next focus for the FSI and money that is going to come in during the next 12 to 18 months till the markets get to a particular level, it’s going to be Asia which is going to give good business.

Pratap Gharge: For our company, being diversified into six business units we have not felt the impact as much of the recession as most manufacturers have. There is an impact but it is not that much. We have been growing at the rate of around 28% year-on-year. Perhaps it is because we are in the small appliances business as well as we have a diversified business like projects to compensate for the lighting projects. For us the impact is almost not there.

Sathyaseelan PA: I would like to reflect on what we have been seeing in the business. The worst quarter we have found was JFM 2009 and in AMJ we have seen a recovery. The situation has bottomed out in India and now it has started moving up. We see business picking up for most of the companies. We had a big dip in JFM and it is looking better now, collective of all the decisions that many of you have taken that has reflected on us as the sales function and business.

Udai Singh: I think it’s been mixed for us. A lot of training delivery that NIIT does is electronic whether it is hosted e-learning or synchronous learning. That has benefited from the fact that customers want more time at the workplace and are therefore looking for convenient ways of employees being able to learn online without being away from the office. On the retail side, the issue has been that customers are taking more time to make up their minds, even typical students who would walk into an NIIT center and I would say that JFM was the time when it was a little slow but the AMJ quarter was very positive and I think we see ourselves as being in an investment phase for the next three to five years.

Sunil Mehta: If you notice there is nothing called recession, it is a curve that happens very often. Many companies worldwide have experienced a recession not once but many times. It is a new learning every time out of an old experience that everyone has dealt with successfully and that’s why good companies have stayed alive and they continue to grow. It could be termed as a slowdown. Even during the calendar year, some months can be good, some can be bad. Smart companies are always prepared for those lean months. If all of you or many of you must have stepped out you must have noticed lots of Americans enjoying themselves. I don’t see any recession happening unless they are booming the economy of Thailand. There is a lot of spend happening in every area. Companies are spending wisely where it is necessary and they are being cautious where they need to be and the priority which has always been a buzzword has now become a must plus priority. You cannot have anything which is just a priority but it is a must kind of thing to have whether it is an application, a service or infrastructure or a machine or manpower. Can have, nice to have, flavor of the month to have are out. In the services industry like ours everybody gets affected when there is an effect which is global and you are not indifferent to these things. One learns to focus on innovation, new ways of doing business, adding aligned businesses, or how with the help of technology you can improve your internal processes and efficiencies giving more time to your employees to learn and look at this as a great opportunity to do what you could not have done with your pressures. Now you have enough time on hand to do something right, enough time to go back to your management and spend time with them, they have enough time to brainstorm with you which did not happen. You can go more often to your teams and do things that your company needs to grow. Have online training programs where budgets have been cut. For e.g. every line item has been cut—no training budgets, no travel etc. So have online training. We have a worldwide signup for this with one of the companies in this space. We used to crib that we have to work 12-14 hours a day and therefore we don’t have time to upgrade our skills. Now there is time to take advantage of these things.

Nitin Paranjape: Let’s look at how to take this as an opportunity and what are the different things that we can do much better.

Sathyaseelan PA: The way to look at it is that lots of CIOs and CEOs whom we’ve met in the past, will I do anything in my organization that the customer will not pay for. That’s the fundamental thing. Look at inefficiencies in the system which we have that are acting as a drag on the business that the customers will not pay for. What is the competitive edge that we are creating? Spending is happening on removing inefficiencies, building competitive advantage, etc. A few software development houses that have a bench, they are getting benched staff to do in house application development. What is my current infrastructure cost today? How do I make it more efficient?

Pratap Gharge: What we have done internally is taken up a few projects. One was to reduce costs, another server consolidation, yet another video conferencing for connecting major regional centers. We also had a recent migration to a set of applications in ERP and to streamline our business processes. We have taken this as an opportunity to work on these improvement areas so that the overall business becomes productive and effective. Our goal is to take IT as an enabler to reduce cost everywhere that it is possible.

Manoj Chandiramani: Immense learning that we can derive from the way in which India Inc has been doing. The best things in life are simple to achieve. We are the ones who make them complicated. The vendors and the consultants are the ones who will come and make it complicated for you. If they don’t how will they sell you the same small thing at a bigger price.

If you see how things were done, even the Indian financial market regulators were quite smart. They were seeing that some kind of downturn is expected. They started launching things like currency derivative segments; they came up with the forex segment. What we’re seeing is what goes into the mind of the customer and where you can pick up share is by innovating with regard to the same product and selling it in a different way. I was talking to one of the Intelligent Enterprise Award winners, Satyen Naik from Sumul and he told me how earlier they were selling Amul Lassi and the sales were dropping. They rebranded it as Tak and they sold the same thing and now they sell 10 lakh liters per day.

Nitin Paranjape: One of the things which many of struggle with is when there is a shortage of funds and you still want to do something good, innovative and proactive, the money that is left are used for essential maintenance activities. How you take out some money for something useful and exploit that opportunity well.

Sunil Mehta: There is a budgeting exercise that every CIO does. Besides the CAPEX, there is also an OPEX. Every CIO typically has some OPEX budget for projects. Unless they are very large projects you do not need a million dollars or half a million dollars. Smaller projects sometimes can be squeezed in from funds that are already available. Typically, when you budgeting, you are not doing so on a net-net negotiated price. You are budgeting 100 you may land up getting that service for 70 or 80 and the buffer you land up getting is available as funds in such tough times. There is always a smart way of creatively handling your own budgets and pushing small projects that are meaningful and efficiency driven where you don’t have to go back and seek approval. You are utilizing your manpower with smaller budgets and you have the opportunity to build up a process in such a way that you can go back and showcase the same to the management and when they see a good result they may turn around and ask you where the budget came from and you can have a smiling answer rather than being tense and nervous about going to seek a budget approval. Everybody has learned the art of managing their budgets but such times these smaller opportunities can make you into a winner.

Udai Singh: You would be familiar with GNIIT, which is one of our flagship programs. There was a lot of internal debate over whether we should make it more affordable in these straitened times and there was pressure from the sales team that we should look at lowering the fees. We proposed an alternative which is how we create more value for the students so that whatever they are paying as part of the fees makes sense not only for them but also for the companies. Typically, students come; they spend six or eight hours a week at the NIIT center. Given the range of new things that need to be taught there is always pressure on what should we teach and how can that time be used effectively. We went ahead and recently decided that we would enable students to have netbooks that are connected to the Internet and we are aggressively looking at eliminating paper-based course material so that course material is automatically downloaded onto those netbooks when they enter the center and the additional hours that we needed to add to the curriculum need not be spent at the center but they can be spent at home and we can increase the amount of e-learning that is integrated into the curriculum. So instead of reducing the price by 20% we added value by making the investment and working with our partners to make it affordable and in the process ensured that the cost of delivery would not go up.

Sathyaseelan PA: Dell as an organization has taken cost saving of $4 bn as the target for this year. A lot of money comes from the infrastructure management piece. We have done a huge amount of infrastructure optimization with virtualization etc. This is there in our Web site. It is to look at the totality that I’m running a legacy system and it is going to cost me more and what is the cost of acquiring and running a new system and can it help us. There is a company in Bangalore that has looked at its total cost of management in terms of the application software that is being used. It has been using a lot of branded software. This company has an internal software arm. It developed a tool that can monitor and manage networks, monitor the infrastructure and then have a help desk. The IT manager was pushed saying I don’t have an IT budget so I need to innovate. Today he is coming out with an IT product to sell in the market.

I have seen many cases where internally developed applications are being productized and companies are adopting that as a business model.

Nitin Paranjape: In the process of doing new initiatives and trying to cut costs has something useful to business come up which is increasing business but would otherwise not have come up?

Udai Singh: The NIIT network of centers, there are almost five hundred in India alone, earlier we typically had the equivalent of branch automation, center automation, software. About four years ago, we decided to network all the centers comprehensively and move to a centralized system. That went off well. The team working on that project, independently and quietly sat with some of the business users as they used to keep getting ad hoc queries to run on the databases. When our marketing campaigns are rolling out, what are the enquiries for the day etc? This used to take days to collate. That team went ahead and built a strong data warehousing application along with an executive information system and a dashboard. Today the sales and marketing team literally swears by that. It’s up to date and authentic information. You don’t have to make phone calls to get that. It’s completely a byproduct and not something that was envisaged but the initiative of the team to work nights and make that possible.

Sunil Mehta: In our case, in the services sector, what happens typically is that we are driven by clients. We work for them and driven to the wall with precision and costs become a great factor to manage. We don’t call it cost cutting, we don’t call it cost controls, we call them cost management exercises. The net result of some of these initiatives that you land up taking besides your CIO role is, of course, management. One thing that we have seen while interacting with business heads all the time is that you are the center of the entire organization’s information flowing from all directions; you are privy to all their positive and negative way of managing their own services. Many a time if you keep your eyes and ears open you can come out with innovative ways in which you can manage their processes better. You start looking at innovative ways in which you can help them. While doing these exercises it is like a precipitate that you get some of the processes which come down, which are not in your domain and you realize that this is where all the money lies, this is where if you control these kind of wastes you could manage it better and therefore you start controlling them rather than cutting or doing any such exercise.