Advisory Board
By CXOtoday Staff
Mumbai, Apr 9, 2008

With the objective to add more value to our content and provide deeper insight on contemporary tech trends, CXOtoday has formed an Advisory Board. The Board comprises eminent experts representing diverse market areas. Here's a list of Advisors.

1. Shirish Gariba,CIO of Elbee Express

Shirish Gariba is a commerce graduate with training in software development and financial management. He has a rich experience spanning 21 years, across various industries and varied business processes. Gariba's unique trait has been his utilization of technology in each of his roles.

He has been instrumental in driving Elbee Express from a small-time logistics player to one of the leading Indian logistics companies. He was also instrumental in setting up a partnership between UPS, a logistics company, and Elbee. His recent initiatives have been toward utilizing technology to provide real-time critical information about shipments to clients.

Is there an empirical methodology to calculate ROI on tech investments?

The ROI calculation, according to me, has no set rules or experience. It totally depends on the tech investments, which the organization is making. Many a time to match the market and competition, one has to make investment in technology - whether the ROI can be computed or not, it is a requirement.

I can give an analogy - if the government is making investment in transportation - (say) plying buses throughout the night, they can't compute whether it is viable or not. They have to do it, because it is for the service to the citizens. Also, there are times - when technology has large time window for ROI, but as and when organization adopts it, the cycle time comes down.

The early adopters of technology have a bigger time cycle for ROI, and when it becomes a commodity - the cycle times of ROI shrinks.

In a mission-critical application environment, would it be wise to create an in-house application development and maintenance team instead of outsourcing?

Not necessary, if the business processes are designed as per the requirement of the organization, then it also can be outsourced. The comfort for inhouse development is that - it can be changed faster as per requirement, when the rules/requirement changes.

As technology costs are soaring constantly, shouldn't fresh investments on IT be application driven?

Generally, the investments are driven by applications, whether fresh or ongoing.

2. Suresh A. Shanmugam, national head (IT) of Business Information Technology Solutions (BITS) and CIO of Mahindra & Mahindra Financial Services

Suresh A. Shanmugam is a mathematics honors graduate from Madras University and has obtained advanced certifications in software programming. With a vast experience spanning 16 years, he has worked in various fields including software programming and hardware fine-tuning. Before joining MMFSL, Shanmugam worked with Appsoft and UPS.

Associated with MMFSL since 1997, Shanmugam is a member of the first Shadow Board of Mahindra Finance instituted by the Mahindra & Mahindra group. He's also on the strategy board to formulate the business information solution requirements.

He reads extensively on rural technology requirements and is an active contributor to CXOToday.

Is there an empirical methodology to calculate RoI on tech investments?

It is very clear for every action, there is an equivalent reaction, but for every 'spend' we can't expect the ROI on the same scales. However, the measurements required for any deployment in terms of cost - is a general or expected term. Since the delivery speed has gone very high, and the usage is based on demand, the modulation to fix the technology versus usage is to be pre-fixed with the duration concept, and actual use of every product. In some cases, the investments are made for keeping uniqueness or completion, where the value shown on is intangible, but gains the innovative value.

But the value for technology and value for usage on money - is more tradition and must, since both are changing based on the environmental need. For every area and sector, the formula is arrived over a point of time, in terms of identifying the model to calculate, to project or present on technology and usage towards the investments. As a given part, until the expectations of technology usage is more than 100%, for all those areas we will calculate the value for usage to result effective return on investments, otherwise it will be just a report to satisfy everyone.

In a mission-critical application environment, would it be wise to create an in-house application development and maintenance team instead of outsourcing?

The dependency of the application has pros and cons using both in-house and outsourcing. But majority of the in-house applications are opted through known personnel, and if that system fails it is a huge failure to the organization. In the same way, when we outsource all the areas, where the domain and uniqueness of the company is exposed maximum times - the domain drives the competition.

If it is more of a process driven application, recommend to keep outsourcing. If it requires more of information - not clear until standardization, recommend to route through in-house, which requires more of understanding, and stabilize to develop a process, and start deploying the same. Further, the time and need for requirement - decide the application to be outsourced or developed in-house.

3. Satish Pendse,CIO of Hindustan Construction Company(HCC)

Satish Pendse possesses a rich experience of 22 years in the field of IT. He has worked across various organizations including Johnson & Johnson, Jet Airways, Marico, Kuoni Travels, and is currently the CIO of the HCC Group.

Pendse has been responsible for implementing large IT initiatives including projects such as SAP implementation, document management systems, automation of distributors, acquisition of IT based organizations, business specific front-office software, business specific technical software, and conceptualization to implementation of state-of-the-art complex IT Infrastructure.

Working with the senior management team of his organization, he ensures business-IT alignment and the broadbasing of ownership for IT strategy and subsequent IT initiatives within the organization. He also focuses on building, developing, and nurturing the high performing team of knowledge workers so as to channelize their strengths and energies into delivering the value of IT to the business of the organization.

An engineering graduate, Pendse is also an MBA in finance and has a specialized IT qualification from NCST. He has been an active contributor to CXOToday.

At a time when technology integration with business has become imperative, can we measure the impact of technology on competitive gains?

Yes, it's possible to measure the impact of technology for competitive gains. Although technology integration with business has become imperative, the levels of technology adoption, pace of adoption, and the intensity of technology adoption vary across organizations within the same industry. It is this variation that gives a competitive advantage to the organization - that is ahead on this technology adoption curve.

The 'measurement' may be easier for some technology adoptions, whereas it may not be very easy in many of the other cases. For example, when the first bank adopted ATM in India, the competitive advantage was clearly evident as well as measurable. When the first airline started selling their flight tickets on Internet, the competitive gain was evident as well as measurable.

As technology costs are soaring constantly, shouldn't fresh investments on IT be application driven?

Fresh investments in IT should be value driven, just like in case of any other significant business investments.

One also needs to be aware of 'cost of not doing', while investing in some of the technologies / applications. In those cases, the value is delivered through the fact that - those investments will allow us at least not to be in competitive disadvantageous position.

In case of some of the business investments, elaborate value / ROI calculations may not necessarily be made, for example, the investments made in brand building or marketing can be classified in this category. However, for those cases too, the value calculations do happen in the minds of decision-makers. However, they have such a strong conviction about the value derivation, they don't expect an elaborate exercise to be carried out for identifying the value. In the future, IT investments may also achieve that status in the minds of decision-makers. In that case, the detailed value calculations / ROI calculations may not be expected. Rather the investment decisions may be taken on the basis of pulse of value in the minds of decision makers.

Is there an empirical methodology to calculate ROI on tech investments?

Calculation of ROI on technology investments is a complex subject, and gets discussed almost on every IT forum. One faces following difficulties while calculating ROI on IT investments:

i) One realizes the benefit but not sure of how that can be converted in tangible monetary temrs.

ii) If some benefits are convertible in tangible terms, then one can always question - whether those benefits are a result of IT investments, or they are the result of some other initiative. The challenge is to establish co-relation between quantum of returns and the relevant IT investments that have caused those returns.

Therefore, it may not be possible to convert all the benefits of IT investments in tangible terms. However, a significant portion can certainly be converted in tangible terms for the purposes of RoI calculations.

Starting point should be to obtain consensus about the benefits, which can be accrued due to the said technology investments. There are methodologies available for the same. After having reached the said consensus, it's possible to measure the said tangible benefits -if the past data (i.e. data pertaining to scenario 'before' implementing the technology) is available. For example, if 'inventory reduction' is one of the benefits of the technology investment, and if the past inventory data is available, then it's easily possible to compare to find out the difference between current inventory levels and past levels, and then compute the difference in rupee terms.

There are some methodologies available for assigning values to the non-tangible benefits as well. For example, one of the IT investments is supposed to increase sales. One should start with obtaining consensus among the decision-makers, that the said investment has potential to increase sales. Obviously it's not possible to meaure % increase in sales that has happpened due to the said technology investment. Best approach is to go by 'leading indicators'. For example, in this particular case, the sales increase will happen due to the following reason:

The said technology investment will automate manual jobs of the salesman (e.g. report preparation jobs, invoice making etc.); this will free (say) one hour of his time every day. This time can be deployed by him to increase his focus on (say) the slow moving items, which he typically neglects due to lack of time. The approach is to build consensus among the decision-makers - regarding the above-mentioned proposition that technology will save saleman's time, and saving in his time will result into increase in sales by X%. In this case, the leading indicator for the 'sales increase' benefit is 'time saved of the salesman'. It's possible to measure the time saved of the salesman. If the said saving is achieved, then one can assume that the anticipated sales increase has also happened. Using this methodology, it's possible to measure the intangible benefits as well.

Once all the benefits across the periods, and all the associated costs are available, it's possible to calculate ROI using NPV or IRR methods.

4. V.S. Manikkam,head(IT) of Henkel CAC

V.S. Manikkam holds a masters degree in materials management from the Indian Institute of Material Management, and his work portfolio includes diverse functions including finance. His initial break into IT was in 1992 when he was entrusted with deploying Manufacturing Resource Planning (MRP) solutions for his company.

Manikkam took up the challenge and delved himself deep into IT, training himself as well as handling crucial projects for various employers. He was instrumental in setting up the IT department at Converter Adhesives and Chemicals which he joined in 1999. The company was later merged with Henkel KGaA. Manikkam helped organize the IT function for the newly created entity Henkel CAC and currently heads the IT department of Henkel CAC.

Under his guidance, the company has been able to deploy best-of-breed ERP applications, spanning the entire breadth of business processes including production, quality control, purchase, finance, inventory, sales, marketing, etc.

With a keen interest in enterprise technology applications and innovation, he's a prolific writer on the subject and a regular contributor to CXOToday.

At a time when technology integration with business has become imperative, can we measure the impact of technology on competitive gains?

The contribution of information technology and its impact on the organization is perhaps the largest single influence on organizational architecture and design since the evolution of information technology. Technology certainly has its place among the key elements, which shape an organization. Technology has an equal attribute, along with strategy, people, and business processes. The interconnectivity of these elements should be obvious, for one cannot be changed in a transformational sense without at least a consideration of the others. While the formal structure or arrangements within an organization will likely be affected by the arrival of new technology, this does not have to be the case in all situations. A transformation can also occur through the business changing the way it operates. More specifically, information technology can be linked to changes in factors such as job design, physical layout or location, supervisory relationships and autonomy, cooperation inside and outside the organization, and formation of work teams.

The use of information systems can impact a firm's relationship with suppliers or customers. The ability to gain information from others up or down a process or distribution channel having control over that process or entity less of an issue. This is especially true of companies that may have considered a vertical integration strategy, but now realize that "vertical integration becomes less necessary when companies use information systems imaginatively. The ability to share information and the ease of transferring designs can also lead to an increase in outsourcing, which is a growing trend as companies try to reduce their own workforces and may find themselves shorthanded.

As technology costs are soaring constantly, shouldn t fresh investments on IT be application driven?

Without a proper governance framework, many organizations lack adequate visibility into their IT assets. The problem is compounded when organizations can t trace and track projects in their own portfolios. The result is wrong decisions, unwarranted spending, and a struggle to meet business demands and user expectations. Another crippling factor is the fact that most CIOs can t determine the ROI and risks involved.

The typical IT landscape of most large organizations represents a portfolio of applications that over time has become large and difficult to monitor, causing organizations trouble aligning business operations with IT. It can be difficult to identify which applications are eating up IT resources, which projects need maximum funding, or which projects should get maximum priority.

The inability of the organization to provide information that can ensure IT and business alignment can be attributed to:
* Inadequate visibility into the application portfolio
* Inadequate processes to continuously monitor and measure an application fit for a business
*Lack of adequate metrics to measure project success
*Time, energy and resources drained into maintaining legacy applications, leaving little for value-enhancing initiatives.

CIOs striving to achieve synchronization with business are plagued with issues such as ever-increasing infrastructure and maintenance costs, growing complexity of their IT infrastructure, and keeping pace with a changing business climate. Some 80 to 90 percent of all IT spending is committed to maintaining non-value-add applications, with only the remainder available for new initiatives or projects. To overcome this challenge, the CIO must ensure that the ratio is brought down so more funding goes toward value-added work.

The lack of IT alignment with business causes the business to distance itself from IT. IT is seen as a service provider rather than a partner. As a result, IT involvement in key business decisions becomes an afterthought. To ensure alignment, organizations must create an environment where IT assets are viewed as business assets. CIOs should consider implementing an Application Portfolio Management (APM) framework, which keeps the necessary checks and balances on applications. The main objective in seeking an optimized application portfolio is to eliminate all factors that constrain the business.


5. Anwer Baghdadi,senior VP and CTO of CFC India Services

Playing a pivotal role with CFC India Services, Anwer Baghdadi is involved in building and managing the secured technology enabling infrastructure framework, interconnectivity, and the technology team to support the company's ongoing operational availability requirements.

An IT veteran with over 24 years of experience, he has been instrumental in creating and managing enterprise IT set up at leading organizations such as Godrej & Boyce, Godrej-GE Appliances, and New Standard Engineering. He has also been instrumental in building up an IT infrastructure for BPOs like Lawkim and Epicenter.

Baghdadi has extensive experience in successfully implementing large IT projects on Enterprise Resource Planning solutions (ERP), multi-geographical Wide Area Network (WAN) implementation, and many other industry specific solutions.

Recipient of an international scholarship in "Systems Engineering" from Tokyo, Japan, he holds a degree in mechanical engineering from VJTI, Mumbai and has done postgraduate diploma in systems management.


6.C.N. Ram,former CIO of HDFC Bank

C.N. Ram has been a prominent technology leader who has successfully taken the technology and banking initiative in HDFC Bank to new heights during his tenure there. He joined HDFC Bank in 1994, the year when it was incorporated, and has helped established it as a premier private bank in the country.

Ram is a founder member of the Global Advisory Board of NCR Corporation. He's also a member of Asia Pacific Technology Advisory Board of Visa International and a member of Reserve Bank of India's Technology Advisory Committee. His keen eye for technology application within the banking and service industry has been appreciated across the industry. Apart from this, Ram is also on the advisory board of many technology companies such as Symantec, Sun Microsystems, etc.

If you want to discuss technology deployment issues with our Advisors, please mail at editor@cxotoday.com.