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IT’s the lever that moves the world

In the backdrop of a growing economy, an effective IT deployment can help a company match or even beat global competition. Aishwarya Ramani looks at how companies have deployed IT to go that extra mile.

Companies use IT for everything from streamlining the value chain to complying with regulations. IT solutions are ubiquitous. At most companies, the basic infrastructure namely servers, WAN links and an ERP system, are already in place. The next step is to deploy IT effectively to gain a competitive edge. IT heads at most companies feel that IT contributes significantly to business growth.

Traditionally, manufacturing, BFSI and telecommunications have been the big spenders on IT. “Companies in the pharmaceutical and chemical verticals are now increasing their IT spending,” says Arup Roy, Senior Research Analyst, Gartner.

"The sheer volume of information routinely dealt with by any business sector makes it highly dependent on IT" - Meheriar Patel DGM & Head - IT Globus Stores

“The sheer volume of information routinely dealt with by any business sector makes it highly dependent on IT,” says Meheriar Patel, DGM & Head – IT, Globus Stores.

IT’s role in M&A

Acquisitions are the order of the day helping Indian companies compete with multinationals or even helping them transform into MNCs. Take the case of Marico that recently acquired hair care brand Fiancée from the Egypt-based Ready Group. Similarly, TCS acquired BPO outfits based out of London and Chile. The point is that Indian enterprises are recognising the benefits of inorganic growth via the acquisition route.

However, if Indian companies are operating on a global scale, it is important that they adhere to global standards. In the global economy no company can survive in isolation and every business must be well connected. “In the domestic scenario, we see companies aping their Western counterparts when it comes to their style of working,” says Roy.

If Indian companies want to establish a strong footing in the global market, they will have to compete with MNCs. Even within the country, competition in every vertical is rising.

Patel says, “IT is now a key driver for any business. In terms of value it has reached a level where all decisions, predictions, innovations and process values are ascertained from a well implemented IT architecture.”

Putting the right infrastructure in place

"We recognise and acknowledge the need for substantial investments in IT" - Satish Pendse CIO, Hindustan Construction Company (HCC)

The first step to gain from IT is to have a strong IT infrastructure. This is as true of SMBs as it is of the enterprise segment. The Roots Group for example, has a basic ERP system, 512 Mbps WAN links and a storage and archival system to suit its needs. While a NAS and a DR site are in the pipeline, the group, already uses BI.

The problem that Roots faces is getting software that offers the best fit. O.A. Balasubramaniam, Head I.T, Roots Group, complains that the cost of customised software is high.

The use of IT testifies to the fact that it has acquired the role of a value creator. The fact that companies have gone ahead and deployed IT to benefit their partners and extended ecosystem proves that IT has shifted from support to partnership.

“We have software for specialised engineering construction functions,” says Satish Pendse, CIO, Hindustan Construction Company (HCC). HCC uses optimisation engines that help reduce wastage. Because it is an engineering and construction company, the capital investment is in the form of engineering construction equipment that must be utilised to the extent possible.

Microchips embedded in the equipment help HCC record real time data. “We make good use of this data and are working on interfacing it directly with our ERP system,” says Pendse. HCC credits IT with conferring several benefits and this is what has led to the formation of an IT R&D team that scans the environment for technological developments that can be adopted within HCC.

Pendse says, “The benefits of his company’s IT deployments can be quantified. Reduction of inventory, and working capital, increase in the utilisation of the equipment, reduction of time taken by various people in the organisation to complete various tasks and reduction in transportation costs are some of the benefits.”

"Computerised fluid dynamics helps us create a virtual environment to test our products" - Vijay S Mahajan General Manager, IT Infrastructure and Information Security Corporate IT, Mahindra and Mahindra

Companies in the engineering and manufacturing industry are using IT to automate testing. For instance Mahindra and Mahindra uses IT at the product design stage. Vijay S Mahajan, General Manager, IT Infrastructure and Information Security, Corporate IT, Mahindra and Mahindra says, “This has helped us reduce our time to market and aided us in fine-tuning our marketing process.” Prototype testing according to Mahajan is a time consuming activity. “Computerised fluid dynamics helps us create a virtual environment to test our products,” adds Mahajan.

Mahindra and Mahindra also implemented a barcode system to track all the materials in its warehouse. “All spare parts are barcoded and tracked with the help of wireless handhelds,” says Mahajan.

Patel says, “IT allows us to enhance customer service levels. Radio frequency identification and development of inexpensive chips replacing barcodes over time will drive the supply chain making it more ‘intelligent’,” says Patel.

FMCG major Colgate Palmolive is deploying front-end applications on PDAs for its workforce. “Over and above the advantages of cost reduction, productivity and efficiency improvement, IT also gives us better insight and control which, in turn, helps us to refine the processes continuously. Deploying IT also helps meet the complex requirements of regulatory compliance,” says Arun Pande, VP IT, Colgate Palmolive India.

The final word

"Deploying IT helps immensely in complying with complex regulations" - Arun Pande VP IT Colgate Palmolive India

The companies might have appropriate IT systems in place but the question is who takes the final call when it comes to an IT deployment? In most cases, it is the CIO, who in consultation with the CEO, is responsible for an IT deployment.

“The decisions are taken by the steering committee and subsequently approved by the CEO. The steering committee consists of the Corporate CIO and other senior functionaries,” comments Pande.

Pendse says that the top management in his organisation gives him the freedom to deploy IT in such a way that it helps the business. “The final decision is taken by the Deputy Managing Director and the CEO. Fortunately, we have never found that to be a constraint. Our culture is democratic,” adds Pendse.

Most companies however, continue to look at IT as a cost centre. “We have not reached the state wherein IT is regarded as a profit centre. It’s a cost-centre. We recognise and acknowledge the need for substantial investments in IT. Approval for IT investments is never a bottleneck. Our pace of IT deployment is never governed by the pace at which investments get approved; rather it’s governed by the pace at which various layers in the organisation can absorb technology,” says Pendse.

Intangible benefits

The success of any investment can be measured by examining the ROI. So how do various companies view the return on their IT investments?

“There are a few factors that are not easy to quantify and measure. For example, if certain IT initiative leads to a rise in the topline, then the question is how do we measure whether a particular initiative has really led to an increase in the topline? We need to understand that the increase in topline could also be due to branding, better sales or due to an IT initiative. Differentiating between all these factors is difficult,” says Pendse.

Mahajan feels that the CIO doesn’t need to give any kind of financial justification for an IT implementation. As an example he cites the fact that IT implementations help manage the product lifecycle. He feels that IT has helped by supporting virtual collaboration with partners.

Balasubramaniam also agrees that the IT ROI is more in terms of intangible benefits.

With organisations operating at a global level, it is increasingly important for companies to adapt to the global style of working. This means having the right IT systems in place so that companies can adhere to global standards and comply with relevant international regulations that affect their businesses.

Examples given by CIOs reveal the importance of IT at any modern organisation. Technology provides a competitive advantage when it is implemented appropriately. Also, the IT department needs to be given some amount of freedom to experiment with new technologies. IT has the potential to provide value to businesses if deployed wisely.