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Selling technology to the management
Akhtar Pasha examines the processes that take place
before vendor evaluation and finds out how IT heads go about convincing the
top management about the merits of a particular IT deployment
 Today
IT is increasingly central to business strategy and execution, yet the IT organization
still has to prove its value—this is a universal truth. If IT has become
so central to the business then it should be renamed Business Technology (BT).
Or should it? We can endlessly debate on this so let us move on to the main
agenda. CIOs strive to operate IT as a business, using business metrics to market
IT more effectively. However, operational excellence alone does not suffice
— IT must also steer the strategic technology investments that enable digital
business, driving further business innovation. IT excellence is what results
from this combination. Here we will focus on the first aspect on how CIO or
IT heads go about selecting an appropriate technology that can scale to support
the organization’s growth and yet is agile enough to change and accommodate
changing market dynamics and how they go about selling the idea to top management.
Scoping of IT projects
Conduct a thorough study on the IT project that you are going to undertake.
Perhaps the best way to kick things off is to start by studying the existing
IT set-up, charting out the future requirement including commercial and technical
details and then map it to your business goals. It may sound simple but it is
actually quite a daunting task for a technology evaluator, as he has to support
the business heads as they scale their divisions. Remember technology alone
cannot bring wonders but it can enable a business to achieve its business objective.
According to Ravinder Jain, CIO, Aircel, “The first step is to identify
the business needs and then decide on your service partner and learn about their
products. Based on this, you can recalibrate the need if you find the need to
do so. Thus, the service provider’s role is essential as you choose a product
based on the partner and it is of paramount importance that the partner has
the ability to realize the technology’s full potential. We, at Aircel,
required a strong and yet flexible partner who could deliver business transformation
for us and we selected Wipro after an extensive & stringent evaluation process.
We found a vibrant culture of innovation and customer sensitivity coexisting
with an expansive talent pool in Wipro which is critical for success in long
term strategic engagements such as ours.”
Additionally studying the existing IT set-up would throw up interesting statistics
on how the company utilizes IT hardware. Through this, you can increase server
and storage utilization freeing up important computing resources and storage,
protecting investments in hardware.
When business meets IT
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 "When
selecting a business
technology we look at the best-of-breed products in the market, vendor
roadmap and the vendor's financial performance"
- Farhan Khan
General Manager-IT,
Videocon India
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 "Who
makes the final recommendation is not that important but who owns the
investment for its effective usage and return is given more importance.
Here the business is seen a single unified element where functional and
IT heads are members"
- T G Dhandapani
CIO, TVS Motor
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 "Foods
Ltd (a fully owned subsidiary of Orkla) The IT solution should be capable
of delivering value. It should be capable of running undisrupted for at
least 10 years and it should not have to change mid-way for if that happens
it would severely affect the growth of the company"
- B.G Shenoy
Head-Finance and IT, MTR
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Jain explained that process owners, top management and IT
teams are all involved in making the decision to invest in a particular technology.
The CIO takes the lead. Functional heads play an important role. For example,
if your business need is customer care, functional heads define the features
and functionalities at a broad level and then the CIO and his team take the
lead in identifying the right solution and ensuring that the functional head’s
requirements are met and, if possible, exceeded. If need be, the concerned functional
head is consulted while making the decision.
T G Dhandapani, CIO, TVS Motor, said, “A technology
related investment can be requested by anybody in the organization, be it the
business or functional head or a CIO. It depends upon the context and thirst
of the business (the CIO is also part of the business executive committee) for
the technology. Of course, functional heads have a key role to play in selecting
the technology, as the functional head owns the business process. The merits
and demerits of available technology to support or enable the business are discussed
among all functional stakeholders before it is selected and deployed.”
According to Farhan Khan, General Manager-IT, Videocon India, “Every quarter
we sit with the head of the department and review his satisfaction with the
systems. Since business process owners are users and cannot define technology,
IT heads take that strategic call. For example, we sat with marketing heads
and reviewed their pain areas, which were there in distribution management,
inventory that was feeding the order and sales. Having studied their pain areas
we recommended a Dealer Management Systems (DMS) and gave a presentation on
how it would solve their business issues and it worked. Therefore, we went ahead
for a DMS solution. Similarly, when we suggested that we should outsource our
HRMS functions, our MD was not convinced. “
He continued, “We had to work backwards to show the management how HR could
be enabled and how we could reduce administrative costs in the long run. In
a way, we had to sell our ideas and back it up with data points to justify it.
Once the management saw the benefit, it approved the project, “said Khan
He continued, “When selecting a business technology
we look at the best-of-breed products in the market, vendor roadmap and the
vendor’s financial performance. We analyzed the functional and technology
used by Videocon Group company—Retail, Net and Planet M and found SAP’s
IS Retail fit the bill because during evaluation and background research we
found that Oracle was still struggling with its acquisitions and that Fusion
was not seeing the light of day. Microsoft’s Navision was another choice
but SAP had solid vertical experience in our industry, a sound financial report
card and number of customer instances.”
B.G Shenoy, Head-Finance and IT, MTR Foods Ltd (a full owned
subsidiary of Orkla), said, “In 2003, our business turnover was Rs 120
crores. By collaborating with business heads and top management, we found that
sales realization was low; though we were into processed foods, we were competing
with raw foods. There were complexities in sourcing raw materials for processed
foods and the amount had increased to 20,000 tons. Additionally the process
completely lacked in control as it was controlled by Tally as there were changes
that somebody could change the data/number of transactions and like.” The
data was inaccurate. Applications were not scalable and lacked integration as
Payment, Good Receipt Note (GRN) etc were generated in FoxPro. On the other
hand, MTR Foods’ business was growing at 25% YoY and the top management
wanted to grow faster in the processed food business as many large cap MNCs
were entering this segment. Shenoy added, “Given the business complexities
we thought how do we add value in process foods and that’s when we thought
of standardizing our processes using SAP R/3 solution in 2003.”
Benchmarking technologies
Dhandapani explained that you could collect the information needed for benchmarking
technology from success stories and customer feedback. Suitability, adaptability,
sustainability, simplicity and cost are the criteria used for evaluation and
benchmarking. “Who makes the final recommendation is not that important
but who owns the investment for its effective usage and return is given more
importance. Here the business is seen a single unified element where functional
and IT heads are members.”
According to Khan, “Since we planned the IT infrastructure and applications
for the next five years, we benchmarked servers on different workloads and picked
up servers that could support 700 users over a period of three years. Benchmarking
is an important step in selecting technology vendors and their product/solution
as it gives the idea whether they can sustain the load before investing. This
helps us know whether the technology can sustain as we expand our business operations.”
Selling the technology to top management
Jain said, “The business output received justifies the investment on the
technology. Return on technology investments is justified by achievement of
business output and you should not look at pure numbers. Once the top management
gets the message of end output, then the IT project starts rolling. Business
output is converted into business Key performance Indicators (KPIs).” For
example, if your business output is customer satisfaction, your KPI could be
that the customer’s need must be attended to within ‘x’ minutes.
To meet the customer’s need in the time span you need to have the right
technology. For our contract with Wipro, we identified five business outputs
namely a) Time to serve customer, b) Time to revenue, c) Time to market, d)
Service Innovation and e) Business growth.
He added that Aircel currently operates in 10 circles across India and has an
estimated 11.5 million subscribers and that it is expanding its operations in
the 13 remaining circles to position itself as a leading full services pan Indian
telecom operator in the near term. To achieve this vision, the company has restructured
its operational architecture around innovation, scalability and flexibility.
Moreover, it relies on proper planning and research.
According to Shenoy, “The IT solution should be capable of delivering value
and that technology should be solid. It should be capable of running undisrupted
for at least 10 years and it should not have to change mid-way for if that happens
it would severely affect the growth of the company. The CIO and the top management
should avoid choosing a stopgap solution that could give up mid-way resulting
in a costly mistake being made.”
He continued, “If you are single entity company, the migration from one
technology to another is easy but if you are becoming a large company, then
migration to a new technology becomes complex, it’s like restarting it
all over again. Additionally it is easier to adopt new technology when you are
growing as you can adopt the business process as per the technology rather than
change business process to suite technology—that could be costly.”
Dhandapani has different viewpoint. According to him, RoI is the common methodology
used to justify the investment. However, you end up making some technology investments
for example those related to Information Security, where it is very difficult
to justify the investment based on returns. Justifications are made in such
hygiene cases based on potential loss that the organization would suffer in
the absence of such investment should be the selling point to the top management.
“Suitability, adaptability, sustainability, simplicity and cost are the
criteria used for evaluation,” he concluded.
Step-by-step guide for evaluating IT investments
Typically the investment process consists of three phases: selection, control
and evaluation. The three phases of the investment process occur in a continuous
cycle of selection, control, and evaluation. Information from each phase flows
freely among all of the other phases with the exception of evaluation. The evaluation
component of the process has a unidirectional information flow to the selection
component. The evaluation component is used to verify or modify the criteria
used during selection. We will study the three phases of investment process
further for greater understanding.
- Select—create a portfolio of IT project
investments that maximizes mission performance, using a standard set of criteria
for consistent comparison of projects.
- Control—measure ongoing IT projects
against their projected costs, schedule, and benefits and take action to continue,
modify, or cancel them.
- Evaluate—1) determine the actual return
on investment of an implemented investment against the business goal and 2)
adapt the existing process to reflect lessons learned.
The control and evaluation phases are conducted throughout the year and their
results are fed into the selection phase, which in turn feeds back to the control
and evaluation phases.
Organizational attributes for successful IT investments
While each phase of the investment process has its own requirements
for successful implementation, there are some overall organizational attributes
that are critical to successful investment evaluation. These shared, critical
attributes are: senior management attention, overall mission focus, and a comprehensive
portfolio approach to IT investment.
Critical attribute #1: Senior management attention
Business processes owners should include the following elements:
Phase 1: Selection
The selection phase creates a portfolio of IT project investments designed to
improve overall organizational performance. This phase combines rigorous technical
evaluations of project proposals with executive management business knowledge,
direction, and priorities. Key to this phase is the use of uniform, consistent
decision criteria that will allow top executives to make comparisons of costs,
benefits, risks, and returns across project proposals. The four step selection
process is:
Step 1: Screen IT project proposals;
IT proposals should be screened for the level of review as
well as relevance and feasibility. A mature investment screening process should
prescribe the amount of documentation and level of analytical rigor depending
on the project’s type.
Ask some key questions to consider in screening a proposal:
- Is the project clearly relevant to mission priorities
outlined in the business strategic or plan?
- Are there commercial off-the-shelf systems available
to achieve the majority of the project’s goals?
- Has another business firm done this type of a project
before? If so, have lessons learned been incorporated into the project plan.
- Does the project conform to the business technology
and information architecture?
Step 2: Analyze risks, benefits, and costs;
At this point, the proposals should be reduced to those with the highest potential
to support the business’ critical mission and/or operations. A detailed
evaluation of each proposal’s supporting analyses should be conducted and
summarized so that senior management can begin examining tradeoffs among competing
proposals that are to occur in the next step.
Ask some key risk questions to consider:
- Has the relevant project team successfully managed
previous IT investments of similar risk and complexity?
- Has the project team assessed project risk using
a comprehensive, well understood and documented process?
- For higher risk projects, does the proposal explain
how specific risk factors will be continuously monitored to minimize exposure?
- What are the risks to program operations and customer
service if this project does not proceed?
Step 3: Prioritize projects based on risk and return
During this phase, IT projects are rigorously compared against one another to
create a prioritized list of all investments under consideration. At the end
of this step, senior managers should have a prioritized list of IT projects
and proposals with supporting documentation and analysis.
Step 4: Determine the right mix of projects and make the
final cut
During this phase, an executive level decision making body determines which
projects will be funded based on the analyses completed in the previous steps.
Determining the right mix of projects to fund is ultimately a management decision
that considers the technical soundness of projects, their contribution to mission
needs, performance improvement priorities, and overall funding levels that will
be allocated to information technology.
Phase 2: Control
While business select proposals once a year, the control phase is an ongoing
activity to review new and ongoing projects, as well as operational systems.
During the control phase, senior management regularly monitors the progress
of ongoing IT projects against projected cost, schedule, performance and delivered
benefits. The frequency of the reviews may vary, but should not wait until the
annual budget preparation and deliberation process. Further if a project is
late, over cost, or not being developed according to expectations, then senior
management must decide whether to continue, modify, or cancel it. The steps
in this phase are to:
Step 1: Monitor projects against projected costs, schedule,
and performance
Senior managers need to compare the preliminary results being
achieved by a project against its projected costs, benefits and risks, and to
identify actual or potential managerial, organizational, or technical problems.
Step 2: Take action to correct any deficiencies
The action should result in the deliberate continuation, modification, or cancellation
of each project.
Phase 3: Evaluation
Evaluation on technology is conducted after a system has been implemented, and
is an assessment of the project’s success or failure. Using post implementation
reviews, data is collected, recorded, and analyzed to compare expected results
against actual benefits and returns. Evaluation is used to 1) decide whether
future changes are necessary which can help address serious performance gaps,
and 2) make decisions about modifications to the organization’s existing
evaluation process and selection criteria. This phase is comprised of three
steps:
Step 1: Conduct post implementation reviews
Step 2: Decide on adjustments
Step 3: Lessons learned
We recommend that businesses do the following:
- Conduct thorough research on business issues faced
by process owners
- Understanding top management business objectives
and growth plans
- Make a study of the existing IT set-up
It is important the CIO/IT head understands the issues of business process owners
and maps IT to the business objectives to achieve the same. The more the CIO
understands the business process issues, the easier the task of selecting a
technology and selling it to the top management becomes. Therefore, it is necessary
that IT team work very closely with functional heads and top management.
akhtar.pasha@expressindia.com
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