Renuka Vembu
Express Computer
The global recession has made the job of CIOs tougher. Let us look at how they are coping up with the challenging times and what strategies they are formulating to deal with it
The economic meltdown has created ripple effects impacting industries across the globe; the IT/ ITeS, BFSI and the service sectors being the major verticals taking the hit. But with increasing security concerns, technological advancement surging at a rapid pace, the growing importance of service delivery timelines, and real-time access and decision-making, the job of CIOs, to give an optimum level of performance amidst working under pressing budgets, is a tough one. Additionally, they also have to adhere to new compliance and environmental regulations and grapple with new products and operations. Though it is an established fact that IT no longer just aids business, but is an integral part of business, in today’s scenario, IT heads are walking on tight ropes in an effort to attain a balance between the performance scale vis-à-vis the cost factor.
Under the scanner
The areas where spending can be restricted wholly depends upon the nature of business, scale of operations, need of the company, their focus for the future and the ways they have chartered out to deal with the changing scenario and the fields where amendments have been impending. While some CIOs eye the day-to-day operations to pull the budget strings, some take a medium-term view while still others adopt the long-term approach to even out the edges.
T G Dhandapani, Chief Information Officer, SCL-TVS Group, said, “As a CIO, my attention is not only on IT capex and opex control but also to look to hasten IT spend that will impact efficiency gains or cost cut elsewhere in the short run. We re-look at assumptions made on various projects and identify the fat caused by ‘over design’ and ‘changed scenario.’ This helps us in reducing non value adding cost. Any new IT enabled business investment will have a target for return, and a cross functional team from business and IT will have joint ownership to ensure flow of returns. This remodeled scenario will ensure that the IT team aligns technology initiatives to the business goals and at the same time creates ownership on business colleagues to own the IT enabled processes and get best out of them. The velocity of reporting by IT can also be enhanced, by cutting the period to shorter cycles—month to week to day to hour, to enable faster decisions and transparency that may be enhanced.”
The prudence here would be to embark on projects that will ensure maximum returns on investment with minimal risk proposition. Likewise, proposals that are under consideration and can be deferred, should be put on hold till the economic/financial situation brightens up.
Vijay Sethi, Vice President, IS and CIO, Hero Honda Motors, explained, “In the IT portfolio, there are always some ‘vital,’ some ‘essential’ and some ‘desirable’ projects. While we are continuing on ‘vital’ and most of the ‘essential’ projects, we are taking a hard look at ‘desirable’ ones and seeing what can be deferred or scaled down. Also, we are reviewing all the IT expenses to see if can defer some of them. There is an increased focus on workflows to improve efficiency in the system and reduce paper work. There is also focus on projects that would help to reduce maintenance costs, improve utilization of equipment and reduce energy costs.”
There will always be a certain amount that organizations will incur as their IT spend. The objective here should be to use the money prudently, towards identifying potential areas where there are chances of a slip-up and then working out ways towards rectifying it.
Remodeling the process
Upal Chakraborty, CIO, DLF Limited, pointed out the aspects that need to be considered while remodeling:
- Look at doing more with less
- Use tools to reduce manpower requirement
- Re-look at bandwidth/server costs (through consolidation)/ reduction of power costs
- Outsource areas where core competency is not there
Identifying areas of waste, aiming for reasonable and attainable profits/revenues, curbing wasteful expenses, can help organizations and CIOs scrape through the rough tide. Sethi added, “We need to review our equipment refresh policy and look where we can extend life of assets. Other areas are projects like application or infrastructure consolidation to reduce maintenance costs and putting technologies like e-learning to supplement training and reduce travel. I think economic conditions like this give us all an opportunity to have a closer and harder look at our way of working and take measures to remove inefficiencies in our systems and processes. I think another thing could be that we need to ensure that when we add expenses in our setup, we need to look at long-term impact of ‘fixed’ expenses that we may be adding in our setup.”
In some lines of business, with falling transactions, needs may not be greater. Vendors too understand that if they want to ‘partner’ and not just ‘sell,’ they cannot increase rates. Certain ROI does not change, for example, if return was in terms of saving in manpower or avoiding duplication of effort or benefits of a new integrated platform, such return does not change. Implementation of processes and procedures helps to streamline operations and leads to greater efficiency which indirectly contributes to cost saving and better ROI. Sharing of resources or phasing out expenditure will reduce the pressure on cash flow.
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