The business world is being disrupted by the combined effects of growing emerging economies, shifts in global demographics, ubiquity of technology and accountability regulation. Infosys believes that to compete in the flat world, businesses must shift their operational priorities.

« March 2007 | Main | May 2007 »

April 30, 2007

Cars: "Some assembly required"?

by Ajai Vasudevan, Automotive Solutions Practice Leader

When we sat down for lunch that day, it wasn't exactly the initial topic of discussion. But given the pressures on the North America auto industry, it was only a matter of time before the topic came up.

"How do we enhance our product development capabilities while speeding time to market and reducing cost," asked the engineering director of a venerable Detroit based Automotive Tier-1 supplier. While this happened several days ago, the words are still ringing in my head.

This is obviously the holy grail of automotive product development.

Maybe a day will come when customers will design their own cars - like they today happily "assemble" IKEA furniture at home.

That will effectively take care of at least part of the problem. However till that day of product development nirvana comes, more mundane solutions need to be found. Mundane? Very well! 

The Product Development process remains one of the most complex automotive business processes. It is everything that automotive manufacturing is not. It is iterative, it branches out and congregates, it runs over an extended period of time. In short, it is quite different and hence requires a different approach. 

The rapidly flattening world is opening up new vistas to innovate the product development process. Take Toyota as an example. While common wisdom conveys that there is an outflow of engineering jobs from the US, Toyota is turning the logic upside down. Its Design center in Detroit is hiring locally and growing fast. Toyota and Honda are opening new plants in the US and recently Kia announced opening a new plant in the US as well. It is remarkable that organizations based in developed economies are opening an engineering center in another developed country. What’s attracting Toyota? Talent. Experienced engineers who have spent a lifetime in automotive product development.

Another route is to leverage the global talent pool. Thanks to availability of connectivity, workflow tools and product data management systems it is now possible for an extended global team to pretty much act as one. This opens up the route to tapping a lower cost talent pool, running an extra shift and allowing the core team to focus on innovation.  And, in the process, if the team comes up with new product ideas for the global markets. Now that’s a way to the holy grail!

CIO performance criteria and product development

In the previous blog, Sandeep Dadlani talked about the need for CIOs to articulate a clear vision, to build a good team and build credible relationships with business.  Romil Bahl, Managing Director of Infosys Consulting, articulated similar sentiments when he said that newer parameters of CIO performance are increasing in importance while some of the traditional ones (such as technology expertise) are decreasing in importance. (see Role of the CIO in the Flat World).

Next, let me introduce Ajai Vasudevan, who is the the Automotive Solutions Practice Leader.  He has over 12 years of experience as a consultant, engagement lead and development executive for automotive and manufacturing companies, including a DSP, and Big 3 automotive major and a big 5 consulting firm.  Ajai holds a BS and MS in Mechanical Engineering and an MBA from the University of Michigan - Ross School of Business.

April 27, 2007

Flat-World CIOs need not understand technology

 

Marcus Buckingham, the author of the best sellers “Go Put your Strengths to work” and “Now, Discover your strengths”, was the opening keynote speaker at Sapphire – SAP’s annual event for customers and partners this week in Atlanta,GA. It was a packed keynote with no standing space left and it seemed that over 10,000 people were crammed in into Georgia World Congress’ main hall in downtown Atlanta. Marcus argued that individuals, teams and companies spend too much time focusing on improving on their weaknesses. What they should be really doing is focusing on their strengths and leveraging them instead. His study revealed that one question above all is key to determining the difference between successful teams and unsuccessful ones…. “Do you get the opportunity to do what you do best every day at work?”….If the answer is yes, then your team is likely to be successful. Marcus also argued that as children we already develop core strengths and weaknesses that are difficult to change so its best that we continue to work in areas that are best suited to our strengths.

Now lets apply this concept to the CIOs of Retail and CPG corporations. The question to ask is “What strengths do successful CIOs, lets call them Flat-World CIOs, bring to the table in todays dynamic enterprise ?”  What strengths are most needed in the job in the ever-changing flat world? Based on my conversations with several of these CIOs it all boils down to three core strengths

1. The ability to articulate a vision : For example, this successful CIO was promoted to run a business function, came back in 4 years to become CIO once he saw the IS organization falling apart. He articulated a clear vision to where he wanted to be in 2 years and has made such rapid progress towards his goals, he is regarded as a turnaround artist within his company. He could rally a fairly large IS team around him because of his vision

2. The ability to build a good team: This is not easy to achieve as most CIOs inherit a team already present. But one retail CIO has changed 18 of his 35 directors/VPs in the last 6 months in a frenzied movement to get top quality team members at the top. He strongly believes that a good team is the first step to getting anywhere with or without a vision. Jim Collins (Author of Good to Great) will agree.

3. The ability to build relationships with business : Infact CIOs who come from business are beginning to enjoy a level of credibility with business and getting buy-in far more easily on key business-IT decisions. Its interesting to  see if this trend continues.

You must be wondering, but what about technology? What about the tech-savvy CIO? While that’s an important aspect of the job and has tremendous advantages, I would argue that CIOs with the three must-have qualities described above  have figured out a way to get the right advice on technology and prove that they are successful without really being tech-savvy. They are working on their strengths that are most suited for the job at hand. Hence, as Marcus argued, they are likely to be successful.

 

 

April 25, 2007

CRM: Putting the Cart before the Horse

by Balaji Yellavalli, AVP, Banking and Capital Markets

The other day, the CIO of a leading consumer automobile finance company (which also offers other diversified financial services such as credit cards, banking, mortgage loans, etc.) told me that they cannot pull the data on an existing customer, say, a credit card holder, when she approaches the firm with a new transaction, say, a home mortgage or an auto loan. Something we would assume as the most simple or obvious thing that one can do in a post internet, hyper-connected, Flat World! These issues may not manifest as tangible or substantial cost escalations in the short run, but ultimately they are bound to add up and bring down customer profitability.

Why is this concept so difficult to implement, if its benefits are so patently obvious to me as a customer?

I see two main reasons. One, we all know very well: Financial services firms have grown through mergers and acquisitions over the past decade, which have brought "legacy baggage" with them.  Business processes, technology infrastructure, organizational politics, turf battles and sometimes even genuine customer privacy concerns have come in the way of sharing data across lines of business.

The other reason is not so apparent: Ironically, it is the evolution of a discipline and function called Customer Relationship Management (CRM) over the past decade or so.

CRM was purveyed as a panacea for integrating all customer touch-points and provide insights into customer behavior. For sure, CRM streamlined customer interactions. The call center or customer contact center, became a ubiquitous part of our daily lives, whether we wanted to add on a new service or to find out why we have been billed erroneously. CRM provided the glue to unify the front-end experience across both these channels and of course any other physical channel, like a bank branch or an ATM.

However, in doing all that, CRM has created for the organization, two new challenges.

One, it generated volumes of transaction data at every customer touch-point, which was often inconsistent with data within another channel or line of business. While data cleansing and data quality solutions addressed some of the problems, there still are far too many exceptions that need to be handled manually and end up not being addressed at all. In other words, while the front-ends of customer interaction points are glued together reasonably well, the middle and back-offices tend to get messy with multiple stacks of data vying for the "single version of truth"!

Second and the more critical challenge: CRM, by definition, is transactional. It tends to be reactive as it "waits" upon a customer to call. When a customer initiates contact (a call, a click or a walk-in), CRM systems, post facto, try and reconcile the true picture of the customer and all dimensions of her relationship with the firm.  So, while data analytics and data mining tools have fed off historical CRM transaction data, the foundation or core reference data of a customer tends to remain fuzzy.

The way CRM has evolved, it has ended up being the "cart before the horse" with regard to customer data – i.e., reactive transaction data continuously trying to catch up and build a 360 degree view of the customer.

I’m sure you have experienced this yourself, as a customer and also as a business professional. 

I am simplifying the case, but this is where Customer Data Integration (CDI) kicks in – CDI, at the core is the creation and maintenance of a centralized repository of core "master data" – the multiple facets (demographic, household, even updated credit-worthiness data) of information that identify a customer. This data is then "pulled" by various transactional CRM systems whenever a customer "calls" in, so that disparate organizational silos draw from the same master data for the transaction. Once the transaction is completed, if there are any updates to the core, master data, they are checked for consistency and updated in the central data repository and become the master data for the future.

To handle privacy concerns, a well designed CDI system can mask certain "views" of data even internally across lines-of-business. And newer technology developments like Service Oriented Architecture (SoA) ensure that the business process to continuously monitor, maintain and update customers’ master data are agile, flexible and scale with the firm’s growth aspirations.

So the next question is: how painful and challenging is the creation of a CDI? Well, short answer is that it can be quite challenging, but it is a one time exercise as opposed to rediscovering multiple versions of the truth each time there is a customer interaction. And the attendant re-engineering of business processes as well as change management is better handled in a centralized roll out.

CRM worked well when acting reactively to customer contact was acceptable; but in a Flat World, it is necessary to have an accurate view of the entire customer relationship. 

The CIO I talked about will hopefully be a happier person, given that he made the decision to adopt the CDI approach to his challenge! 

April 12, 2007

A Tale of Two CIOs

Two meetings last month remain etched in my memory for different reasons. Both with CIOs of  retailers who are facing a particularly challenging environment.

First let me point out the similarities. Both retailers are probably number two or number three in their sub-sector and have recently declared dismal results while the number one retailers in their category continue to buck industry trends and declare fantastic revenue and earnings growth. Both these retailers are under pressure to cut costs and at the same time transform the company. Both these retailers have relatively new CEOs whose mandate is to turnaround these companies. Both CIOs have been with their companies for over a decade.
 

So what does this mean for the CIOs? The two CIOs had absolutely different ways of dealing with what seemed to me fairly adverse circumstances.
 

The first CIO, lets call him CIO A…. figured out a way to consolidate his infrastructure spending and strike a pretty neat outsourcing deal with a global major reducing his net operating costs, resulting in lower SG&A. Lets ignore the specifics of the outsourcing deal for now but prima facie, the outsourcing deal has helped him free up headcount for either selected layoffs or to focus on strategic initiatives or both. The net financial impact is positive and he looks like a hero for his CEO. His CEO has gone on record stating that they will not look for further cost reductions in IT since it is so pivotal to the future growth of the company. Masterstroke, some would say….but some further digging may reveal that the CIO A has barely started to focus on how IT can really help turnaround the company. The company faces plaguing issues in areas such as customer service and customer loyalty. The speed at which he moves to mine the already available customer data to bring a customer-focused revolution in the company will be a direct measure of his success going forward…. From what I know of this CIO, my bet is that he will move forward aggressively using the same confidence and personal commitment as he showed in the outsourcing initiative. He knows that the biggest difference he can make is initiatives that directly affect customer service and customer loyalty.
 

The second CIO, lets call him CIO B…is struggling. Faced with similar circumstances, he is dabbling with initiatives around outsourcing, multi-channel management, master data management, etc. but is not truly committing to either. He is waiting for the new CEO to provide direction and will move as per his priority. Politically Smart? I don’t know…. I assume his new CEO will be looking towards his next rung of leaders (who have been around longer than him in the company) to make bold suggestions and take bold steps to take the company forward and make him look good. This retailer for example has no way of controlling how they deal with customers across multiple channels – store, services, website, etc. Any quick initiatives around this area are bound to be received well in the market and will boost the company’s topline. But the wait-and-watch approach so far deployed by CIO B will not serve this company well. I will refrain from betting on this one till we see how the company moves forward.
 

The two stories above highlight a couple of strong trends
1.       CIOs can be as powerful and as self-initiated as they want to be….particularly in difficult times to help reduce costs and improve sales/margins. It’s up to the individual CIO to take the proverbial bull by the horns to make something happen
2.       Outsourcing (as a quick fix to cut costs) and customer-service /loyalty type initiatives are being used to show quick results to Wall-Street. Other structural issues particularly supply chain issues are being addressed by more long-term transformational initiatives. Those are important and should be addressed in parallel but more on that in another blog….
 

As for CIO A and CIO B….I will keep you posted on their personal success and their company’s success.

 

April 6, 2007

Of IT Matters

Recently, Sandeep Dadlani had shared his views on Flat World CIOs who are increasingly focusing on improving operations through the use of technology or global sourcing.  This week on "IT Matters", Michael Taylor talks about the "business alignment" of CIOs.

According to him, "Despite the lofty intentions of seeking alignment, perhaps a more pragmatic focus is to make IT relevant to the business."  He cites the 2007 State of the CIO survey which shows that CIOs who are aligned with business are twice as likely to have created a new revenue stream.

There was also a recent survey by Saugatuch Technology and BusinessWeek Research Services of C-level executives of companies with revenues of billion dollars or more, that showed that a substantial gap in IT performance assessment by IT executives' themselves versus non-IT executives. (Survey link, registration required)

As Michael points out, IT organizations should ask what they can do to make other executives jobs easier and improve the bottom line.

Read Michael Taylor's full post