Think Flat

Or: If you build it, will they come?

As I've written earlier, in the lexicon of modern-day business, innovation and isolation are firm opposites. The most successful companies have embraced unplugged approaches to innovation, which seek to allow the judicious flow of information, ideas and insights across what would conventionally be watertight walls.
Unplugged approaches epitomize how innovation happens on our ever-flattening and increasingly hyperconnected planet. Innovative new companies such as Innocentive have  even built a business model around helping such unplugged innovation thrive.

But let us pause to dwell upon the fate of the new products being birthed thus.
Across industries, the mortality of new products has traditionally been high (as high as 60%, or even higher depending on which source you consult). Clearly, new product innovation is fraught with risk.  Can unplugged approaches to innovation help ameliorate this risk?

I believe they can – particularly those that emphasize blurring barriers with customers, such as Co-creation and User-centric innovation.  These approaches to innovation posit that you should begin working with customers long before the new product is complete. They obviate the conventional need to have a complete product before coming to market, instead allowing the product to evolve in the direction of a more organic fit with customer needs.
In other words, rather than assume if you build it they will come, these approaches take the more pragmatic route of saying, if you invite them (customers) to help create the product, maybe they’ll use it!

Continue reading "Born in the Flat World: Bringing new products to life in a hyperconnected world" »

Posted by Dr. Vivekanand P Kochikar at 08:01 AM | Permalink | Comments (1) | TrackBacks (0)

Continue reading "Mind the Gaps – 500 executives share Flat World insights" »

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In his recent blog post from Davos, Nandan Nilekani stated, “Clean energy presents a big opportunity – you may even call it a profitable opportunity,” and that solving the issues will require public-private partnership.  He also highlighted that many of these issues are interrelated, so we have to think about them from multiple angles (such as biofuel demand’s impact on food prices). And Kris Gopalakrishnan shared his thoughts on whether Web 2.0 technologies have made innovation democratic, blurring company hierarchies and boundaries. 

Putting these thoughts together, what emerges is a case for using collaborative innovation for solving some of the biggest issues facing humanity – issues such as climate change, food security, basic health and education. 

As Kris pointed out, the advent of the Web 2.0 technologies is changing how we work and collaborate.  And as we master these collaborative technologies, it will be only natural, and expected, that we use them to help solve our biggest issues. 

As we design these collaborative mechanisms, we should keep three points in mind:

Continue reading "Big Opportunities" »

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On 10th of Jan 2008 the world saw the launch of the cheapest car, not from Japan or Detroit (who are know as the technology leaders in automotive), but from India. This car is not only going to revolutionize the automobile industry, but also the entire manufacturing industry. This car is going to be an inspiration for many  and is the best example of Innovation and optimizing cost to fuel growth.

The company undertook the transformation journey few years back when it saw huge losses of $110 million in 2001 and today is set to change the rules of the game with the introduction of Nano. The learning from this is that Impossible is Nothing and companies need to constantly innovate.

Continue reading "NANO - Innovation in Automobile" »

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I am not sure I need to contribute yet another piece on the 'greening' efforts of the Global Auto industry, but let me try!

We have read numerous news-articles on the efforts by the major manufacturers to launch hybrid cars over the past couple of years. I am aware of a few models from Toyota that have hit the roads and seem to have found a strong 'green' franchise. General Motors, the largest car manufacturer worldwide (yet, with Toyota nipping at its heels!), has announced grand plans to launch an 'unplug-and-drive' electric hybrid, aptly called the Volt.

Continue reading "The Next Big Innovation in the Automobile Industry..." »

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The September 24th issue of New York Times was interesting and eventful. There were ofcourse detailed reports of all the happenings that day in the city and nation : the visit of Iranian President Mahmoud Ahmedinijad, India at 60 celebrations, the deepening mortgage crisis in the US, the usual political drumbeats before the 2008 elections,etc. But interestingly, the entire page 4 was dedicated to describing the Twenty-Twenty cricket world cup – a new brand of instant cricket that has become increasingly popular not only crossing countries in its entertainment value but also crossing genders. Yes, the women like this game as much as the men (as the article reported). Will it be successful in America? Time will tell. However, an even more interesting article was on the bottom of the cover page : "Outsourcing Works and So India is exporting jobs"

The author here described how companies like Infosys are having many American graduates fly in for a novel experience – A six month training in Bangalore followed by assignment options anywhere in the world including back in America.. AMR Research this week has written about Indian companies setting up numerous near-shore delivery centers in US time-zones. India is outsourcing outsourcing.

As luck may have it, this week, I was called by our academic relations team to present to the students of Georgia-Tech, a top engineering university in Atlanta, US and talk about the same program referred to in the article above on why it would make sense for these students to consider Infosys as a career option for internships or full-time assignments. We presented on how the world is flattening and it is important for the students of today to get India/China assignments early in their resumes. The audience itself was an equal mix of students of Chinese, Indian, European and American origin. At the end of the presentation, one of the American students walked upto us and enquired about full-time positions for Americans in our China office. He mentioned that he had already done 3 years of undergrad in China, completed his graduation in the US and wanted to go back to get some experience in China, India, East Asia and Australia before coming back to the US. The experience he said would be invaluable for the rest of his career. We had all along been preaching to the choir! I don’t know if Georgia-Tech was the exception but students today are gearing up fast to deal with the flat-world. Programs like the one Infosys has instituted is accelerating this awareness.

Coincidentally, one of my clients, a senior business-IT executive of one of the most successful CPG companies in the world was visiting Georgia-Tech along with his CEO to deliver an inspirational talk to the students there on how compelling their value proposition was for potential career aspirants. He mentioned that even they could not beat the Infosys proposition of providing emerging markets and global delivery experience early in the career in capsules like we had structured.

This CPG company is a true flat-world company and the senior IT executive felt that emerging market and global delivery experience was an imperative for all their leaders, not optional at all. Young students and progressive companies are all adapting fast to the flat world, faster than you think. They are getting ready for the future. Are you?

Posted by Sandeep Dadlani at 09:33 PM | Permalink | Comments (6) | TrackBacks (0)

by Kannan Amaresh

I was encouraged by the responses to my earlier post to share further views on the subject of new product introduction, especially those focused on individual consumers. It's about "information asymmetries".

In a flattening world, one of the aspects we talk about is how information asymmetries are going away. If as an enterprise you are clued in to this aspect, you will realize that even your prospective customers are watching your product launch, reviews and so on. Increasingly enterprises will find it difficult to take advantage with information asymmetries even though the product was marketed to a particular geographic or market segment.

We all know how that iPhone introduction was watched on the web by millions of prospective clients. Now with the price reduction done, perhaps without sufficient substantiation [you can read Apple's open letter and make your own conclusion], it looks like a perfect mis-reading of the market, by those who are already iPhone owners and the prospective ones.

Here is my thought – assume I want to buy an iPhone for $399.  At what level of confidence will I be buying this, knowing the established precedence of a potential price reduction of another $100 in about 3 months?

Continue reading "Information (a)symmetries in new product introduction" »

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by Kannan Amaresh, Banking Domain Competency Group 

I have asked Kannan Amaresh to share his thoughts on this blog.

Kannan heads the Banking Domain Competency Group at Infosys.  He has over 14 years of professional experience in the field of banking and financial services.  He has been a consultant with some of the leading banks in the US, Canada, Germany, UK and Australia.  Kannan is the author of several thought papers and has been an invited speaker several prestigious industry events hosted by the Financial Times and academic institutions such as University of Cambridge.

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An interesting HBR viewpoint from Mark Kramer about CSR.

Mark Kramer is the co-author, with Michael Porter, of the McKinsey Award-winning Harvard Business Review article, "Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility." 

One of the reasons that CSR is different today than a few years ago is the availability and access to information.  Easy information access makes it easier for consumers to form opinions about responsible (or irresponsible) behavior of companies: Imagine all that gets written about known and "not so well known" corpororate activities in personal blogs and discussion forums.  

While only a small percentage of people will translate their opinions about companies into purchase choices, their opinions will have a substantial impact on the company's brand perception.  It would also have an impact on recruitment and retention.  It is never fun to have to defend your employer's behavior to your friends and family.  

Mark Kramer talks about direct business benefits of CSR and how it is a business reality.

Maybe a better word for "CSR" would be "Corporate Responsibility", because it is not merely "social" any longer.

Posted by Richa Govil at 07:00 AM | Permalink | Comments (1) | TrackBacks (0)

Subsequent to my earlier posts, there have been further developments in the areas of consumer payments and consumer lending that I thought I could share with you.

Amazon.com has announced its intentions to jump onto the ‘consumer payments’ bandwagon by offering payment services, like Google and Paypal, to its customers. Many online sources report that  Jeff Barr, Amazon’s executive who heads their Web Services Group apparently wrote in a company blog last week, ‘Since we've been processing payments for over 10 years, we have a really good understanding of the cost and fee structures which are associated with each type of payment method.’

On a related note, there have been a few comments to my earlier posts, decrying the excessive focus on innovation in service delivery as opposed to service creation. While I agree in some part to that point of view, I also believe that in a Flat World, execution excellence is what will differentiate the winners from the also-rans; and execution excellence is about delivering not-so-innovative concepts in a rapidly scalable and cost effective manner to the market. Paying for purchases is not necessarily an innovative area; but bringing in efficiencies to offer superior ‘one-click’ experience at better cost structures is something that has changed the way the world shops! And the capabilities to execute on such initiatives are not necessarily born out of 'legacy' retailing or banking experience, but from a better understanding of how customers behave and the ability to model their adoption of newer technologies.

The other update on innovations in consumer lending (Read my older posts here): Prosper.com announced last week that it will take its peer-to-peer lending model to Japan through a joint venture with a local financial services firm (I could not find the original press release on Prosper’s website, but here is a related report). This follows Zopa.com, another UK based peer-to-peer site, announcing its US foray and UK’s Virgin Group investing in an emerging US peer-to-peer lending site. In the context of the ongoing happenings in the global credit market, it is interesting to see that on the one hand, while Central Banks across countries are challenged to walk the delicate path of restoring order to the financial system, peer-to-peer lending sites are quietly expanding their reach! I am not attempting to strike a comparison, given the magnitude of the larger global crisis, yet, I strongly feel that peer-to-peer sites offer a lesson to those clamoring for safety-nets to irresponsible lending (and borrowing) behavior!

Posted by Balaji Yellavalli at 05:13 PM | Permalink | Comments (3) | TrackBacks (0)

So wrote Mark Twain after learning that a reporter was sent to investigate whether he had died.  I was reminded of this quote after reading the latest in a recent spate of articles predicting the decline of India as the leading global sourcing destination.

Citing unnamed "experts" the article, like others of its ilk, blamed wage inflation, hidden costs, and rising demand for skills as the reasons why companies are pulling out of outsourcing relationships or shifting offshore operations from India to "newer" locations. 

There are a number of problems with this line of reasoning.  First, it assumes that global services market is static and cost-obsessed and that the labor arbitrage model will always rein supreme. 

Certainly, cost reduction is and will remain a principal goal driving companies to move IT and business process activities to offshore locations.  But, it is not the only reason.  Establishing market presence or supporting local business activities in emerging economies are among the others, as is the need mitigate geopolitical risks.  Companies also look to different locations for local knowledge and linguistic and cultural reasons, e.g., to serve East Asia markets from China or EU countries from Central Europe.

Continue reading ""The report of my death was an exaggeration"" »

Posted by Stephen Lane at 06:39 AM | Permalink | Comments (5) | TrackBacks (0)

I was quite overwhelmed by the comments to my earlier post, here as well as offline! Most readers agreed that digital alternatives to cash are becoming prevalent. Many also alluded to the so called ‘unbanked’ segment of society and what service providers are doing (or need to do) to enlist them into the mainstream. That thought is an interesting lead into what I wanted to post as a sequel!

According to a 2004 Federal Reserve Board study, nearly 10 percent of American households are unbanked! One would assume that a developed economy like the US, with Banks at every street corner, would not suffer from such a glaring deficiency! It is this underserved segment that is now becoming the focus for some of the large financial institutions.

Continue reading "Innovations in Retail Banking – Part 2" »

Posted by Balaji Yellavalli at 09:34 PM | Permalink | Comments (6) | TrackBacks (0)

by Stephen Lane

I've been thinking about a recent Wall Street Journal article titled "Seven Myths About Outsourcing" (subscription may be required).  Basically, it is a cautionary tale that's been told many times in outsourcing circles.  Last year an outsourcing advisory firm also wrote a report along the lines of something like "the seven secrets of successful outsourcers".
 
Five years ago the authors could have written the same article about CRM and before that ERP.  We all know quite well that every business/IT trend follows the same path.  Gartner hit the nail on the head when they came up with their Hype Cycle.

True, vendors sometimes over-promise, but the problems in many outsourcing cases are due to failure to properly plan by the outsourcer -- that and a lack of dedicated program management.  Many first time outsourcers jump onto the bandwagon with visions of huge cost savings.  What they fail to realize is that if they don't have a good sense of their internal operations, they won't know what they are outsourcing and can't manage it well enough to get the desired savings. 
 
The moral of the story is that outsourcing is a strategic activity, one that requires planning, partnering, and a strong sense of internal processes and costs.  It also requires executive leadership, stakeholder buy-in, and dedicated ongoing management, which is the same for any strategic undertaking.  In raising these points the article is actually quite positive.  If anything, we and the other offshore vendors should be thanking the authors for pointing out what to most experienced outsourcing practitioners is obvious. 

The main problem that I have with the WSJ article is that it follows the recent trend of using the terms outsourcing and offshore interchangably.  The same myths have been and continue to be applied to domestic outsourcing, e.g., the old "your mess for less" approach that led to headlines a couple of years ago about dissatisfaction with outsourcing in general. 

True, the offshore approach does include a cultural wrinkle, which is one reason, but not the only reason why some our most advanced sourcing clients travel to India and other sourcing locations between 3-5 times annually to meet with us.  That kind of dedicated management and attention to relationships yields results.  So does experience, which is another point the authors make. 

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I have been having conversations with many Banking Industry executives on the Retail side of the business over the past couple of weeks. I was struck by two industry innovations, at either ends of the spectrum – one, impacting sophisticated and well heeled customers; the other, addressing the traditionally underserved segments of the market. I will talk about the first trend here today and cover the second one in a subsequent blog.

How you pay for your purchases - whether at the neighborhood grocery or at a restaurant for that fancy Saturday evening dinner or even online, buying your favorite pair of jeans - has profound implications on the entire transaction value chain. The ‘consumer payments’ area, which is industry jargon for what I just described, is ripe for change!

What we all know: Over the past decade, cash ceded its preeminent position to credit, particularly for large-ticket transactions – there have been varying adoption rates of credit cards across countries, but they are here to stay; in the past 5 years, debit cards have seized significant turf from credit cards and have penetrated what the industry calls the ‘micro-payments’ segment, which are in the nature of smaller, diurnal transactions we make for ‘convenience’ purchases!

Continue reading "Innovations in Retail Banking – Part 1" »

Posted by Balaji Yellavalli at 07:32 PM | Permalink | Comments (6) | TrackBacks (0)

Kris Gopalakrishnan, CEO Designate of Infosys, recently observed: "The computing horse-power within the largest of firms has been outpaced by what is today available collectively at the fingertips of individuals." A testimony to true democratization of technology! In Kris' view, it is going to be a challenge for firms to catch-up; further, given security and confidentiality concerns, it may be a while before Web 2.0 applications (Read my previous blog here) are adapted to an "Enterprise 2.0" framework.

An ex-CIO Client of mine who is now examining independent business ventures told me that the Software-as-a-Service (SaaS) business model could accelerate adoption of Web 2.0 by Companies. SaaS is about hosting business critical IT applications off-premise, outside the firewall of a Company and charge based on usage or transaction. SaaS can bring all the latest and innovative Web based applications developed for individual use, into the enterprise mainstream by distributing (and thereby reducing) adoption and ownership risks.

Continue reading "Network Based Business Models: Another Step Further" »

Posted by Balaji Yellavalli at 06:32 PM | Permalink | Comments (5) | TrackBacks (0)

By Badri Devalla, Sr. Principal, High-Tech and Discrete Manufacturing

Supply chains are lengthening as everyone knows - we are connecting far removed markets and suppliers, moving far more information (buying a car at a dealer in your zip code vs viewing models and building a personalized car online), and moving a lot more inventory over larger distances (So much so that there’s a Think Local movement gaining root in the left coast of the U.S.)

Continue reading "Shrinking the expanding supply chain" »

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Badri Devalla, from our high-tech business unit, was recently discussing how the use of information in supply chains is changing. So I've asked him to share his thoughts on this blog.  

Badri is a Senior Principal for Infosys solutions for the High-Tech and Discrete Manufacturing industries.  He holds a Ph.D. in Computer Science from Texas A&M.  He is particularly interested in how companies use consumer information for better product, supply chain and customer operations.

Posted by Richa Govil at 09:20 AM | Permalink | Comments (0) | TrackBacks (0)

Sandeep Dadlani's previous blog generated quite a bit of discussion (some on the blog and some 'offline') about relying on inuition vs. analytics to make decisions. In business, as in life, you never have perfect information (by that I mean complete and accurate information about everything you need to know to make a particular decision).

Whether you're trying to figure out your way through unfamiliar streets or trying to trade-off new product features, you are forced to make do with imperfect information. It could be that the needed information simply does not exist (or more accurately, it is not captured anywhere), or you don't have the resources to collect/analyze the information or you don't have the time to do it.

What if I were to restate Sandeep point: when does it make sense to seek (and invest in) better information and when does it not? IT professionals are adept at putting together 'business cases' for IT investments. What about business cases for information analytics? And how do those business cases change if the cost and management attention required for analytics becomes a fraction of the original estimate through the use of global resources and advanced technology?

Posted by Richa Govil at 10:14 AM | Permalink | Comments (6) | TrackBacks (0)

My previous blog on Customer Relationship (CRM) and Customer Data Integration (CDI) generated some interesting comments. While many industry insiders did agree on the importance of CDI and “putting the cart before the (CRM) horse”, there was healthy skepticism around the effort and investments involved in a potential CDI implementation – is it again one of those big, hairy, audacious monsters which puts organizations at risk during implementation?

Well, to answer that question simply, no, it is not. But let me not get into a spiel on CDI implementation; instead, let us take a detour and touch upon technological developments in the flattening world around us, which if leveraged in an organizational context, can significantly bring down the implementation efforts, costs and risks for complex technology programs.

My long time friend and colleague, Sandeep Dadlani wrote a blog recently, right on these pages, extolling the virtues of 'Linked In' and how it can jump start networking and collaboration even within a large and rapidly growing organization. Think about it, networking and collaboration tools on the Internet have figured out the art and science of connecting and integrating public data across a mass of individuals. These tools seamlessly and silently update, in real time, any changes in people's professional or personal lives, based on individual preferences. And here, we struggle to link silos of customer, employee or any other business critical information, when everything is right under our noses, within the firewalls of the organization!

Continue reading "Web 2.0 and The Network Based Organization" »

Posted by Balaji Yellavalli at 04:35 AM | Permalink | Comments (1) | TrackBacks (0)

“What if we had LinkedIn within the enterprise?” – asked the CIO of a large CPG company. Three different Fortune 500 company CIOs in the past two weeks have approached my team for help in the area of employee productivity, internal communications, company-wide collaboration,etc…. Coincidence? Lets look at similarities in these companies. These are large, high growth, successful companies who continue to add employees by the thousands every year, in different parts of the globe, organically and through acquisitions….The nature of their business (Retail / CPG) is such that the employees are operating in distributed locations. All three companies are known to be very employee-friendly.

So why did these companies simultaneously have the same problem to solve? Why the CIO?

Continue reading "LinkedIn across the Extended Flat-World Enterprise!" »

Posted by Sandeep Dadlani at 07:25 PM | Permalink | Comments (4) | TrackBacks (0)

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!

Posted by Guest Author at 06:30 AM | Permalink | Comments (1) | TrackBacks (0)

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.

Posted by Richa Govil at 06:20 AM | Permalink | Comments (1) | TrackBacks (0)

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.

Posted by Sandeep Dadlani at 03:27 PM | Permalink | Comments (1) | TrackBacks (0)

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.

Continue reading "CRM: Putting the Cart before the Horse" »

Posted by Guest Author at 06:03 AM | Permalink | Comments (4) | TrackBacks (0)

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

Posted by Richa Govil at 05:44 AM | Permalink | Comments (0) | TrackBacks (0)

by Balaji Yellavalli

I got many interesting responses to my previous blog stressing the role of technology “engines” in meeting emerging regulations related to Anti-Money Laundering (AML) and illustrating the collateral benefits of such moves on customer experience.

I envision two critical “calls to action” especially in the context of regulations such as AML, Know Your Customer (KYC) and others that keep popping up every time a new and perverse way to engage in criminal activity is uncovered.

One, financial institutions need a strong “Unified Compliance Solution” (UCS) approach to integrate seemingly disparate compliance-monitoring activities across global lines of business. A UCS approach not only helps in linking apparently unconnected transactions to establish a potentially suspicious pattern and file a “Suspicious Activity Report “(SAR) with the regulators. It reduces time for investigation and focuses staff energies in going after the “bad guys” as opposed to disrupting genuine day-to-day transactions. A UCS also helps in integrating customer data which could help in gaining better insights into customer behavior, for improving customer experience and ultimately, customer satisfaction.

Infosys’ experience with leading financial institutions has borne out the fact that while Regulatory Compliance may be the impetus for a UCS, it is not the end game. A well-designed UCS can be leveraged for competitive advantage and ultimately, for winning in the turns, based on superior customer insight!

I know a top Wall Street Firm that consistently outperforms the competition by combining regulatory compliance initiatives with customer data integration. It is in an enviable position today because of investing ahead of time in aligning and unifying disparate silos of organizational information across their global operations. 

The second call to action: it is assumed, when we discuss such topics, that the quality of transaction data generated by a firm’s systems is clean and reusable for further analysis. Unfortunately, it is not always the case.

As the complexity of transactions, coupled with their global spread increases, so does the scope for errors in collating and reporting. Independent studies by leading analysts have estimated that the business losses due to poor transaction data quality are in the order of US$1 billion to US$ 1.5 billion on an annual basis. It is ironical that financial institutions are actually losing money due to poor maintenance of data and information within their organization, far from making money from information! Hence, it is important to install strong data quality systems as an intermediate step before building the UCS engine.

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by Balaji Yellavalli

Recently, I attended a conference on “Money Laundering” in New York. I was surprised to meet more than 500 people representing banks, financial institutions and government agencies on a cold Monday morning to discuss a topic that one would normally associate with the underworld! Well, to be fair, the conference was to discuss the emerging regulations to curb Money Laundering or “Anti-Money Laundering” (AML) as they are collectively known.

How is AML relevant in a Flat World? Well, just as there are benefits of the flattening world, there are unscrupulous elements in society that take advantage of business and technology advances to perpetrate financial crimes. Money laundering is potentially the tip of the iceberg – it may be a conduit that feeds into international corruption, drugs and in the post 9/11 world, terrorist financing. In other words, fraud can be an unanticipated outcome of the Flat World, if regulators and the private sector do not work together in a timely fashion to detect and weed out the bad elements of society.

Interestingly, this conference was the sixth or seventh in an annual series and elicited active participation from well-known top tier global banks and investment firms as well as US regulators from Washington DC. A leading Swiss Bank executive said on a panel that they use “Artificial Intelligence” based algorithms to sift through terabytes of customer transaction information to detect suspicious patterns and uncover potential wrongdoing. At the same time, the bank maintains the classic “Swiss” tenet of privacy and customer anonymity. Well, I can imagine how difficult and complex it can get!

I may be wiring some money from the US (where I live) to India (where I was born) to invest in a holiday home for the family. I may have done that after juggling my savings, e.g., selling a portfolio out of my retirement accounts or liquidating my time deposits held with US banks. So how do the regulators and banks ensure that this is a genuine transaction? Do they know that I am just an innocuous consultant working for a large global professional services firm or a front for some other suspicious person or transaction? Not to scare you, but it illustrates the challenge government agencies and financial institutions face in linking the myriad, seemingly ordinary transactions that people conduct in the course of their daily lives, to suspicious and potentially dangerous activities.

The challenges can be a minefield, fraught with financial risks for banks and financial institutions.

Now, going back to the Swiss bank illustration, it is about mining existing customer transaction data globally and across the enterprise to uncover patterns; how does one go about doing that?

Continue reading "Anti-Money Laundering in a Flat World" »

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