Case Game; Case Solutions

CASE GAME
The Case Of Managing IT
Contd.

Should IT Override Strategy

THE DISCUSSION

V.S. KRISHNAN
President, RPG Enterprises

Typically, the root of all implementation worries is the absence of a synergistic view of IT. I would suggest that Kumar and his core team draw up a comprehensive roadmap to make sure the IT initiatives yield the desired results.

As a first step, Total should examine its business processes and single out those critical to its success. This should be done separately for each of its four businesses. If a particular business is cost-intensive, then all processes driving costs become critical. If a particular business is working capital-intensive, then all processes driving product-delivery are critical. As a thumb-rule, however, any process that impacts the customer is a critical process.

The next step is to map processes in detail. If order-delivery is a success factor, it, in turn depends on things like order-receiving, inventory-monitoring, dealing with the manufacturing department, and customer feedback. These processes must be sequenced and documented.

One of Chatterjee's complaints was about data integrity. And rightly so, because weeding inconsistencies out of the system is critical to ERP's effectiveness. There are numerous gaps here. For instance, when it comes to order validation, Total has fallen short. These inconsistencies must be ironed out through safeguards and by incorporating time schedules. IT brings the rigour of discipline into the system even while ensuring autonomy at the operations level.

I think Total should gain access to the best practices in each process. If it takes 12 days to deliver a product while its competitor takes five days, the managers should in fact be asking themselves: ''Why can't we do better than the best?'' Benchmarking against the best, not necessarily in one's own industry, helps generate stretch targets to which the IT system can then be dovetailed.

Once Total has these steps in place, the next thing is to pick the right it system-both hardware and software-which addresses the basic process concerns.

In sum, the problems have arisen at Total because of an excessive focus on systems. Kumar and his team should talk processes first and systems next. That is the best way to reconfigure Total's IT drive.

ANWER BAGDADI
Head (IT), Godrej-GE Appliances

If Total is under an it 'siege', it is because of two factors: absence of process orientation and a lack of synergy between organisational goals and IT. In order to be successful in IT, you need to have at least three basics in place: cross-functional workflow, adherence to common procedures, and transparent processes. You also need to manage change, all the way.

One of the first remedial measures that Kumar should initiate is to demystify IT at Total. It can be done by fostering an enterprise-wide understanding of the benefits of IT and of how each individual manager can add value to his role by accessing IT. It is important to address the "what is in it for me?" factor at the individual level. That will automatically ensure, over time, integration of all business process with IT.

The process of demystification can be enhanced by segmenting-and not lumping together as Total seems to have done-the various IT activities. For instance, there could be three functional categories at Total: on-going business support (supporting the day-to-day systems), business value creation (identifying and developing new it-based systems and infrastructure components), and business resource management (the administration of various IT processes). Each of the categories requires a different approach. For instance, ongoing support needs focus on efficiency and customer satisfaction, business value creation warrants a focus on tangible business benefits, and business resource management needs an asset management perspective. Such segmentation would address issues related to data integrity.

Total should consolidate its IT initiatives already in place, even as it plans an expansion in the role of IT through tools such as 'balanced scorecard'. The scorecard is a good review mechanism that also provides a platform for business alignment and growth. Its linkage model ensures awareness, visibility, integration, measurability, and day-to-day management of all the four keys aspects of an organisation viz. financials, customer, internal process, and growth-enablers. The scorecard is meant to change even as the company's goals change.

It is important for Total's managers to recognise that it is only an enabler and no more. Their efforts should be concentrated in ensuring process and business alignment, and in administering proper measures through tools like the scorecard. However, the problem pertaining to the measurement of IT value is pervasive in traditional companies like Total. The argument conveyed is that the benefits of IT are intangible and therefore beyond measure. The fault invariably lies in one of three factors: the object of measurement is not understood, the meaning of measurement is not clear, or, the techniques of measurement are not properly deployed. Viewed in this light, it can't be denied that the value of IT is, in fact, measurable.

AMBARISH DASGUPTA
Exec. Dir., PricewaterhouseCoopers

The problems being discussed in the case are not only systemic and sporadic in nature but pertain basically to software design. Such problems are bound to surface when an organisation is moving from a hierarchy-driven reporting to an open environment, which allows free access to information-but the solutions would be normally available in the system itself. All you need to do is to fine-tune the system and make it flexible as you go along. But, clearly, the issues that Kumar and his team should be addressing are more fundamental: What is it that we are looking for in it? Should we move into e-commerce? Without a long-term perspective driving the IT initiatives, Kumar and his team would be groping in the dark, caught up, as they are now, with finding short term solutions to isolated problems. This is not only a waste of managerial time but constitutes, in my view, a serious business risk.

There are some areas where Total has not done enough homework. Benchmarking one's existing practices with national and global standards is an integral part of any IT endeavour. For instance, if a global player in any of the four businesses of Total is ensuring that no order goes unfulfilled for more than two days, that should become the benchmark for the corresponding IT initiatives at Total. It is the common experience of corporates transiting towards e-commerce that benchmarking not only provides a focus to the IT drive but ensures that the system fully measures up in future. Kumar should avail the help of an outside agency in this regard. In fact, the implementation should be the responsibility of a core team comprising senior managers from Total and an outside consultancy firm.

The core team would have its tasks cut out at Total. As part of revamping the system-which in my view is important-the team should first identify the key success factors in each of the businesses and ascertain the best practices for each. Once they are in place, the team should decide on the IT modules that would be necessary to drive the company towards pre-determined standards of excellence. This is where the choice of technologies becomes a critical component of the IT drive at Total. Simultaneously, Total should undertake a comprehensive review of its database and information systems. It should question the legacy practices and purge those which are coming in the way of achieving business results. This is an important step towards evolving an integrated database. There are three factors that the core team should keep in mind in this regard-data transparency, data integrity, and data security. A number of systemic issues-of the kind that Kumar and his team are grappling with now-would be automatically resolved at this stage.

A solid transaction foundation is central to moving towards the ultimate objective of e-commerce. Integrity is certainly a major issue in a situation where information is captured from different sources in varying time zones. The need for data reconciliation is obviated when you can ensure that there is only one point of entry of data into the system. This is where the core team must define authorisation limits and install relevant protocols. These are basically design issues. And they should not pose a problem. But if they are indeed a major problem at Total, it is because the link between IT and business strategy is tenuous. This must be rectified.