CIO-Reinvented Blog - By Prashanth Rai

TCS CO-Innovation Network

In my last two posts on Indian Offshoring companies, I have been stressing on need for companies to look for where they can bring value addition and innovation to the table. Now  here is a post by Steve Hamm (Author of Bangalore Tiger - book on Indian Offshoring / Wipro) which covers the new initiative by TCS called Innovation Networks.

TCS CO-Innovation Network:

TCS Innovation resources are extended to an entire ecosystem through a Collaborative Innovation Network that leverages shared synergies across the innovation ecosystem to bring all new standards of co-innovation for our customers.

For the past three years the company has been gradually building a network of university researchers, venture capitalists, and startup entrepreneurs. Now this initiative is really starting to get traction.

Model:

In past years, TCS invested small chunks of money in startups. Now, though, Malik says he’s developing a new strategy aimed at putting small investments to work with strategic partners. TCS really isn’t interested in the old-fashioned model of investing in startups simply for the capital gains. It wants a better payoff than that. The small investments it makes in startups can help solidify a relationship and boost the partner’s ability to develop products or bring them to market—which in turn helps TCS improve its product and service offerings.

Malik sees TCS as an enabler and transformer of innovations incubated by others. As a service provider, it’s in a unique position to understand both what corporate customers need and what startups have to offer. “It’s connecting the supply with the demand, and it’s a huge piece of the equation,” he told me. “There are startups popping up all over and they need to connect with customers.”

This is the kind of thing Indian outsourcers need to be doing to avoid the commodity services trap.

Some of the companies / initiatives that are part of the CO-Innovation network of TCS are:

CollabNet is the world's leading provider of solutions for on-demand collaborative development that enable globally distributed teams of software developers to complete software projects on-time, on-target, and on-budget.TCS and CollabNet partnered in 2005 to explore synergies and co-innovate and worked on CollabNet's flagship product, CollabNet Enterprise Edition (CEE) 4.0, designed for distributed application lifecycle management and software development.

MetricStream is a leading solution provider in Governance, Risk, Compliance (GRC), and Quality Management areas. MetricStream uniquely combines business process management software and content to deliver solutions with embedded best practices templates, access to compliance training programs, and real-time regulatory notifications and industry alerts.The TCS-MetricStream co-innovation partnership has been successful in delivering GRC and Quality Management solutions for global customers operating in a variety of regulatory environments and facing unique compliance challenges.

Tags: innovation - innovation+network - tcs - offshoring - it+services - india

Prashanth Rai

New Platforms for Growth - Offshore IT Services

Was just browsing through the old HBR articles and came across one titled "Creating New Growth Platforms" while reading this I wondered how relevant this is to the Offshore IT Services industry today. What can be the New Growth Platforms for this industry?

What are New Growth Platforms (NGP)?

Opportunities of building NGP's lie at the intersections of a company's actual or potential capability set, unmet customer needs and forces of change in the broader market.

Relevant Questions:

1. What trends would enable markets to grow faster and bigger?

Enablers:

• New or Converging Technologies
• Regulatory Pressure
• Social Change.

On this topic, I recollect an post I had earlier written about a speech by Nandan Nilkeni(Chairman Infosys) at their analyst meet and an interview with Gopalkrishnan (CEO, Infosys)covering the trends or themes they are seeing in the market, Looks like all the enablers are in place.

Gopalkrishnan's list of the most important transformational trends out there today:

1. The sensor Internet. He believes that sensors of all types will gradually become vital pieces of the Internet. "We'll move from an Internet of people to an Internet of appliances and people."
2. Social networking. "Thanks to social networking, power is shifting from organizations to individuals." The first major example of this phenomenon at work is the open source software movement.
3. The explosion of data. The data is there, but it's not being taken advantage of yet. "We leave a digital trail everywhere we go."
4. Mobile computing. "We got used to desktop computing, but the user interfaces of today don't really some natural to us. With mobile computing, we'll create more natural interfaces."

Nandan Nilkeni , 5 Themes that dominate the new world:

• Future Customers - Rise of the Emerging market , China / India, Significant growth rates, implications on the global GDP and its reallocation over the next 30-40 years
• Global Age Arbitrage - Demographics driving the world , Next 20 years the young people are going to be in places like India, Countries that are aging need to tap countries with the younger workforce - Global Arbitrage of age, Outsourcing phenomenon will continue to raise, trend is expected to continue for many years to come.
• Moores law still goes strong - Nobody predicting the end of the compounding improvements of computing power of computers , faster forms of computing - silicon, molecular & atomic. Along with improvement in communication networks (Satellite to T1,T2, Broadband moving towards wireless and mobility). Leading to increase collaboration, virtual work rooms and a virtual work force.
• Increased Granularity of information - Realtime nature of information that clients are having is on the increase, the future competitive advantages for all customers are going to be coming from those who take advantage of this information and make money from the same.Looking at information systems as a source of profit.
• Manage Global Regulations - Pressure on companies as they globalize in this environment is that they have to deal with the complexities of increasing global regulations. Sarbox, BaselI, BaselII , Anti Money laundering act etc etc.
• To Survive - Every company no matter what the value proposition , will have to become the most efficient low cost provider for products and services.

To factor all these companies will have to undergo a lot of fundamental transformation.

Winning in the turn - Companies that can take advantage of these shifts in the market place , companies which have information management to respond quickly to market changes, those that can respond to demand supply or strategic change in direction.

2. Where can we make a difference?

Customer Problems:

• Unmet
• Unserved
• Latent Customer Needs leading to markets

This one needs more thought but I think fundamentally the customers are not satisfied, very few CIO's or IT Departments are happy and content with their current state of Value that Information Systems deliver. There is a lot of talk of if the CIO needs to be on the board and who he should report to CFO/CEO. There is no doubt that the CIO is in a position to provide serious business value to the organization, information systems should be catalysts of the future of business. I remember reading somewhere that a CIO is in an ideal position to succeed a CEO , given his awareness and familiarity of the value chain of the organization. Below is just an initial list of possible points that they they could be looking at

1. Executing their Business better with the help of IT
2. Re-Inventing / Renovating their IT Landscape to prepare for the future
3. Incorporating the new innovations in technology, In their Information systems.
4. Reducing costs, Making Technology/Information systems and enabler of profits
5. Getting the right talent to work on their needs/problems

There is ofcourse another school of thought that instead of selling to the CIO , the selling should be focused on the CEO. Where the companies take propositions to the CEO to add value to the business rather than focus on the maintenance of systems or some application development work that is to be done.

3. How can we make a difference?

Capabilities

• Identifying & Assembling Capabilities
• IP
• Know-how
• Competencies
• Processes
• Leveragable Assets

Lets make a rough list of it:

• Global Organizations are being built
• Strategic Consulting capabilities is being created
• Vertical specific capabilities are being created

But this is where the organizations are probably going to have their focus, but its going to be a difficult & uphill task. Organizations are quite happy with the scores of people deployed on T&M Projects or on staff aug modes where they leverage the mix , experience of resources and the onsite offshore mix and are making a good amount of money even with the growing salary cost and dropping rupee. But the talent crunch which is not as accurate as stated but could become given the ever growing demand  will force organizations to look at other platforms for growth.

Tags: it - ito - offshoring - cio - infosys - india - hbr

Prashanth Rai

Workday Financial's

Workday the company founded by Dave Duffield, the founder of PeopleSoft till recently was delivering SaaS based HCM solution, on 20th Aug they launched the Workday Financials solution (It is currently in Beta). This is in some ways the first on-demand / SaaS based ERP, but for sure wont be the last.

“Workday is bringing together the lower cost of ownership of Software as a Service with our deep domain expertise in enterprise business solutions to deliver an on-demand alternative to ERP,” said Aneel Bhusri, president of Workday. “While ERP requires complicated integrations and bolt-on additions to deal with changing business requirements, Workday is built from the ground up to support today’s agile enterprise, and our modern architecture means we can continue to adapt and extend our solutions to meet customer needs for years to come.”

Research organizations project robust growth for enterprise software and on-demand solutions, while often citing significant issues with traditional products:

• AMR Research, in a July 2007 report, projects that ERP vendor revenue will grow from $28.8 billion in 2006 to $47.7 billion by 2011. 
• A recent MIT report discusses challenges with existing enterprise software. 
• Gartner announced August 9th that it projects worldwide Software as a Service (SaaS) revenue will top $5.1 billion in 2007, a 21 percent increase over 2006. 
• A soon-to-be released study by McKinsey & Company finds 61 percent of North American companies with sales in excess of $1 billion plan to adopt one or more on-demand applications over the next year, up from 38 percent in 2005. 
• An April 2007 report from InformationWeek magazine showed that 18 percent of business technology professionals surveyed would consider using SaaS for Financial solutions, with 37 percent considering SaaS for Human Resources management.

In the Enterprise Software Marketing space, On Demand or SaaS has become quite popular and now we are seeing increasing applications and solutions staking claim in this area. But SaaS or On demand are innovations of the delivery mechanism or licensing model and thats it. We can even extend it to say its just old wide in a new bottle. In the sense that the application which were architected for the C/S or within the enterprise environment, are hosted and made available via the Internet. But this doesn't allow up to tap on the innovation in the other areas of the application.

Currently while I was going through the presentations (1,2,3) available at the workday site, it becomes evident that the need of the hour isn't just better subscription & delivery models but a fundamental rethink / innovation of the way applications are work.

A white paper by B2B Analysts highlights the technical innovation that Workday has put in place by using in-memory databases instead of the relational model.

The innovation itself is a hosted, non-relational (or object-oriented) database, on which Duffield, Bhusri and company have chosen to write a suite of business applications.The components of this innovation have been around for a while.In-memory databases have been around for 8-10 years, I think, and so have object-oriented databases. Hosting for business applications still strikes as innovative, but conceptually, it's been around for a very long time, and even the Salesforce innovation on that innovation, the multi-tenant hosting model, is nearing its second decade. Business applications? Well, they're about as old as snuff and anti-macassar.

The combination, however, is relatively new; in fact, it was barely even conceivable five years ago. And what Workday is doing with this combination is entirely new.

But on all these infrastructure innovations I think the most important innovation that Work has put in place is at the application level.

 

As highlighted here by Dennis Howlett, Workday financials is based on Resource, Events & Actors Framework

Workday is using REA (Resources, Events and Agents), a 25 year old idea to develop modern software. In REA theory, the economic data surrounding accounting entries that gives context to those entries is captured. It goes way beyond simply recording of debits and credits. REA defines a way to capture entire processes or process parts, depending on the extent to which the process designer wishes to develop or expose process. The way Workday has interpreted REA allows them to atomize process objects so they can be assembled to represent pretty much any view a user requires.

Pricing

The company says its targets are the mid-sized organization trading $500 million to $2 billion and it will offer the service at a starting price of $100,000 per annum. According to my rough estimates which the company confirmed, that means businesses with at least 1,000 employees. If Workday can snag a clutch of these at that price point, they will blow a massive hole in enterprise software pricing models

More later.

Tags: cio - saas - on+Demand - workday - erp - financials

Prashanth Rai

India, Offshoring, IT Services ??? Part 1

Last evening I was reading the new book by Ram Charan and some phrases/passages in the book got me thinking about the IT Services industry more specifically the Indian IT Services Industry.

Today I read this post by Stephen Lane at the Infosys Think Flat blog which was for  lack of better word defending India's top position in the global sourcing pecking order. And was an effort to counter some of the recent predictions that India as a location is losing its charm.

Well Infosys and other Indian IT Service providers has a lot of to do/say about where India stays on the ranking. And as expected these companies have a lot to loose or gain on that account. Of course the counter to that is that these companies are becoming global/MNC's , but nevertheless their reliance on India and the Indian promise is very high.

In this post I am going to highlight couple of themes of thoughts on the above topic:

1. What Value do "Indian IT services companies" deliver? It might be a stupid question but I think it is worth some amount of thought. One of the problems in the industry currently is that lot of the Indian IT Services companies are still in the business of providing "Technically Sound/Well trained Bodies", I know this is a gross generalization and lots of companies are doing some relatively cool stuff. But when you look at the broad stroke this statement still holds true. Of course it is an advantage that Indian IT Services companies provide technically sound/well trained people at a fraction of the cost. Also since these people are IT people and not technical people working in a manufacturing company they bring additional technical prowess to the table, but lose out on the knowledge of the functional aspects of the businesses. Companies are doing a lot in this space, but its time companies stepped back and evaluated what their value proposition is ? And How best it should be delivered? These should be arrived at looking into the windshield and not in the rear view mirror.

2. Outsourcing / Offshoring industry is undergoing fundamental changes. I don't think there is going to be a raise of another India , And the model that exists currently which is titled geographically is going to change. I think a good vision of the future was captured well by Frank D Souza of CTS "Intellectual Arbitrage" - Which means getting the best minds to work on a given problem no matter which part of the globe they are in.

3. Employees - Can you be independent?, I think its important for the employees of the large IT Services companies to stop getting comfortable and introspect deep and hard. I think they should specifically evaluate their productivity, knowledge growth and skill building and track progress in these 3 areas very closely. Employees or resources should feel / work towards adding value to the project / assignment and should not be just looked at as hands to execute the job, but should have their intellect challenged as well. I remember the quote from "Straight from the gut", They were paying me from my hands, they could have used my brains for free. Employees/Resources should build a level of knowledge technical/functional/process, where they can market themselves as an independent consultant even within the boundaries of large organizations.

I am going to focus a lot more on these 3 topics in the month to come, Would love to hear your views on this topic.

Tags: india - offshore - IT

Prashanth Rai