With the domestic industry spend ing Rs 26,952 crore ($5.5 B) in 2002-03, it grew by 9%. How ever pale this may be, in comparison with the exports of IT services by India, the demand for technology in the domestic market is buoyant and waiting to be served. Across all verticals including government and defense, India is gaining maturity in technology adoption. Vendors are already after the "bottom-of-the-pyramid" market segment (call it SMB- small and medium business) and the segment is about to explode.

As in every market, we have some segments like banking, financial services, telecom, services, and large manufacturing companies leading the curve with demonstrable maturity in choosing and deploying IT and managing it for competitive advantage. Through the past several months, we have been interacting with many CIOs to understand some of the things that work in managing technology within an enterprise. We have show-cased a few of these cases where the CIO takes us through the technology story within their enterprises.

Aligning IT with business goals is the oft-quoted objective. Simple as it may seem, it is difficult to achieve it all the more. In our survey of around 68 senior CIOs of large and medium organizations in the country, we found that many a CIO is still struggling to do it right and even those who claim to have brought in business benefits are not able to prove it always.

n  CIOs of nearly 68 medium and large enterprises participated in the Enterprise Technology Directions Survey, aimed at understanding the broad direction of technology spends for 2004, the technology priorities for 2004 and the pressure points that the CIOs face in managing the technology function. n The sample had a representation from almost every segment barring the defense and government. n Companies from all over India participated and the survey was administered face-to- face.

We have brought in some global cases of excellence in managing technology. Take the case of Cisco Systems Inc and its successful e-business story. Ninety percent of Cisco’s business is done online. The company has been ale to save $2.1 bn in 2003 by leveraging the Internet and its technology spend has remained almost constant for the past three years at around $1 bn. Reason : Cisco has been able to pin down the right direction and choice of technology. It has been able to drive standardization of commodity IT components and unwaveringly execute the projects with business goals in mind. Moreover it institutionalized the practice of measuring the impact of IT.

In the case of General Motors, one of the largest IT spenders worldwide, the unification of its fragmented IT fabric has brought in most of the advantages. GM removed over 3500 information systems while investing $1.7 bn in Internet applications that connected the company to its supply chain as well as consumers. A matrixed organization manages IT consistently around the world. The organization includes CIOs who are responsible for improving operations within their respective business units. There are also process information officers, called PIOs, who drive common technologies and standards across business processes, such as manufacturing, product development, or sales and marketing. Says Ralph Szygenda, group VP & CIO, General Motors, "This structure creates an intended tension designed to drive immediate results in each business unit while operating through cross-company standards that drive consistency and structural cost reductions."

It is important for the Indian CIO to understand that they are no longer the custodian of the IT function. This is the root of the disconnect between IT and business. Veteran CIO, Phillip Windley puts it well: "I have always believed that the CIO’s job is to support the business and that’s a strategic function. Unless you’ve got a seat at the table, and are meeting with the business leaders of the organization, you can’t hope to understand what the business needs. Business leaders want business intelligence and business process automation, what we give them is desktops and networks. That gap is where CIOs fall short."

And delivering good IT is often not about technology- cutting edge or commodity. It is about operational excellence combined with strategic management. This is what is borne out of our interactions with some of the brightest minds in managing enterprise IT.

In a manner of speaking, the career of the Indian CIO is at crossroads- they can either make it big or be relegated to the management backyard. We are highly motivated to make the former happen.

Apart from the global wisdom, we have attempted to provide an insight into what CIOs have planned for the year 2004, their technology priorities, so to say . Beyond that, we have put together a ring-side view and analysis of some of the major verticals, forecast on technology trends, insightful interviews with CIOs, a debate on the CIO being the change-agent in the organization, a round-up on what some of the enterprises on planning, and a listing of some leading enterprise products available in the country. It is the voice of the Indian enterprise and CIOs who manage IT.

Find all this in Enterprise 2004-The CIO Handbook.

Where are CIOs planning to invest

• Nearly 56% of the organizations surveyed, indicated that they would take up application integration projects in one form or the other during the year. The trend continues in the next year too. These projects may not be full-fledged integration projects and are likely to be undertaken in-house, as pointed out by nearly 50% of the organizations. Only telecom and some BFSI companies would do EAI in an elaborate manner.
• ERP here largely denotes expansion of modules and other enhancements. About 38% organizations would expand their ERP in the next two years
• Along with EAI, organizations are also planning web-enabling existing applications this year itself. This points towards the trend of using XML and other emerging Web-services standards. The trend has been chiefly cited by telecom, BFSI, and service organizations. Building new e-business applications ground up is not in favor. This points to the increased reliance on packaged application software and middleware.
• With nearly 50% organizations indicating data warehousing initiatives for the year, increased use of business intelligence tools is expected.
• Surprisingly, despite the presence of 38% manufacturing organizations in the sample, supply chain management is still not a priority area. Within that, supply chain planning is considered to be a very difficult area. This points to the overall lack of maturity of manufacturing sector in the country, leaving aside certain pockets of excellence.
• Notably, on the overall, 2004 seems to be the year where a lot of action is expected on the applications front.
  

Top Priorities in Internal IT Management

• Organizations still rely on a lot of in-house expertise for application development and maintenance. Nearly 50% of the organizations would continue to do some in-house development activity. These are expected to be in the area of application integration, customization, and in the web enabling of applications using Java and .NET, and Oracle technologies
• User training is a high priority area for over 60% of the organizations- a direct consequence of new and emerging applications being deployed within organizations. User training is also a part of readying the organization for enterprise-wide usage of technology. The trend is evident across verticals including banking and telecom where business users are trained in application areas.
• IT outsourcing is a trend but restricted largely to facilities management, infrastructure outsourcing, and outsourcing of very specialized application development. Larger organizations have been outsourcing chunks of IT activities to third-party companies.
• Internal IT departments would continue to hire and staff people with nearly 56% of the organizations looking at hiring new staff.

Priorities in Data Protection

• Even if it is a lip service, Indian organizations have been sensitized to the issue of security. An overwhelming 70% of organizations have indicated that they would be implementing data security and privacy measures. For one, with the increasing amount of virus and denial of service (DoS) attacks and reports on hacking, organizations have been ramping up security measures by implementing anti-virus, firewalls, and intrusion detection systems. But only few organizations have been looking at security in a holistic manner; most are securing the organization from the perspective of its dependency on networks and the Internet.
• That security is still a matter of having the appropriate software (rather than the security policy aspect) is evident from 70% of the organizations opting to go in for security software.
• Along with security is the issue of data protection and protection of information assets from disaster recovery. Nearly 50% of the organizations voted for having disaster recovery measures, primarily BFSI, telecom, and service organizations with a sprinkling of manufacturing organizations. DR comes in all shapes and sizes and effective DR measures range from having strict back-up policies in place, redundant network paths, mirroring of applications, data replication, remote site DR centers, and hosted DR sites.

Investment Plans

• Nearly two-thirds of the organizations seem to be averse to shifts in architecture and platforms. One of the reasons is that many of the organizations surveyed are nearly running in a centralized architecture with an ERP and a central transactions database. In light if this, the number of organizations opting to shift from distributed architecture may be construed to be a significant trend.
• We found lack of clarity amongst the organizations polled in the context of thin-client/ server-based computing. The trend that 34% of the organizations have indicated this shift may be ignored.
• Even at 20%, the organizations that are considering a shift to open-source and Linux can be considered to be significant. For one, these are progressive organizations and many of them currently have some deployments of Linux. Having learnt from their experience and with the high decibel popularization of Linux, these organizations could consider deploying Linux in mission-critical areas. Others are looking at using open-source software in areas like messaging, web serving, etc.

Infrastructure Management

• While building IT infrastructure is a very high priority area, infrastructure management (through software) does not seem to be a hot area, except in banks, BPO, and telecom companies.
• Again, while storage hardware found a favorable take amongst organizations, storage software is not considered hot in bulk of the organizations except for BFSI and telecom.
• Few organizations reported that they would consider outsourcing infrastructure management.
• The concept of automated helpdesk for delivering IT service to users is still to catch on. It could also be a function of the size of the organizations and the overall infrastructure set-up.

Building IT Infrastructure

• Overall, the organizations surveyed are in the mode of infrastructure build-up and expansion. This trend could be true for most organizations in India across all segments, something characteristic of where we are on the IT maturity curve.
• The uppermost trends are in the area of network expansion and new server acquisition reported by 70% and 62% of the organizations respectively
• Even desktops upgrades have been reported by a good number of organizations
• With multiplicity of applications, most organizations had multiple servers based on functional requirements—web serving, messaging and mail serving, applications, and the like. Managing multiple servers is a nightmare. Organizations have begun to realize this and have started considering the move to consolidate multiple servers. Some organizations are even considering moving into a data-center kind of a concept. Nearly 51% of the organizations indicated server consolidation for the year. This could happen in tandem with new server acquisition and server upgrades- both of which have been indicated as strong possibilities by nearly 60% of the organizations.
• Close on the heels is a sizeable move towards adding storage capacity by way of storage hardware and storage consolidation reported by nearly 45% of organizations.

IT and Business

• This is where CIOs get stuck. When it comes to proving the value of IT, CIOs find it difficult (see also CIO ‘Pressure Points’, later in this analysis). Most organizations surveyed have been in the phase of building infrastructure and populating it with business applications. In many cases, proving the ROI continues to be a contentious issue. On the other hand, there are technologies that help in lowering operational costs and which may or may not be tied to a specific business application- for example: IP telephony or corporate instant messaging. Nearly 70% of the organizations surveyed indicate that they would choose technologies that help in lowering costs.
• A direct corollary is the relationship between the business strategy organization and the IT organization. While CIOs jockey for more power and say in the strategy of the organization, in most organizations IT is relegated to be a business support function. More than two-thirds of the organizations vow to align IT with business goals. The success of this would largely depend on the company culture and structure.

• There is a cautious move towards adopting emerging technologies and applications- for one, it is difficult to get fresh budgets and then CIOs are yet to find compelling business needs to support the need. Most want to perfect the use of existing technologies. However, the understanding of these emerging technologies, amongst all CIOs surveyed has been beyond expectation with most of them fully aware of the cost implications and the organization-readiness required. One frequently response was that they could try out pilot projects.
• More receptive were the private sector banks, insurance companies, telecom companies and some of the multinational manufacturing companies.
• Wireless networks and sales force automation found the most takers. To be specific, supplementing the existing networks with wireless in the former case and trying out sales force automation projects using hand-helds in a limited manner in metros.
• CIOs don’t seem very enchanted about the enterprise portal concept- for one, many believe that it is but a feature in any good application package and in any case the applications scenario is not complex as to warrant a separate effort in building a portal.

CIO Pressure Points

In a similar vein, there is some extent of disconnect with peers in the organization and being able to communicate the value of IT to business users. All this points to the fact that CIOs need to develop some soft skills and relate to the entire organization and be articulate about the value that IT brings to the table. Nearly a fifth of the CIOs said that they are mired in routine operational activities leaving them with little time for strategic thinking.

Resource Related

An overwhelming 75% of CIOs find themselves resource-starved. This is highest pressure point for CIOs—the biggest crunch is being able to find and recruit key staff and skill-sets and being able to retain them. Blame it on the vibrant IT services industry and the offshore development centers of both Indian and MNC software companies. Inadequate budget allocation is almost a non-issue. This may be due to the realization of the top management that IT is inescapable if the organization has to have a competitive edge.

Behavioral Issues
Interestingly there are some behavioral issues that pose a pressure point for nearly 55% of CIOs. The key issue amongst this is the difficulty in proving the value of IT— basically demonstrating the hard and concrete evidence as to how has IT helped. This could be a direct consequence of the fact that most organizations in India do not have the practice of having IT metrics in place and have strategic measurement of IT’s impact as a responsibility of the IT department. In most cases, CIOs themselves do not speak the business language and find it difficult to articulate the value of IT.

External Factors

External factors like volatile market conditions and the rapid pace of technology change also pose as pressure points for the CIOs, who aver that these factors place a constraint on budgets and proper planning. Changes in prices, licensing fees, demand-supply variations, and rapid obsolescence of technology have the combined effect of keeping the CIO and his team on their toes every working day. Vendors would be happy to note that they have been favorably voted for by nearly 90% of the CIOs in terms of product and service quality.

Figures denote number of CIOs who responded
All base =68; Source: Dataquest

Easwaradas Satyan in Mumbai With inputs from Mohit Chabbra in New Delhi Easwaradas Satyan is the Associate Editor covering enterprise computing for Dataquest.

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