In my previous post, I tried to demystify server virtualization and made up a case for considering this technology for use as it helps optimize resources. For those who are first time users, doubts arise about its efficacy and its real benefit. Any IT investment proposal, such as in virtualization, has to be supported with a cost-benefit analysis so that it is approved by business.
Benefits are real; I have experienced them. How much we gain will depend on the mileage that we extract from technology and our propensity to try and innovate. Let me explain various benefits that virtualization can bring in. Following are the key areas where we can see gains:
1. Better utilization of hardware resources:
You can subdivide the processor and assign more than one application to it. For instance, I have often run four different applications running under different OSes, assigning them to a single processor. In the normal course, processors may be fully loaded or partially loaded and therefore we have server resources that lie idle and when we count total idle capacity in various servers, we may find a huge unutilized capacity. Since virtualization creates a pool, we can assign desired resources to each application.
2. Minimum physical space required:
Since we utilize fewer servers the space requirement in the data center comes down drastically if servers are stacked in a rack. In these days when space is at a premium, virtualization comes as a boon to us.
3. Lower power consumption:
Since we use fewer servers, the consumption of power would be low, despite the processors being loaded fully. That reduces the amount of heat generated by servers, and correspondingly, even the power consumed by air conditioning systems is also lower. In one of our recent implementations, we proved that the power consumption could be lowered by 40% with virtualization implementation.
4. Lower investment (capex) on hardware:
Proper capacity planning could see a drastic reduction in the capital expenditure that we incur on server buying. For instance, we had blade servers and by creating a pool across several blades we were able to use the available resources and thus put away the investment proposal that was on my desk. In case we host our applications or use external resources, expenses would come down.
5. Less maintenance overhead of IT:
Virtualization simplifies server management as the entire server farm can be managed through a single console. In addition, recurring expenses on AMC and other costs reduce.
6. Provision of resources on demand:
In a conventional environment, since we dedicate a server for each application, we are at our wit’s end when we have to make available sever resources for any urgent requirement. In a virtualized environment, we can make available additional resources on demand from the pool we create. In additional we can cater to a periodic demand (say month end or year-end processing0 by reducing the resource allocation to any non-critical application and make it available temporarily to the ERP or any mission critical run.
7. Easier to do patch management and upgrade:
We used to create a clone of a server and apply patches on the original file. If for some reason, the new version did not run, we could revert to the old version within minutes. The same process applied to software version upgrades and this was a great facility which made these tasks easier.
8. Disaster recovery planning:
Various features exist through which you can recover fast in case of any interruption due to hardware failure. The entire set of programs can be backed up on a different physical server and can be activated quickly.
How to convince the management
These benefits are ones that I was able to enjoy and once implemented we went about quantifying some of the benefits and demonstrating them to the management. The one question that I am often asked is: How did I justify the investment to the management at the time of taking approval?
I, of course, had problems in working out a cost-benefit; and therefore took a different stand. I worked out figures showing investment that we would otherwise make on additional servers if we did not go in for virtualization: that figure being much higher than the investment in virtualization. It worked and I got the required approvals.
Virtualization as a subject has been talked of for many years now but it is only during the last few years that it has come into large scale usage by many organizations and data centers. While large organizations have embraced this technology due to sheer necessity, many small and medium-sized organizations are still out of this gambit. So it makes sense to explain this technology solution and make it easy to understand.
In simple terms, virtualization is a method of running multiple independent virtual operating systems on a single physical computer. Let us say it is the masking of server resources from server users, including the number and identity of individual physical servers, processors, and operating systems. All server resources are put together as a pool from which each application or task draws out the resources it needs, thus making the application or the user believe that his task is running on a separate and dedicated server.
How this works is simple to understand. Virtual servers work through a middle layer called a ‘hypervisor’, which masks the servers from the users and takes over the task of allocating resources to each task from the server pool. To understand further let us consider the following statements:
Virtualization enables us to combine servers from multiple generations into the same virtualized server pool.
Virtualization allows a group of inefficient servers to be replaced with a fewer number of machines.
Virtualization is a software that allows a piece of hardware to run multiple operating system images at the same time.
In the conventional set up, we keep on adding servers as we introduce more applications in the organization and when the numbers grow very large it becomes unwieldy and difficult to manage. Further, every application consumes resources differently; leading to some servers being strained to the full and some others have it easy with very little usage. This leads to sub-optimal utilization of server resources which is undesirable. Adding to this is the difficulty of provisioning space to host several servers.
If you are thinking of implementing virtualization, I would recommend the following steps:
Clearly assess the requirement of server resources in a three-year horizon, taking into account additional applications that are likely to be introduced; and the projected growth of the organization leading to higher number of users and the increasing size of data to be processed.
Evaluate and select a virtualization software that is appropriate, given the current IT landscape and size of the set-up.
Re-asses the hardware resources and plan new servers that would make use of this new environment.
Choose an implementation partner who has adequate experience and expertise in the software selected.
Work closely with the partner to work out an optimal design that works best to accommodate your applications.
A breakthrough technology?
I think it is. It is amazing how the researchers worked out a way to break the paradigm of considering the processor as undividable and to create a mechanism by which the processor lends itself for manipulation. It is a wonderful solution to leverage on and I hope most of us use this to make optimum use of the resources.
The job of a CIO is a tough one. He has to do quite a bit of jugglery trying to balance various demands that are made on him. He has to engage with the CEO and the board members to understand their visions and aspirations, has to deal with various functional heads to try and resolve cross-functional issues, has to face the music when end-users are in their elements demanding more features and reports, has to handle some errant IT staff and also the technology vendors, who, at times, may play the truant. There are days when he feels happy, having achieved some goals, but bemoans his fortune when he gets caught up with issues that seem never-ending.
Besieged by difficult situations, the CIO often looks lost and forlorn. He feels like hitting back at his detractors; he wishes to argue out points, to rebut objections raised by cynical users, or to escalate matters that he thinks needs attention of higher ups.
He however stops in his tracks fearing a conflict and the possibility of annoying some important functionary in the organization. He is wary of losing whatever cooperation he receives from the users and therefore settles for a compromise. He withdraws from his aggressive intentions and accepts whatever the situation provides him with. He feels sad and powerless and wishes someone rescues him from that situation.
He says that if it was not for the fear of losing his job, he would have been bolder and would have taken a few tough measures to deal with the situation. He may then seek another job but may land up in a similar situation and may rue his luck again. But is that feel of insecurity a valid predicament or is it a perception of danger that the CIO lives with?
Possible measures to overcome this situation
There is, of course, no magic wand that can make the management and the end-users kneel before you or to listen to you without raising an eyebrow. So this is a battle that has to be faced head-on to win. We sometimes lose the battle even before it begins. By cultivating fears, we give up our efforts at resolution right in the beginning and do not even try to put up our views strongly.
It is good to be adventurous. I remember the situations when I feared the most but when I took up the case with a functional head, I was surprised to see a favorable reaction and it happened because he saw some sense in what I proposed. I have not known anyone losing his job for trying something good for the organization; so why harbor unknown fears? What if we attempt and fail – well, understand that the measure has not worked and seek another way out.
A CIO should clearly steer clear of political moves and alignments within the organization and take strength from his professional acumen. Seeking favors from the CEO or an influential senior may give some quick wins but may land him in trouble later with changing political alignments.
A CIO, like other managers, has to be employable at all times. He should therefore equip himself with contemporary knowledge and skills so that he stays effective and may also periodically assess himself in the job market to understand whether he is still relevant in the professional world. That is not to suggest that he can try a quick jump if he is not happy. It is only to give him a reassurance that he is a wanted professional and therefore does not have to live with the fear of losing his job.
We use many solutions in the form of software, whether they are the operating systems, databases, or application packages. Whenever we faced issues as users in the past we had only the vendors to fall back upon. While some were happy with the vendor-support, many others complained of poor response. Vendors, at the same time, were keen to expand their customer-base using the current customers as their spokespersons. This is perhaps what led to the creation of various users-groups.
In India, the early groups created were the Lotus Users Group, Ingres User Group, and a few others; later, many others followed including users of SAP, Oracle, Linux, etc.
Running of the user groups
In the early days, initiative was taken by a handful of good user-organizations who desired a platform to exchange ideas on use of various features in the products they used and to find out solutions for problems they faced. It was natural for them to approach the vendor to help organize meetings. Vendors willingly agreed as they found it useful to meet their customers together and if one of their experts could address all of them and clarify their doubts, they will have built enough goodwill among the customers. Vendors would, in these cases, pick up the tab for hotel expenses, etc., and play host. Along with the experience-sharing by a few members and a clarification session, vendors would also come on to the stage to showcase their new offerings and make up a case for upgrade and for customers to expand their footprint with more packages.
Situations changed; whenever some lead customer-representatives moved elsewhere, the whole movement took a dip and then the vendors took over the center stage. Slowly, many of these groups became vendor-led and some others faded away. Such a powerful medium for the users has often been allowed to slip away.
Vendors-companies also hold their annual events that are grand shows and they attract good participation of users. For example, Sapphire, Oracle Open World, Lotus Sphere, etc., are events that are completely led by vendors and this may also have had a role in weakening of the user movement.
What can be done
I strongly feel that a lack of leadership and absence of participation amongst the user community have led to the weakening of the user movement. I have often seen a few strong personalities taking initiative and starting the movement on a high note. Others do join them, though not as leaders or participants but as spectators. Since the community is not tightly bound through active participation, separation of one or more of the leaders leads to the movement going astray. The user group working is sometimes not institutionalized through creation of executive committee, regular meetings, encouragement of users to share their experiences, and involvement of other members in evolving new ideas for the group. In the absence of strong user-involvement, vendors start exercising greater influence and the sessions move toward product-promotions and acquire a sales-flavor.
I had the opportunity to head two user-groups in the past and my experience was that as long as the initiators held the reigns, the group worked very well; but soon as the original team moved away, the second line did not take over. We were then guilty of not creating a second line by choosing some of the bright users and encouraging them to lead some initiatives.
We often talk of our IT strategy and its alignment with business. We may be right in our intentions but may perhaps have to examine whether we talk of these terms loosely and without fully understanding its import. We, of course, look good saying the right things and striking a good note with our peers, but a close look inwards may reveal our need to understand the subject better.
Let me, therefore, initiate a discussion on corporate strategy―our need to know and understand where the company is headed to―and the alignment of IT with the corporate strategic goals (IT plans that seek to serve the organization’s strategy).
Understanding business strategy
Business strategy is the direction that a company adopts over the long-term, a move which provides advantage to the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations.
In other words, we have to first enquire, research and understand the company strategy by raising the following questions:
* Where is the business trying to get to in the long term? (The direction).
* Which are the markets / segments that the company is trying to compete in and what kind of activities are involved in such markets? (Markets and scope).
* What are the set of activities that business plans to take up in order to perform better than the competition in those markets? (Competitive advantage).
* What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (Strategic resources).
* What external, environmental factors affect the businesses’ ability to compete? (Environment/ changes).
* What are the values and expectations of those who have power in and around the business? (Stakeholders).
Types of business strategies
Strategies exist at several levels in any organisation – ranging from the overall business (or group of businesses) through to individuals working in it.
* Corporate strategy is concerned with the overall purpose and scope of the business to meet stakeholder expectations.
* Business unit strategy is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc.
* Operational strategy is concerned with how each part of the business is organised to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc.
Once the CIO understands these imperatives, it becomes easy for him to look at IT from the management’s point of view and shape IT offerings in such a way as to help the company win in the markets.
If the IT strategy is to be aligned with business strategy, it will have to reflect steps that help achieve organisations defined priorities and goals. The IT strategy document, many a time, is worked out jointly by CIO and some business heads.
Following are some of the elements of an IT strategy:
(1) Key business imperatives: A report on the main business issues that are sought to be addressed. For example, it could state matters like manufacturing strategy (production planning optimization, material availability, lower manufacturing costs), finance (cost control, lower working capital, budget control etc.), or marketing and sales (order fulfilment, customer complaints re-addressal, marketing and sales analytics, etc).
(2) Priority listing: Some issues may be more critical than others and therefore the ranking of the applications in the order of their importance.
(3) Time frame: Drawing out a broad time frame for their implementation.
(4) Assessment: A scan of the technology environment and a clear technology direction that is most appropriate for the company given the set of business requirements specified.
This may include:
a. The hardware landscape: This may include aspects such as movement towards consolidation of servers and storage, moving towards virtualization, building reliability, etc.
b. Software choices: Of moving in the direction of standard packages, putting in analytics, other specialized packages necessary.
c. Safety and security: Defining requirements and overall policy direction, indicating levels of protection necessary etc.
d. Outsourcing policy: Defining a direction either in the form of strategic outsourcing or selective outsourcing.
e. Taking stock: Resources necessary in the form of funds, people, training etc. for achieving the defined objectives.
(5) A set of deliverables and standards in the form of key performance indicators which would help in drive performance and ensuring that implementation stays on course.
IT strategy is usually drawn out for a period of five years or for a period that the organisation thinks is appropriate.
The IT strategy document, however, is not static and would undergo a change if there is change in organisations strategies and goals or when technology advancements cause a change in the directions we took earlier. This makes IT an integral part of business and can play an important role in making business successful.
Continuing our discussions on ERP, the group of CIOs, who meet regularly to discuss issues of common interest, went on to debate the question: Who should ideally be the project manager (PM) for an ERP implementation? As is usual, different views were expressed; but surely, it was a refreshing debate. We got to know the views of others, and at the same time, we had an opportunity to examine the best available options.
I initiated the discussion citing a few issues that we had faced as CIOs in some of the implementations. People from the CIO assembly agreed that ERP implementation should not be termed an IT project but should have adequate business representation.
Amongst other requisites, the role of the project manager (PM) is one which is critical for a successful run of the project. In most cases, it is the CIO who is one of the main initiators of the move towards ERP, and once approved, he is automatically assumed to be the one to take on the responsibility. The question posed therefore was whether this is the right move for organizations to make when starting an ERP project? Deliberations touched upon various points:
- Should the PM be from one of the business functions, say from finance, sales, operations, etc?
Though the general opinion favored such a move, there were apprehensions expressed about their inadequate exposure to IT and whether they would be able to understand, work out, or guide the team on aspects such as parameter configuration. There were no clear answers. The consensus, however, emerged on the point that selection of a project manager is a challenge since ERP covers more than one function.
- Is a manager from any specific function more suitable for this role than others?
Each of the functions was examined but the larger view veered towards the ‘finance’ function. Participants felt that since the finance plays a controlling role, is in charge of compliance, reports to the Board on results, and since the organization’s performance finally boils down to financial figures, there could be nothing better than a finance manager being on board as the ‘project lead’.
Surprisingly, people did not talk of the organization strategies, the goals of business, the need for transformation and business process improvement, which point towards a business-view of project and the need to go beyond the limited worldview of the finance function. I think we have to grow up to view issues form the management angle.
- Is CIO the best bet?
Well, you bet, the CIOs think so! They say the CIO is the only executive in the company who has an overview of the business processes across the organization since he is involved in automating them. They further say that a CIO is neutral and not function-specific in his approach, and therefore, has an edge over any other functionary. He also has an in-depth knowledge of hardware requirements, software functioning, and networks and therefore can manage the entire project better than any other functional manager. They feel that an IT head with a business understanding is an ideal choice for the Project Manager. A few questions however remain unanswered.
Need for a balance
But is the knowledge of business processes adequate to bring about fundamental changes to those processes and is it equivalent to understanding business? While we may say that the CIO is neutral, his technical orientation could lend a bias which may not be desirable. Knowing IT may not be a qualification essential to be a project manager, as the PM has the overall responsibility of ensuring success of the project.
Again here was a situation where CIOs were keen on holding on to their turf and not willing to let others play this role.
In my opinion, CIOs have to take a broader view and consider the matter from the organization’s perspective. The purpose of the ERP project should be to serve business, and therefore, the project should be led by a person who is most suited to bring about the desired transformation to business using ERP. The community, therefore, would have to move a little higher in terms of thinking and lay focus on business benefits that he can bring about.
Governance, risk, and compliance or ‘GRC’ is an increasingly recognized term these days and widely talked about and discussed at various forums. GRC reflects a new way in which organizations are adopting an integrated approach to these important aspects of their business.
GRC is the umbrella term covering an organization’s approach across these three areas. Being closely related concerns, governance, risk, and compliance activities are increasingly being integrated and aligned—to some extent—to avoid conflicts, wasteful overlaps, and gaps. It is expected that companies would follow certain norms of governance, ensure that they have the right processes to recognize business risks and their mitigation and that they conform to the laws of the land.
As managements try to address these issues, the CIO has a fiduciary responsibility to assist the management in its efforts to address GRC issues. Let us understand each of the elements of GRC.
Governance describes the overall management approach through which senior executives direct and control the entire organization, using a combination of management control structures and the right management practices. One of the requirements of governance is that that the critical management information reaches the executive team in a form that is adequate, accurate, and timely to enable appropriate management decision making. It also involves providing the control mechanisms to ensure that strategies, directions, and instructions from management are carried out systematically and effectively.
So the CIO has his role cut out; he has to proactively provide the required support to the management through robust information and control systems. IT systems should also facilitate maintenance of documentation of various transactions, approvals, record of critical business discussions, decisions, etc.
Risk management is the set of processes through which management identifies, analyzes, and where necessary, responds appropriately to risks that might adversely affect realization of the organization’s business objectives.
The first need, therefore, is to do a risk assessment and identify all possible risks that the company could be exposed to. The next step is to analyze those situations and determine criticality of the risks and their possible impact on the organization.
Once the risks are analyzed, the company has to define measures that it can take to contain any adverse fallout. The response to risks typically depends on their perceived gravity, and involves controlling, avoiding, accepting, or transferring them to a third party.
It then becomes the duty of the CIO to introduce policies and technologies for risk coverage and mitigation. He covers risks against hacking by external users, institute measures for user authorization and control, ensure safety of data through regular back-ups, implement disaster recovery and business continuity plans, conduct user education sessions, etc.
Compliance means conforming to the stated requirements. At an organizational level, it is achieved through management processes which identify the applicable requirements (defined, for example, in laws, regulations, contracts, strategies, and policies), those which assess the state of compliance, and the ones that assess the risks and potential costs of non-compliance against the projected expenses to achieve compliance. It also involves defining management processes that can prioritize, fund, and initiate any corrective actions deemed necessary.
Here, the CIO has to be in touch with the company secretary / legal head or concerned departments to make a list of various statutory requirements that the company is required to comply with. He needs to facilitate the creation of facility to record requirements, to remind people on due dates, to help monitor compliance and help create a report on the status.
Various software packages are available that helps meet these requirements including those from leading ERP vendors, software majors, and many other small firms who create such specialized tools.
A 360-degree approach
GRC, therefore, is a holistic view of issues that the managements of companies are obliged to address. In my opinion, a CIO can play a significant role in helping his organization meet its obligations. Since most documents and processes reside on IT systems, it becomes incumbent on the CIO to ensure that all requirements are taken care of. Here is an opportunity therefore for the CIO to fill this space and rise to be an executive of significance.
We have enough experience of dealing with the staff who work with us. The staff always puts in efforts to achieve goals that we define and is one of the reasons behind our success. We know how to encourage, motivate them, at times by giving a pat on their backs, getting them awards, or by providing incentives so that they continue to help us attain our short terms goals. As a part of development activities, we send them for training programs, seminars, or workshops.
A pertinent issue
But in all this process we fail to address one situation which I have often experienced and may be true in many other organizations.
I am talking of the situation when a staff member acquires some additional qualification either through an executive education program, a correspondence course, or a certification program. He undertakes this study with the objective of advancing his professional careers. It is natural, therefore, that upon his completion of such program, he would expect some consideration from the employer in the form of an expanded role or a promotion. But to his disappoint, many a time, the employee doesn’t get any such consideration.
Apart from cases where the boss acts as the spoilsport, it can also be the HR department that puts spokes in the wheel. Their bureaucratic ways come to fore as they cite outdated policies to deny any such considerations. They may even point out that such a college or university does not figure in their approved list (which is made in the past) of institutions.
The poor fellow then loses out. Think again. Isn’t it the company that proves to be the loser? Let’s take a closer look at the situation.
The candidate, disappointed, starts looking out for an alternative and sooner than later finds an employer who is ready to respect his qualification and work experience and gives him a position that he deserves. He decides to separate and gives a damn about loyalty or any such terms thrown at him.
It’s only now that the boss or the company gets into the act. Suddenly, the candidate is bestowed a lot of attention and is persuaded to stay on. He is termed as the rising star in the team and is given assurances, including of a promotion (in the next year) and so on. Ironically, none of these promises are made in writing. The candidate, having been slighted earlier, usually turns down such overtures and makes an exit.
Now what does the company do? Obvious; it starts the candidate search afresh to fill up the vacancy. It is surely the boss and the company that lose out as they have to deal with:-
Loss of a good and experienced hand: The ongoing project suffers; deadlines are missed. The managers is hard-pressed to get work done by his other colleagues who swear and complain. The corporate brand suffers with company losing its face to its internal/ external customers.
Fresh recruitment efforts, costs: An unnecessary situation thrust upon due to faulty handling of the leaving colleague. This process takes time, effort, and the attendant costs.
Cost of change-over: The new candidate joins only after a certain gap. He requires time to get used to the new environment. Pace of work slows down. There would be a cost of spoilt work, which is but natural for a new recruit. He becomes valuable over a period of time.
Clearly companies pay dearly for their inability to address such a situation. It is sometimes the ego of the boss, unresponsive HR department, or the organizational culture that discourages the new and emerging talent. There are lessons to be learnt from such experiences and the earlier we learn the better.
For several years we processed our transactions sitting on fixed desktops and then moved on to laptops. Security considerations restricted usage from remote centers and access was given to only a select few. Times, however, have changed. The availability of various mobile devices that allow us to transact from anywhere and the severe competition in business have forced companies to sit up and examine the use of solutions that let people carry out their business dealings from anywhere.
Mobility solutions have been around for quite some time now; but it has taken time for these technologies to mature and for applications to get better and robust with their applicability in various industries. Devices and the networks used to be slow earlier and it was a challenge to connect and run applications; but technology companies have made significant contributions during the last few years to make this possible. Pioneering work done by a few software and service companies has resulted in development of solutions that are easily deployable.
Importance of mobile applications
Use of mobile applications is quite common now and companies are realizing the importance of exploiting this medium to gain advantage over their competitors. I would classify the usage into the following types:
Messaging: Exchange of mail between employees and with the outside world is a critical activity in any organization. We are expected to stay in touch, and therefore, not being in the office or being in a meeting is no longer an excuse that is tolerated. In fact, during off-hours, when we are at home or when on leave, we are still expected to respond to critical situations. Blackberry mobiles and the others have made our lives even more difficult by pushing/ pulling messages to/ from our handsets.
Field sales automation: These applications are widespread and have been implemented across industry segments including FMCG, automotive, insurance, banking, travel & tourism, real estate, etc. Applications ranging from sales order booking, making deliveries, generating invoices, recording collections, making travel itinerary to conducting field surveys have become common. Many organizations have demonstrated significant benefits using these applications.
Procurement staff: This is also a field application and used by officers who make procurements, to strike deals with approved rates/ schemes and also to seek required approvals for special cases. Various industries including engineering, automotive, commodities, financial sectors, etc., have been using this facility and have gained from it.
Managers on the move: Automation of business processes have spelt trouble for managers. With companies trying to speed up business dealings, tolerance for delay in approvals due to the absence of a manager in his seat, is fairly low. So you would find managers fiddling with their mobiles, trying to access and approve various transactions, whether inside or outside the company premises.
Flexi-offices: This trend, which began with the IT companies and consulting organizations, has now spread to other sectors as well. People working on special tasks or those making project reports, often work from home or from some remote centers, and therefore, prefer to be mobile.
Mobility solutions, therefore, are here to stay, and are an important medium for CIOs to leverage with. Though many have adopted to this new way of doing business, many are still considering and watching it from the sidelines. In my opinion, it is important for the CIOs to analyze business opportunities in their organizations and make use of this technology, wherever appropriate, and act proactively before functional heads realize and press for such solutions.
We have an association of CIOs residing in the NCR region and we meet regularly to discuss matters of common interest. These meetings are in the form of seminars or group discussions, either amongst us or those involving external speakers who are technology or management experts.
Relevance of ERP
As a part of the series, we held an internal meet of CIOs a few days ago for a discussion on ERP implementation and its effectiveness in our respective organizations. About 50 CIOs attended the event. Since the subject was vast, it was important to decide the format of the meeting so that the desired objectives were met. Instead of presentations by a few members, we thought it would be better to place a few salient points for discussion by members.
These points encompassed all elements of the ERP journey, like establishing the need for ERP in the organization, formal definition of project objectives, evaluation/ selection of ERP package and implementation partner, project manager and the team, business transformation, etc. We thought of capturing best practices adopted by the member organizations.
The meet was conducted in a panel discussion format, but at the same time, allowing enough opportunities for all participants to join in the discussion with their views. I was asked to moderate the session.
Establishing the need for ERP
The discussion kick-started with the point – whether the need for ERP was clearly established in the organizations right at the beginning. Answers varied; some expressed their plan of taking ERP as the core application accumulating data from all other legacy systems for consolidation. For someone, it was his company CEO who, having seen it running at some other organization, opted for ERP. Some were clear that their companies needed financial reports and that led to the introduction of ERP. Some said that it was due to peer pressure and also the fact that other companies in their industries had ERP, while some others said that the objective was just to replace their old and creaking legacy systems.
I tried to elicit CIOs’ views on the business value of ERP and the role it can play to further the business of the organization, but didn’t find adequate appreciation from the audience about this being a genuine requirement or an admission that this aspect was left out in their scheme of things.
Laying out project objectives
The second discussion point was about the need for an organization to formally lay down the project objectives or their expectations from the ERP implementation. It was explained that without a clear definition of objectives, it is very difficult to assess the degree of success for any project. There are elements like business drivers, KPIs, or some measures that define goals for the enterprise.
The responses from participants ranged from saying that there was a broad definition to some small and insignificant measures. For example, one CIO stated that the objectives were set based on broad expectations spelt out by the CEO or some functional head during the kick-off meet. Some said that the expectation was to reduce manual entries, or for preparing final accounts from the system. Some said that meeting demands of compliance to IFRS was the need and some said that generating MIS was the need expressed.
Getting IT right
It was only towards the end that one of the CIOs got up to explain that their organization had hired a consultant to lay down KPIs for the CEO and further down to each functional head and that served as the document to drive the design of the ERP system. That was a significant statement and I thought that adequately explained this point and grand finale for the meet.
Discussions during the entire meet were intense and we thought it better to discuss a few issues in depth rather than running through many. To me, the meeting revealed one significant point: there is a need for the CIOs to understand the business value of ERP and IT in general. They need to focus on business outcomes and not limit their focus to operational matters. CIOs still have some distance to travel in spite of their assertions that they have already ‘arrived’.