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 Over
70 percent of CIOs from the Banking and Financial Services sector believe
that IT and business goals need to be firmly aligned. C N Ram, Head-Information
Technology at HDFC Bank, tells Anil Patrick and Deepali Gupta, that business
and IT goals are now so inter-dependent that alignment can be nothing
but natural.
Why should the CIO and business heads align IT with
business needs?
If there is no alignment what are we here for? Without it what is IT suppose
to do? We are supposed to serve the business community.
How much of business operations and processes should a
CIO understand?
The CEO is a strategist; he has to know which business will be profitable
and suitable for the organization. He should know the future plan of action
and how to be prepared.
At the CIO level we have to turn those strategies in to action. Support
functions like IT have to align themselves to produce results the business
heads aim for. Therefore, a CIO has to understand everything.
IT is required to do the business faster (so that business is conducted
more efficiently) with less errors, and for information management. It's
also used to check whether a business is profitable or not. Eventually,
instantaneous data helps reduce reaction time.
What is your role in the IT-business alignment process
in your organization?
There are several examples of successful alignment. Take a look at the
Stock Exchange system. Earlier you bought stocks and the settlement was
conducted on a weekly basis. Brokers borrowed money from the exchange.
Thereafter the exchange would follow up with everyone who owed them money
during the following week. To enable all this, the brokers had to open
a bank account with nationalized banks.
The bank compiled all the brokers' balances onto a floppy and sent it
to the exchange. Then the exchange ran the balance against how much each
broker owed them and if there were a shortfall, they'd call and ask them
to fund the account. Settlement took time because the broker was not always
a local. Initially, brokers were given a week to pay up. But then the
settlement time was shortened, and that's where problems began.
We offered the exchange a solution where it could query our system on
an online real-time basis. So there was no need for floppies, and therefore
no delays in carrying the floppy from one place to another. As long as
brokers banked with us, we'd enable them to fund the account on an online
real-time basis, and it could be credited in a matter of seconds. This
way 70 percent of these weekly settlements happened through us. We are
talking about Rs.1,300 Crore approximately.
Another example is that of Supply Chain Management. As corporates implementing
their SAP systems, they brought in a lot of automation. But for payment
they were still using cheques. So, if the payment would be due in 45 days,
the cheques would be signed and sent on the 46th day. It would take a
week or two to be encashed. In the mean time the supplier had to ensure
he would not run out of funds during the delay period. So he added the
interest cost to the material; input costs went up and the customer paid
a much higher amount.
We offered to do the entire transaction electronically. The manufacturers
gave us their credit file, and we would credit the supplier instantaneously.
As the suppliers became confident that the money would reach them on time,
they reduced their cost. If they didn't they were walking away with a
much bigger margin.
Another area was to get corporate salary accounts by offering to credit
employee accounts based on a corporate file. This was a fairly major effort
for us.What is the role of IT governance in an organization?
Techies tend to get carried away with technology. It's imperative that
Business Heads, the Financial Control office and the MD keep tabs on what
is happening.
Our job is to increase the levels of awareness. People don't need to understand
TCP/IP or databases. They need to understand that with the appropriate
set of technologies they can get what they want. They need to intuitively
feel they got value for money. They need to set goals for everybody. They
need to specify what expense needs to result in what reward. And the entire
process needs to be monitored. We tend to be careful about what we spend.
We put out measurement parameters right up front so it's easy to see the
investment made and the returns gained.
How do you measure the success of technology initiatives
in your organization?
Automation helps reduce errors and to manage transactions without increasing
headcount. It also keeps track of transactions. So we can ensure investment
and transaction ratios are right.
There is a planning phase where we estimate the likely benefits from an
IT project. Post production we actually measure the benefits and map them
back to what we expected. It's an on going process. You have to be alert
all the time.
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The
alignment of IT goals may have been overlooked in the past, but now technology
and business initiatives are no longer separate watertight compartments.
IT is fast becoming the means to do business, particularly in the case
of The Stock Exchange. S.B. Patankar, Director - IS, The Stock Exchange,
shares his views with Anil Patrick and Deepali Gupta on the need and process
of IT and business alignment.