Business-Aligned IT: The Key to Survival for Businesses and CIOs
By Vijay B. Iyer, SVP & Global Head – CPG, Retail & eCommerce, HCL America Inc.
While maximizing ROI remains the most sought-after number for business leaders, Chief Information Officers (CIO), especially in the consumer goods industry, are experiencing an interesting paradigm shift. They are transitioning from “Keeping the lights on” to powering business opportunities not just through transformation programs, but leveraging the Applications Support team.
The transition today, however, is impeded by certain critical factors. The first is the difficulty in funding huge, transformational projects that enable new and more effective capabilities within the organization. The second, and the most astonishing factor, is the commonly accepted rule that about 60 percent of the total IT budget should be allocated to support and maintenance activities to just ‘keep the lights on’.
Nevertheless, recognizing that support and maintenance and business value are not mutually exclusive is the beginning of an era of new IT sourcing model. CIOs are beginning to realize that while cost cutting is undeniably an important business goal, there are also other ‘change the business’ (CTB) objectives such as entering into new markets, integrating acquisition efficiently, delivering value on new products, etc. that factor in heavily into their IT strategy.
The competition is intense and the advantage will be with the service providers who understand the customers, their business processes, pain points, and offer a comprehensive and flexible solution that is aligned with their business. Today’s market demands a revolutionary sourcing model that not only helps companies cut costs, but also enables them to:
Organizations like HCL have developed business-aligned IT framework by adopting a new sourcing model that fosters high engagement visibility and transformation of Application Maintenance & Support processes to unlock capital. Such solutions can create substantial incremental value to the business of millions of dollars, by aligning IT closely with business processes.
The new sourcing model offers:
High control and visibility
In contrast to the traditional outsourcing model, this model enables the customer to retain control over IT, thereby providing higher transparency, control and visibility.
Cost advantage over normal IT outsourcing
The model offers a year-on-year reduction in overall IT expenditure, as against the traditional model that provides significant cost advantage only in the first year. In addition, HCL’s Business Aligned IT model also commits to business operational cost reduction leveraging the same personnel performing applications support.
Freeing up management bandwidth
This new strategy—business and technology- or operations-focused—allows HCL to focus on operations and customers to concentrate on core areas and business innovation.
Higher productivity
With reduction in errors and downtime and increase in operational efficiency, resources get more time to focus on incremental value creation tasks every day. This is measurable value to the business.
The future will witness customers seeking more business value in newer sourcing models and replacement of the traditional outsourcing services at a faster pace than expected. IT outsourcing will be viewed as a revenue generation tool, rather than just for expense containment. HCL’s Business Aligned IT framework opens up a big new opportunity for today’s CIOs and businesses. Transitioning from technology to business and directing millions of dollars towards value creation that is more tangible and profitable than ever before will be the base of competition.
During this period of transition, the roadmap for service providers is clear – adapt to the demands of customers by offering technology support that aligns with their business needs. Partnerships of the future will involve more focused value addition than ever before. For CIOs, it is time to turn the corner, and embrace the new sourcing model.
About the Author
Vijay Balasubramanian is the Senior Vice President and Global Head for Consumer Goods, Retail and eCommerce. Vijay has over 22 years in the industry, including the past 12 years of providing professional consulting services to clients around operational improvement, business and IT strategy development, and technology integration. Prior to his work with HCL, Vijay was the CIO of a large manufacturing and distribution organization providing business and IT strategy in addition to managing operational IT for the group. He was also instrumental in re-engineering the business processes of the organization and improving productivity, and one of the first in India to implement end-to-end ERP.
While maximizing ROI remains the most sought-after number for business leaders, Chief Information Officers (CIO), especially in the consumer goods industry, are experiencing an interesting paradigm shift. They are transitioning from “Keeping the lights on” to powering business opportunities not just through transformation programs, but leveraging the Applications Support team.
The transition today, however, is impeded by certain critical factors. The first is the difficulty in funding huge, transformational projects that enable new and more effective capabilities within the organization. The second, and the most astonishing factor, is the commonly accepted rule that about 60 percent of the total IT budget should be allocated to support and maintenance activities to just ‘keep the lights on’.
Nevertheless, recognizing that support and maintenance and business value are not mutually exclusive is the beginning of an era of new IT sourcing model. CIOs are beginning to realize that while cost cutting is undeniably an important business goal, there are also other ‘change the business’ (CTB) objectives such as entering into new markets, integrating acquisition efficiently, delivering value on new products, etc. that factor in heavily into their IT strategy.
The competition is intense and the advantage will be with the service providers who understand the customers, their business processes, pain points, and offer a comprehensive and flexible solution that is aligned with their business. Today’s market demands a revolutionary sourcing model that not only helps companies cut costs, but also enables them to:
- Focus on customer priorities
- Enter new markets
- Adopt new processes and reduce cycle times of existing processes
- Create new cost optimization opportunities within the business
- Provide better operational flexibility
Organizations like HCL have developed business-aligned IT framework by adopting a new sourcing model that fosters high engagement visibility and transformation of Application Maintenance & Support processes to unlock capital. Such solutions can create substantial incremental value to the business of millions of dollars, by aligning IT closely with business processes.
The new sourcing model offers:
High control and visibility
In contrast to the traditional outsourcing model, this model enables the customer to retain control over IT, thereby providing higher transparency, control and visibility.
Cost advantage over normal IT outsourcing
The model offers a year-on-year reduction in overall IT expenditure, as against the traditional model that provides significant cost advantage only in the first year. In addition, HCL’s Business Aligned IT model also commits to business operational cost reduction leveraging the same personnel performing applications support.
Freeing up management bandwidth
This new strategy—business and technology- or operations-focused—allows HCL to focus on operations and customers to concentrate on core areas and business innovation.
Higher productivity
With reduction in errors and downtime and increase in operational efficiency, resources get more time to focus on incremental value creation tasks every day. This is measurable value to the business.
The future will witness customers seeking more business value in newer sourcing models and replacement of the traditional outsourcing services at a faster pace than expected. IT outsourcing will be viewed as a revenue generation tool, rather than just for expense containment. HCL’s Business Aligned IT framework opens up a big new opportunity for today’s CIOs and businesses. Transitioning from technology to business and directing millions of dollars towards value creation that is more tangible and profitable than ever before will be the base of competition.
During this period of transition, the roadmap for service providers is clear – adapt to the demands of customers by offering technology support that aligns with their business needs. Partnerships of the future will involve more focused value addition than ever before. For CIOs, it is time to turn the corner, and embrace the new sourcing model.
About the Author
Vijay Balasubramanian is the Senior Vice President and Global Head for Consumer Goods, Retail and eCommerce. Vijay has over 22 years in the industry, including the past 12 years of providing professional consulting services to clients around operational improvement, business and IT strategy development, and technology integration. Prior to his work with HCL, Vijay was the CIO of a large manufacturing and distribution organization providing business and IT strategy in addition to managing operational IT for the group. He was also instrumental in re-engineering the business processes of the organization and improving productivity, and one of the first in India to implement end-to-end ERP.