The Hindu Business Line : Tune in to this Webbcast

Long after you have met Simon Webb, the one thing you’d remember about him is the consistency in his answers to your queries. One strain ran through all that Webb, Director, Global Consulting Practice, TCS, said during an interview to eWorld: His job is to ensure that his customers not only implement technology but also derive benefit out it. He says companies invest “tens and hundreds of millions in technology but do not see value out of it, because th ey are not addressing the other dimensions of change — business processes and dynamics within the organisation.”

“Part of our job is to focus on three areas — reduce cost, ensure actual performance, and ensure business value is created.”

But isn’t that what IT vendors have been talking about for the last 15 years or so? Is it a case of an idea whose time has come only now? According to him, TCS and other Indian IT service companies are going up from the technology layer into the management layer while companies that have traditionally been in management consultancy are “going the other way. The bunch in the middle, such as Accenture, IBM, Capgemini possibly, occupied that middle ground and the lower technology space as well, practically going back 15 years or so. The driver for TCS is that our clients weren’t getting what they want to, from the major consultancy firms. Fee rates were incredibly high.”

The gap that TCS sought to fill was easy to address thanks to what Webb calls its “huge technical delivery engine.” He says delivery orientation is important, for, what is consultancy if it cannot implement solutions and help clients realise business benefits? “Partly, people (were) not getting that end-to-end view and delivery orientation and had to pay a high price to not get it.”

He believes that TCS is being pulled into this space. “Conversations we have with clients are not those that we initiate. Clients who have worked with TCS on delivery-focused projects earlier tend to ask the Indian IT major how it can help optimise their IT.” TCS has about 250 people across the UK and the US in its consulting practice with about 300 people in India.

Webb cites the example of a ‘big international global organisation’ with which TCS has a sizeable business in application development and maintenance. “They are under huge pressure. They will make a loss this year. Next year is not going to be a lot better. They are going to run out of cash if they don’t watch out. They asked us, ‘We do a lot of work with you, how can you help us actually reduce cost of IT.”

In other words, he says, what the client is saying is “We are in deep trouble, we have a relationship with TCS. How can you help us? Give us your ideas.”

Interestingly, the above conversation has its genesis in the economic environment. The client cancelled an outsourcing programme to save money. Webb told the client that they should be looking at the bigger picture, save on costs so that you have make cash available for further investments, rather than just cancel the programme. “I asked them to rethink the whole relationship. For instance, we asked them to re-engineer the whole process so that the cost of outsourcing comes down.”

But isn’t this the time when decision makers shy away from further investments. After all, when you re-engineer processes, the CIO tends to ask the board for more money. How open are they to such uncertainties?

Webb says that conversations now increasingly start with regard to alignment of IT with the business. Most companies tend to spend 70-80 per cent of their IT budgets in ‘keeping the lights on’ (meaning, running the business or RTB as TCS calls it).

“Those are huge amounts of cash. What a company wants to do is minimise that amount (but invest that in changing the business so that long term costs come down).” In other words, investments in changing the business (CTB) should see priority. His own benchmark is that investments should be equally divided between RTB and CTB exercises.

“But, because of the way people have been throwing money on technology in the last 20-30 years, without really managing this growth, companies have, say, 57 different varieties of applications around the world, with complex infrastructure. And, no one has architected the whole thing to be effective or efficient.”

“One of the reasons companies come to us for help is our core offshoring capability. And, we are known for helping organisations reduce cost of applications.”

The essence, he says, is about re-engineering the IT function in organisational terms, process terms and sourcing terms. “Often the discussion starts with how we can take application side of things and offshore large elements, to help them realise substantial cost reduction.”

But, in order to do that successfully, re-engineering the residual IT organisation and changing management processes so that the offshore model works, is key. This would ensure that technology is used to efficiently run businesses in terms of project management, architecture, managing demand and the like.

But, do decision-makers have time to experiment with this?

“This isn’t a conversation that we take to a client, but one that a client calls us in to have. Often it’s in a situation where we have a long relationship with the client or with an individual who has moved companies and needs to re-engineer in the new company. That’s the IT scenario.”

As to the business scenario, Webb gives an example of TCS’ global client which has had its own operations in India for about 15 years now.

“They are rethinking their entire business and want to move as much of the back and middle office as they can into some sort of shared-services structure. They aren’t quite sure exactly what they want. What they know is that their core strength is in the sales and marketing and deal making. They are just not interested in all the administrative processes.

We are now working with them to help find what their strategy and vision and target business operating model should be. And then, we will work through the implementation of that. They aim to have three regional centres across the world with a global centre in India by either expanding their base here or having another centre here.

Webb says that the COO in this client-company is an ex-strategy consultant from one of the big consulting houses. “He came to us, though we have had no relationship with him in the past. He recognises that we have all this delivery capability. The question in his mind is whether we have the strategic skills to help him work out a strategy and manage the process in the transition to the target operating model.”

In the last 12 months, the consulting practice’s contribution to TCS’ total revenues has fallen. Is this normal during recession or is there something else to it?

He says that over last 9-12 months, a lot of decision-making has got put on hold. He views it as a short-term challenge. “Quite a few clients have disappeared because they have been acquired. So decisions are frozen. We are now helping them work out what to do.”

TCS has also moved some people out of the consulting practice. “It worked well before but not so now. Skills that these people had were delivery related, some people who were focused on product implementation were moved into the ADM area,” he says.

Finally, don’t clients see a conflict of interest? After all, if you help implement what you advised the client to do, would you have his interest at heart? Webb sees merit in that argument but says that the way clients relate to consultancies is changing. “They are under pressure to get things delivered more effectively. In the past and sometimes even now, organisations spent too much time analysing things and not doing enough. Clients just want to get on with it and are concerned less about conflict of interest.”

bharatk@thehindu.co.in

More Stories on : Software | Interview | Tata Consultancy Services Ltd | Outlook

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Tune in to this Webbcast