“Economists make good leaders.” Someone said this when the final result of the 2009 Lok Sabha elections were declared, and it was known that Dr Singh would fulfill a second term as India’s Prime Minister. Could the same be said for CIOs? Well, if you look at Pravir Vohra’s profile and 30-year track record in the banking industry, you’d tend to agree. Vohra, the Group CTO of the ICICI Bank, holds a Masters degree in Economics and he swears it works to his advantage. Technology came later.
“It is actually not difficult to be able to evaluate whether a particular technology is suitable for our business and I find it easy to be able to convert everything into cost benefit and effect,” says Vohra.
CIOs always search for ways to use technology to deliver more value to the business, at a lower cost. So whether it is a choice of ATM switch, a (tough) decision to switch to open source software, or renegotiating AMCs for servers, this tribe of modern day CIOs speak of technology projects and P&L in the same breath.
“Twenty percent of our IT spends are strategic. So there are times when I tell the MD and the CEO that we need to make some enabling investments to ensure that we maintain our business leadership. I tell them that the benefit of those investments is going to come maybe a year or two down the line. And I ask them to assess me on that,” says Vohra.
Enabling investments allow the Bank to service its immediate requirements and yet adopt emerging technologies such as mobile, analytics, fraud monitoring, or new Internet technologies. And this is what gives the Bank a competitive edge.
Luckily for Vohra, coaxing top management to invest in new technology is not a challenge, for two reasons: one, the Bank has a tight “gating” criteria and two, his team has always managed to deliver under budget.
CIO’s contribution to the business
Fifteen years ago, a CIO was mainly concerned with the execution of IT projects within his organization. Today he focuses mainly on strategic roles; execution plays a small part in this, a role that’s fulfilled by his team. “The focus is now on strategic insights to your business colleagues as to how else you can leverage technology,” informs Vohra.
He feels today’s CIOs have an advantage. They have an enterprise-wide view of the companies they work for because they are delivering technology across the organization and across its businesses, globally.
The CIO contributes directly and indirectly to the business. The direct contribution, which is the CIO role, is to deliver predictable technology at an increasingly affordable price point, and within finite and predictable timelines. Businesses have certain expectations from technology, in terms of product features and functionality.
“But this goes beyond delivering technology; it is also about keeping an eye on how technology is evolving, making investments, and anticipating what your colleagues/users are expecting next year (from the technology),” opines Vohra.
Speaking specifically about his indirect contribution, Vohra says he is involved in discussions relating to business expansion, product diversification, or the introduction of new customer services and retail products.
Measuring IT Effectiveness
The ICICI Bank maintains three indices for measuring IT effectiveness. The first is an index of how many transactions are straight-through processing (STP). Here, there is no human intervention for processing transactions. Vohra admits it is not a perfect matrix because at times regulations require the system to bypass the straight-through process.
Then there are financial indices. Says Vohra, “For every project that we deliver we ask users what is the business value for them and we check the IT cost against this. So this really becomes like a P&L. We ask ourselves if we are delivering dramatically more value at a lower cost. When someone requests for a specific service to be introduced, we ask what is the annual benefit that this offers. So this is not an effectiveness index; it is a value index.”
The second index, at a macro level, is project viability. Every project must make sense. If there is a regulatory requirement or a customer service requirement then the business unit is asked to outline the business benefit.
The third index, also at a macro level, compares certain parameters with those of its peers in India and around the world. It compares the technology costs on a per customer, per transaction, per branch basis.
Making Tough Decisions
When one considers the scale of operations at India’s leading private sector bank, one can gauge the complexity of its IT infrastructure. Obviously, that merits careful decisions on IT procurement and governance. The Bank has an estimated 40,000 employees, with 1,500 branches in India and 25 branches oversees.
Yet Vohra’s toughest decisions are not directly related to technology. He says the toughest ones are actually people-related—change management and HR-related issues.
In 2002 - 2003 the ICICI Bank migrated from Microsoft Office to OpenOffice.org. “The toughest thing here was change management and perception management. People opposed this change vociferously,” recalls Vohra.
From a technology perspective, the toughest project for Vohra was a live replacement of a credit card management system. The Bank migrated a universe of 70 odd applications and 20 interfaces (one for each card company) to a unified platform and interface. This project was really complex as it not only involved many systems but also impacted the most number of people in various teams: fraud control, retail marketing, collections, and ops personnel. The switchover to the new integrated system had to be done live, without shutting down the current system as people use credit cards even on weekends and holidays.
Vohra has also maximized the usage of IT solutions. Three years ago, the bank implemented a CRM system. The system was extended to the IT helpdesk, HR helpdesk, and for operations workflows—and across all its businesses across the globe.
Vendor management
Vendors should be considered as partners who add value to your business. There has to be a structured process for choosing your partner, whether in life or in business! What’s more, a business must have a way to benchmark vendor performance and communicate this to the vendor on a regular basis. Here’s how the ICICI Bank does it.
Potential partners are put through a rigorous scoring exercise. A team in the bank diligently checks parameters such as track record, management style, capital investment, duration and history of its business, management depth, market share, market experience, market reputation, and customer feedback. It also reviews the commitment of its senior management.
Once the partner starts to deliver products and services it undergoes a review process every quarter wherein the concerned operating teams at the bank review performance on the ground. If the scoring numbers fall below certain thresholds, the vendors are invited for a quarterly meeting. At this meeting the bank informs them of their performance scores and alerts them about the areas that need improvement. After this the bank closely monitors vendor performance for the next quarter to see if there are improvements.
The bank also circulates a scoring questionnaire to all the application teams within the Group. There are questions to check the quality of a business unit’s relationship with the vendor. The questions are based on service levels and on what was promised by the vendor.
Advice for tomorrow’s CIO
Vohra mentors five people in the Group who have been handpicked to lead tomorrow. He encourages them to think original and out-of-the-box.
“My advice to them is that they should learn to be able to think from first principles. Learn from everyone who has been there and done that, but do not lose the ability to design from first principles,” says Vohra. He says that one should always think about enhancements, new ideas, partnerships, training programs, and innovations.