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Achieving global excellence through IT news
Azim Premji
01 October 2005

Global excellence is a moving target. Companies have to constantly innovate and reduce costs. On the one hand, they must not only develop expensive new features to please consumers but also improve their environmental and safety standards, knowing fully well that cannot expect a simultaneous increase in their price realisation. Customers always want something more for less.

Azim PremjiAchieving excellence, which can meet global standards and expectations, in not a new concept for India any more. Today, there are at least 20 firms doing well in the global market. Tata Motors sells its Indica cars to Rovers factory in UK, Bharat Forge is the world''s second largest manufacturer of forgings. Sundaram Fasteners has been ranked number one supplier by GM 3 years running for its zero defects which bear testimony to the world class capability here.

Automobiles and auto components are high value industries. Between 1998-99 and 2003-04, India''s export of passenger cars increased nearly five fold to 1, 26,000 units and two wheelers from 1,00,000 units to 2,65,000 units. For the first time, the industry exported auto components exceeding one billion US dollars.

According to McKinsey, India could capture up to $25 billion of this amount by 2015, to become, along with China, Mexico, and Thailand, one of the developing world''s top sourcing bases.

Apart from low costs, India''s auto components industry has the advantage of skills in process, product, and capital engineering owing to its long manufacturing history and higher-education system. Also, India''s advanced tooling and machining industry makes it possible to produce capital equipment locally in a less expensive manner.

In the pharmaceutical industry, firms like Ranbaxy, DRL bring out affordable drugs to the world. Ranbaxy ranks ninth globally in the generics drugs category and had bagged the AIDS research funded by former US president Bill Clinton. Even in the entertainment industry, India is making its mark.

Toonz animation based out of Kerala rated among the top 10 in the world while Maya Entertainment played a significant role in the production of recent Hollywood special blockbusters like Star Wars, Mummy and Stuart Little. India has make its mark in fashion industry beyond Aishwarya Rai and now romps cat walks in Paris, Milan, London and New York.

While these are important achievements, global excellence is a moving target. Companies have to constantly innovate and reduce costs. On the one hand, they must not only develop expensive new features to please consumers but also improve their environmental and safety standards.

They must do all this knowing fully well that cannot expect a simultaneous increase in their price realisation. Customers always want something more for less. Especially, after the downturn, they have realised that there is a buffer somewhere that they can squeeze out, if they only look for it hard enough. They have become extremely tough in their negotiations.

The other global trend that virtually spans all industries is the desire to have fewer vendors on whom the customers are willing to bet. It also helps them to drive them harder, especially in the face of fierce competition. Clearly, companies who will win will be those who have an excellent record for delivery execution.

Delivery execution is the end effect which depends on other components including vendor management on one hand to customer relations management on the other. Companies also have to contend with the uncertainties of demand, complexity of the global situations and just-in time manufacturing systems.

Information Technology has a key role in connecting up all these parts. It is like the nervous system in the body that senses and responds quickly. Similarly, for organisations to respond quickly to changing customer requirements, order management systems must be able to capture the voice of the customer throughout the supply chain. They must develop lean, agile supply chains that meet complex production delivery requirements. But information technology has a greater role to play in building the health of the organisation.

To sustain in the long run, achieving global excellence needs not only the quickness of a sprinter but the stamina of a long distance runner. How information technology is used becomes central to this.

It may be useful to see how successful global companies have used Information Technology for improving the success of their organisations. Companies such as Charles Schwab, Dell Computer, Wal-Mart, and other leading businesses used IT to influence what really counts in their industries.

First, they identified the productivity levers in their organisations. For some, it was the numerator: number of units or value. For others, it was the denominator, cost and effort. They focused on what matters the most. Targeting specific productivity levers.. Different industries have unique performance drivers that are based on the products they sell, the customers they sell to, and the costs associated with conducting business in that sector. Companies that deployed IT successfully not only clearly understood this but also used IT to achieve great improvements in these levers.

Second, leading companies invariably focus their IT investments in one area: reducing interaction costs, which in most businesses consume 40 to 60 percent of the staff''s time. Coordinators, order-entry clerks, follow up staff, schedulers, and many others who operate between the company and its customers only add to the delay, cost, and error. Some of these defects eventually damage credibility with the customer.

Third, Technological and management innovations were developed hand in hand. Research shows that technological innovations are typically of little use until complementary managerial innovations bring them to life. Dell and Wal-Mart provide good examples using this combination well. Wal-Mart''s innovations in supplier relationships, for example, were developed in tandem with its RetailLink information system and its collaborative purchasing systems. Its innovations in the day-to-day replenishment of its stores were developed along with its applications for warehouse automation and inventory tracking. Custom merchandising applications facilitated the company''s innovations in store formats. Technological innovation without corresponding managerial innovation is like a car with a powerful engine but a wobbly chassis. It cannot get far. Partnering with IT companies that have offer not only technological breadth but also a sound understanding of management can help in leveraging the IT investment.

I would therefore like to conclude that sustainable excellence in a global environment needs more than technology or even advanced Quality processes. We need a strong linkage between what the Customer needs and what the organisation can deliver with amazing speed and flexibility.

I want to end by a funny little cartoon strip I came along which illustrates this very well: A mother was out in the garden when her five year old son ran to meet her. He said, "Mother, there was a call for you half an hour ago." The mother asked, "Who was it?". The son said, " I do not know her." The mother asked, "Did you not ask her name?" The son replied, "I just told her you will call back." "Did you get her number?" asked the mother. The boy shook his head. "We don''t know who she is, we do not have her number, then how can I call her back?" The boy smiled, "No problem. She is still holding on to the phone."

This is the truth about being in a global environment. One has to be online and constantly in touch with everything that is going on outside and inside. Excellence, after all, is not an act but a habit.


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Achieving global excellence through IT