ROI Is A Myth

Patrick Kishore, Chief Information Security Officer (CISO), State bank of India, gives away his candid thoughts on the two key business and technology aspects of enterprise IT - ROI and Cloud Computing. As he opens up to Biztech2.com, he shares the key considerations that should preclude any IT product purchase.

What is your take on ROI? Can ROI be aptly calculated?

ROI is a myth. ROI cannot be justly fit to enterprise IT. The claim to have the right model of calculating ROI should be termed as a ‘bluff’. It is a term used by vendors to sell.

In banks not all IT decisions are supported by ROI. Rather they are driven by obvious reasons, like for instance ‘Core Banking’ that offers anywhere banking. When our competitors are offering Core Banking, we have to introduce the same, especially considering the fact that State bank of India covers a large footprint running operations across the country. Not to adopt it would mean losing out on customers. This applies to newer technologies as well. These are business compulsions that make banks invest in IT in a big way.

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After setting up this baseline technology (Core Banking), banks have realised it’s ‘innovation potential’ in designing new products and providing alternate channels of banking and not just improving customer service and operational efficiency. The technology can also identify the leakages when compared to the manual system. This also contributes to the profits.

These are the main considerations before going for an IT implementation and not ROI.

What should be the key considerations before deciding on an IT product?

Business value should always be the top consideration. Secondly, in case of a software roll out, the selection of a system integrator (SI) is a crucial decision. The SI should be the best in the field to implement that particular product. Many a times a good product has been ruined by a bad implementation.

Next would be customer comfort. The customer will not use a complicated product, and thus customer ease should also be one of the considerations. Security is another prerequisite. At times, security is compromised for convenience. This is a trap that banks, at least, should avoid. If the product is not proven to be secured or cannot be configured to be secure then it should not be bought.

What are your views on virtualisation and cloud computing?

Cloud computing is a good option for faster setting up of websites for small start-ups that do not have in-house IT teams and cannot invest upfront. But, I would advise against cloud computing for large businesses of critical size because at such level the state of affairs has to be in complete control. In that case companies need to either invest in their own IT assets and people, or outsource it to somebody in the real world whom they can touch and probably hit if needed.

As far as virtualisation is concerned, a lot of developments have taken place in that area. Both storage virtualisation and server virtualization are gaining momentum. A number of small companies running many applications have adopted server virtualisation.

Another virtualisation that has happened is in the network area and a lot of smaller organisations have virtualised their network environment. MPLS WAN has become the preferred mode for small companies. Virtualisation at the network level primarily helps organisations in making effective use of their MPLS (Multiprotocol Label Switching) WAN infrastructure.