Outsourcing To Allow Godrej IT Team To Develop Strategic Focus

In a recent development, Godrej Industries selected Hewlett-Packard India as its strategic IT outsourcing partner. The outsourcing agreement between Godrej and HP will cover the whole gamut of IT operations at Godrej, right from desktops and networks to infrastructure management services to SAP, Peoplesoft and other application management services. Biztech2.0 brings you the behind-the-scenes action from Godrej through an exclusive interaction with Mani Mulki, EVP, Information System, Godrej Industries.

Vision to Operate IT with Highest Efficiency

While cost and attrition of IT staff are popular drivers behind outsourcing decisions, in Godrej’s case it was the rising dependence of business on IT infrastructure that led to this move. More than 90 percent of business applications at the FMCG giant today rely on the robustness of its IT systems. The IT department at Godrej is expected to ensure round-the-clock uptime of all systems and deliver desired service levels.

“As an IT head, I would be able to meet these expectations only if I was assured of stable resources in terms of infrastructure and people, which we can ensure through the outsourcing of IT functions,” says Mulki. Godrej also had to make sure that the technology was harnessed in the right manner at the right time and with the right cost – which would help the business achieve some of its strategic objectives and also sustain a competitive edge. Thus, need for higher levels of efficiency and effectiveness was the primary driver behind outsourcing of IT operations.

Why HP?

Before deciding on HP India as its outsourcing partner, Godrej had evaluated several other IT vendors of similar size. The defining criteria that Godrej was looking for in the outsourcing partner included flexibility, Indian experience, cultural compatibility, cost viability and skill availability. HP’s extensive experience in outsourcing, application development and infrastructure services combined with its rich domain experience in the FMCG and retail segments made it suitable for Godrej’s requirements. HP’s customers in India include some well-known FMCG companies like Britannia and P&G.

Godrej decided to go in for a solitary vendor as it needed a single window interface and clear accountability. According to Mulki, in case of a multi-vendor system, if there is any dispute the blame is passed around and it is difficult to make any one vendor responsible for the flaws in the system.

Smart SLA Ensures Outsourcing Success

Service level agreement is one of the prime concerns among CIOs while considering the outsourcing of IT operations. According to Mulki, one of the primary advantages of having an internal IT department lies in the flexibility that it offers to the business user. The CIO has to ensure that the SLA with the prospective outsourcing partner incorporates this ‘flexibility’ element to the maximum extent possible. “Similarly, one has to ensure that the current level of IT service is not compromised in the agreement in any way,” he says.

Measurement of the SLA is another important aspect, which should be given due consideration. With the help of Ernst & Young as its advisory partner, Godrej ensured that all critical aspects of the SLA like contractual, penalty, exit and incentives were well taken care of. Also, as security is a prime concern in an outsourcing agreement, Godrej has ensured that sufficient confidentiality clauses are included in the agreement, which will protect the IPR of both parties.

Outsourcing will allow Scope for Strategic Focus

The company is envisioning that the outsourcing move will make sure that there are no hiccups and stoppages because of the non-availability of IT systems, and business functions will operate at a higher level of efficiency and effectiveness. Mulki says, “At Godrej, we believe it is imperative that IT operates at a level of efficiency that makes the service in one way as being ‘invisible’. In other words, the IT service component should be available to the business users whenever it is required and in whatever form it is desired.”

Outsourcing of IT also leaves more time for the CIO to concentrate on strategic issues rather than managing only day-to-day activities. Post IT outsourcing, Godrej’s IT management team is expected to spend more time with business users, interact closely with the HP team and bring relevant technologies that would aid business to the growth platform.

As the global economy coped with unforeseen economic uncertainties, CIOs are bound to search for options that will help them curb their expenses of maintaining IT infrastructure and services. Mulki concludes, “IT Outsourcing (or right sourcing as I would like to call it) should be an option, which CIO’s should be looking at in any case, whether there is a crisis or not. However, this option should be preceded by a proper justification, business alignment, due diligence and evaluation.”