Technology Weds Leadership : Arun Jain

Interview Questions

Full Interview with Arun Jain

Arun Jain:

Arun Jain: IT was an enabler in the 20th century. Now, it is a basic necessity. Technology forms the very core of any business nowadays, especially in the services business.

 

Arun Jain:

From day one, we looked at IT as a source of knowledge. Even in 1997, when we were small - maybe, just a Rs 15- crore company - we made significant investments in technology. As a software company, we believe knowledge is key.

And questions like how do you store and retrieve knowledge are critical. We felt that if Polaris had to grow from being a Rs 15- crore company to a Rs 100-crore company, we would need the strong support that technology provides. At that time, our CIO, V. Balakrishnan (who has been with us since then), put up a portal to manage technology.

This was at a time when portals were emerging. We implemented Lotus Notes as a mail system sometime in 1998. In 1999, we built up a portal that is run by associates, so that they could access information, including things like attendance to workflow. It allowed them to bypass departments to get their work done. Then, we implemented ERP. We invested in PeopleSoft and, then, enterprise project management and technologies required for financial accounting and human resources. Then, we integrated business analytics and used it to make business decisions. Earlier, we had discrete business analytics, but we now have a four-in-one system where four different inputs join and help us make a more integrated decision across geographies and businesses.

 

Arun Jain:

We've had to build systems and processes that are scalable. It is important to have repeat processes, especially with new managers joining us. We've have to build these repeatable practices and encode them into technology. These help in ramping up and bringing in lateral talent into the company.

 

Arun Jain:

I think both business and IT must be an integral part of this process. Many say that CIOs are technology people. My belief is that technology has to be led by the CEO himself and not just regular business heads. Corporations that have CEOs who run their technology are very different companies. Take Citibank, for example.

From day one, John S. Reed (former chairman and CEO of Citicorp, Citibank and Citigroup) invested in technology to make Citibank the technology bank of the world.

The major growth they showed during the 1980s came because of the money they putinto ATMs an technologies. So, I say that IT shouldn't only be the realm of managers. IT needs a leadership team - and everyone on it has to buy into it. Getting such a leadership team to work together is a CEO's role. He needs to become the person who keeps selling technology to every person on it until the team believes that technology, more than any individual, is a business driver.

 

Arun Jain:

He needs to be committed to technology. Look at ICICI and HDFC Bank. Look how IT is making a huge difference to their growth. This is happening because their CEOs believe that technology can make a huge difference. I'm not saying that CEOs should know technology. But in any other organization, a CEO's commitment to technology sends a very, very important signal to the leadership team. It is only then that IT is implemented.

 

Arun Jain:

A CIO should be a business person first - and then a technologist. The CTO, however, should be a technologist first. For a CIO, information comes first. He should look at information as information - how it comes to him should not matter. As soon as a CIO gets into the jungle of technology, he'll get lost. The CIO needs to be clear what dashboards the business needs and what matrixes will make a  difference.

Once this is his focus (more than 'how data will be collected'), he will be able to build better systems. The external CIO - what we call a CTO here - is the alter ego of the customer's CIO. We have structured our entire organization towards a CIO-centric mindset; so, my CTO interacts with the worldwide CIO of Citigroup. He would, in turn, have a line of business CIOs. Similarly, we have a line of business CIOs embedded into different business solution centers - and below them are the business solutionarchitects. So, we have a CIO for retail banking, I have a CIO for corporate banking and a CIO for lending, and so on.

 

Arun Jain:

We haven't given designations yet, but we have this mindset. Our CTO works with a model that has five levels. At the top, we start with what drives profitability.

Then, we look at the operating model and what products can drive profitability. This includes questions like: what combination of products will help? Mortgage products?

Consumer finance products? Below this is the performance model.Here, they look at the criteria of various stakeholders and the dashboards they need. An operations manager will need to look at a different set of parameters from a product manager. Below this is the process model, where technologists typically work - they look at how to orchestrate a process. The fifth layer is where it all comes together.

Business needs a certain job done and a product can fulfill that. This is how a CIO or CTO can make a difference in business process management and create a mindset.

 

Arun Jain:

One of the biggest and more important pieces in a transformation is looking at how we can build the organization for the next decade. This is the job of a CTO: to envision new technologies and see how to implement it in a business environment. Companies that don't act on choosing the right technology at the right time get bought out; they disappear after a decade.

 

Arun Jain:

It's the same thing: aren't we, after all, the ones selling these technologies to companies? Look at the progression. First, there were mainframe technologies. Then, there were client-sever technologies and, now, there is a pattern where people on the business side are looking at service-level technologies. Today, you need an architecture that is service-oriented. We chose this in 2003. When we launched our Intellect suite of products, we decided to have them on SOA-based technologies. And, we made a Rs 100-crore investment to transform all our technologies.

It was a big decision because we made the move when client-servers were still in vogue. Today when people say we're transforming, it is because we took those decisions in 2003.

 

Arun Jain:

There are early adopters of SOA, though they are based in the US. Its benefits really depend on how companies look at their businesses. If a business wants to be dynamic and competitive, they need to be breaking down their business into services. And you need to combine three four services to make one product out of them. This is only possible when you have the flexibility to break it down and reassemble it. Client servers or mainframes cannot provide this.

 

Arun Jain:

That's a myth. SOA doesn't require you to change everything. At Polaris, we use SOA in such a manner that it coexists with the mainframe. We've built an entire methodology, which we call non-disruptive, major step methodology - or NDMS. This suggests that you shouldn't use a Big Bang approach to change. You are likely to fail with the Big Bang approach. If you're going to make changes, do it in bite-sizes with each bite not being longer than 90-180 days, and create projects in 6 to 12 bites. This will increase you chances of success. It's also the innovation that makes a difference.

 

Arun Jain:

There are three segments that target the same customer. These are retail banking, the retail consumer segment through retail stores, and the insurance sector. They all target the same consumer. Personally, I believe that these three segments should be compressed into one. There will be retails stores that will get into the banking space, banks will become insurance players or insurance companies will become bank players. We're already seeing some of this. Look at AIG - they are getting into consume finance. And Wal Mart is coming into banking.Now, Citibank is selling insurance.

 

Arun Jain:

A CIO has a role there, although it is more of a leadership function. Business models are really the work of both business managers and a CIO. In US companies, for instance, operations and technology report to an O&T head who reports to a CEO. Typically, this works in American banks, especially among the top 10 banks. And either a business manager or a technologist can become an O&T head. In this set-up, business models can be created together.

 

Arun Jain:

It isn't a right model. It's a convoluted model from the 1980s that is still hanging around, and I have no idea why. A CFO has no role to play in a scenario that includes so many business processes. It's a problem with the way industry has evolved. Earlier, money was the most important element for the business. So, everything was controlled by those who handled money. Today, money is not the important piece. Innovation is. It's totally changed.