Indian IT companies regarded as absolute process champions. Industry
body Nasscom cites that about two-thirds of the firms globally boasting SEICMM
level-5 (highest-level quality certification for software process maturity)
are Indian firms. What’s more, Indian firms also dominate newer certifications
(PCMM, SEI CMMI - a variant of SEI CMM & other quality labels).
We have heard of delivery heads of some Indian IT companies having
spent elaborate time with Japanese auto manufacturers such as Toyota,
Honda to understand how manufacturing excellence can apply to IT
Services. So much so, Indian IT companies already are/are getting adept at
applying Japanese quality techniques in manufacturing to IT Services
represented by acronyms such as TQM, JIT (just-in-time hiring), Lean (Wipro
made this a focus area in the past), 6 Sigma, etc. All of this is commendable but
its limitations should be understood. After all, for long, Infosys has led the
process journey in a manner that was the envy of industry.
Besides software engineering, Infosys’ processes relating to aspects
encompassing delivery (back-end) and sales (front-end) are regarded as
quite robust and are widely admired. About four years back, Infosys’s
processes were so tight that we heard that if technical resources onsite were
unbilled for even one day, the concerned project manager could get to know of
that without having seen the resource(s); project profitability was calculated for
every project on a periodic basis based on effort accrual. Also, the sales pipeline
predictive mechanism (CRM) at Infosys was considered so forward-thinking
that senior engagement managers and top management could see on a dynamic
basis pipelines of those sales/account management folks whose prospective
pipeline was not filling as fast as their confirmed order pipeline was getting
executed (or depleted). In short, we may have believed that Infosys had
mastered the task of ensuring business predictability through mastery of process.
So much so, there might have been an impression that excellence in ITServices
in the era of “industrialization of delivery” was all about excellence
in processes & systems - with the benefit of hindsight, we know that this is
not true. Because if it were so, why would TCS be seeing a continued
resurgence amidst Infosys’s continued weak performance? Infosys’
process/systems were at least as good as of TCS three years back. If anything,
they might have been more robust. After all, TCS has had to deal with issues of
process standardization & integration of systems of companies/operations it had
acquired through the years (Pearl BPO, Comicrom, FNS, Tata Infotech, CMC,
eServe) unlike Infosys, a company that has grown almost entirely organically.
What’s more, processes & systems have to be continually updated in an age
when new technology models are emerging and the nature of engagements
with customers is changing. If companies are unable to engage and work with
customers at a commensurately intimate level to keep up and understand how
processes & systems must accordingly evolve, their existing processes &
systems regardless of how robust they might have been can get outdated. Just
the way business models evolve in keeping with the times, by implication,
supporting processes & systems must also get consequently refreshed. It is quite
easy for processes and systems to quickly get outdated in an era of rapid
technology evolution. After all, process cannot exist in vacuum.
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body Nasscom cites that about two-thirds of the firms globally boasting SEICMM
level-5 (highest-level quality certification for software process maturity)
are Indian firms. What’s more, Indian firms also dominate newer certifications
(PCMM, SEI CMMI - a variant of SEI CMM & other quality labels).
We have heard of delivery heads of some Indian IT companies having
spent elaborate time with Japanese auto manufacturers such as Toyota,
Honda to understand how manufacturing excellence can apply to IT
Services. So much so, Indian IT companies already are/are getting adept at
applying Japanese quality techniques in manufacturing to IT Services
represented by acronyms such as TQM, JIT (just-in-time hiring), Lean (Wipro
made this a focus area in the past), 6 Sigma, etc. All of this is commendable but
its limitations should be understood. After all, for long, Infosys has led the
process journey in a manner that was the envy of industry.
Besides software engineering, Infosys’ processes relating to aspects
encompassing delivery (back-end) and sales (front-end) are regarded as
quite robust and are widely admired. About four years back, Infosys’s
processes were so tight that we heard that if technical resources onsite were
unbilled for even one day, the concerned project manager could get to know of
that without having seen the resource(s); project profitability was calculated for
every project on a periodic basis based on effort accrual. Also, the sales pipeline
predictive mechanism (CRM) at Infosys was considered so forward-thinking
that senior engagement managers and top management could see on a dynamic
basis pipelines of those sales/account management folks whose prospective
pipeline was not filling as fast as their confirmed order pipeline was getting
executed (or depleted). In short, we may have believed that Infosys had
mastered the task of ensuring business predictability through mastery of process.
So much so, there might have been an impression that excellence in ITServices
in the era of “industrialization of delivery” was all about excellence
in processes & systems - with the benefit of hindsight, we know that this is
not true. Because if it were so, why would TCS be seeing a continued
resurgence amidst Infosys’s continued weak performance? Infosys’
process/systems were at least as good as of TCS three years back. If anything,
they might have been more robust. After all, TCS has had to deal with issues of
process standardization & integration of systems of companies/operations it had
acquired through the years (Pearl BPO, Comicrom, FNS, Tata Infotech, CMC,
eServe) unlike Infosys, a company that has grown almost entirely organically.
What’s more, processes & systems have to be continually updated in an age
when new technology models are emerging and the nature of engagements
with customers is changing. If companies are unable to engage and work with
customers at a commensurately intimate level to keep up and understand how
processes & systems must accordingly evolve, their existing processes &
systems regardless of how robust they might have been can get outdated. Just
the way business models evolve in keeping with the times, by implication,
supporting processes & systems must also get consequently refreshed. It is quite
easy for processes and systems to quickly get outdated in an era of rapid
technology evolution. After all, process cannot exist in vacuum.
TCS versus Infosys comparison bears this out
The continuing disparity in financial performance between TCS and Infosys
reminds us that, ultimately, processes & systems do not help if management
does not generate enough demand in the market-place. Processes & systems do
help raise red flags but only mid-to-senior management can address the red flags
when they see them or better still pre-empt them to the extent possible. In the times
of flux, inability to retain mid-to-senior level talent at both the front- and back-end
can weaken Infosys’ ability to address the red flags thrown up by processes &
systems. Processes & systems are necessary but hardly sufficient. We think it
ultimately boils down to people.
Conclusion
To conclude, processes & systems constitute a hygiene factor at best and should
be seen as subservient to people. Also, good processes & systems can run the risk
of getting outdated if firms fail to move with the times. People inevitably trump
processes & systems. The tendency to see process excellence as a way out of all (or
almost all) issues in IT Services is a flawed one. It should be evident by now.
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