IT innovation hinges on identifying business process levers

D&M Holdings' growing portfolio of high-end audio and video brands sparked an IT innovation that gave marketing the tools to interact with customers.

Lalit Panda is the global CIO at Japanese company D&M Holdings Inc., which manages a portfolio of high-performance audio and video equipment brands, including Denon, Marantz and Boston Acoustics. A supply chain expert, he has a degree from MIT's Center for Transportation and Logistics. He worked for Sony before joining D&M Holdings in 2009. He spoke with SearchCIO.com Features Writer Laura Smith about business process innovation at D&M.

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A talk with Lalit Panda about IT innovation

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What do you think is the CIO's role in innovation?
Panda:
The CIO is really the owner of business process innovation in the company. The CIO obviously has visibility into end-to end processes within the organization. So, finding the right leverage opportunities to improve the business, whether it is in product development or whether it is in business process within operations, within the order-to-cash cycle, order procure-to-pay cycle -- the CIO and his team have a visibility into where the potential levers are in terms of innovation on process and in terms of … the steps involved in executing to the organization's plan, and these business drivers, and the link between the business drivers and the strategies. So, I think the CIO's role is to create an environment of enablers that allow for process and business innovation.

In our company we have certain global themes that we drive across the organization. One of them is growth through innovation, the other one is through operational excellence, and the third one is through development of people. And if you look at the role of IT and the CIO and these themes, we create or enable the infrastructure to be responsive to these themes.

I'll give you a perfect example of that. We had many websites in the company; we had 200+ websites, and these websites were on completely different technologies, some not managed by us: We had third-party vendors in many countries who were managing these. So, the marketing people really had no direct control over these websites; it was a very time-consuming and tedious process to make changes and modifications on the websites, and improve our branding and communication to our customers.

So, we built an infrastructure on a single global content management system platform; and what we did with that is empower our marketing team to be flexible and responsive and be able to directly manage those websites without having an intermediary in the process. What we really did through that is allow the marketing people to innovate and modify and change and manage their websites, and we created a process to enable that. So, I think overall the CIO's role is critical in that process, to find out the right leverage points and then be able to execute to that.

How do you calculate the risks, benefits and return on investment of innovation?
Panda:
Like in every investment in IT, we try to prioritize based on our assessment of what value that investment will provide. In some cases, it may be pretty straightforward as a cost-reduction initiative or somewhere where we can impact a financial parameter like working capital or gross margin or things like that. In other cases, it might be flexibility in terms of improving a key business process that definitely has an impact on the overall value that the company delivers.

Product development, for instance: There is a lot of innovation in development of new products, and there is a whole process behind it. Systems can help speed up that process, improve the collaborative aspects of that process, and help us to bring product to market quicker. In that sense, there is a benefit of investing in that innovative capability. It may not be directly transferred to a calculation of cost reduction or something like that, but there is an investment in terms of making our organization capable of delivering a key business value, which is to get the right product to the market quicker.

So, in a sense we look at the various aspects of an investment in IT, whether it is improving our responsiveness or whether it is in reducing our cost, or specifically which impact it is having. Sometimes it might be just reducing risks in management: for instance, in investment in infrastructure; for instance, in disaster recovery and things like that. There may not be a huge impact on innovation, but it certainly provides the base for the organization to be more reliable in terms of the service that IT provides to the business.

We look at various aspects. We do ROI calculations where costs are directly something that we can estimate. In others, we might go on our assessment of the qualitative benefits and the improvement in the ability of the organization to meet its key business goals and objectives.

How do you get others to think about innovation or create a culture of innovation?
Panda:
I think this is where process enablement comes into play. What we usually do in my company is, we have an annual refresh of our business strategy; and IT follows that with a presentation of what we heard, in terms of business drivers, and identify where process innovation can help the business meet its goals of being able to respond to our customer needs.

We identify a set of drivers, and we then outline what process enablement we can bring to the table, and how that might help the business in achieving their key goals that they set through that annual strategy meeting.

In terms of culture of innovation, I think IT provides a lot of cues for the organization to think differently about the way they operate, whether it is in terms of collaborating on a global SharePoint platform or whether it's in terms of how we communicate with each other, or how we think about managing the process of creative development and product development and communicating across a group, or whether in terms of managing projects so we deliver expected results at a specific time, a committed time.

I think basically we set some examples of innovating in terms of process, and the technology enablement that helps the process; and that sort of grows across the organization. The other aspect of that may be also if you look at project management, for instance. That's an area where IT leads the business in many ways, in setting up the standards for good project management; and that then translates to areas where the business can innovate, using a project management methodology and bringing projects to completion under budget, and as specified and on schedule. So, I think in various ways, IT has a positive role in creating that culture of innovation, especially in global organizations like ours, where there is a huge amount of communication that needs to happen across global teams in order to accomplish these objectives of innovation.

What technology or trend is causing you to rethink how you operate IT?
Panda:
Anybody who opens up a magazine or a trade journal these days, I think the key technology trend that we are seeing is the cloud being used as an enabler of IT systems, and we think that is definitely a way to go in the future; instead of doing a lot of stuff on the desktop, we'd like to take it to the cloud. For instance, we've gone with Microsoft BPOS Business Productivity Online Suite to take our email onto the cloud, and collaborative capabilities onto the cloud as well. So, I think the trend is going in that direction, where we'll end up with common applications running on a centralized basis and you can access that application wherever you are, whether you are in your office or in transit somewhere or in a hotel room, and be able to operate seamlessly; so I think that's one technology trend we see has a big impact.

We identify a set of drivers, and we then outline what process enablement we can bring to the table, and how that might help the business in achieving their key goals.

Lalit Panda, global CIO, D&M Holdings Inc.

The other one I think is the power of the network. We've implemented our global [virtual private network]. I think there's a lot of leveraging of that network that can happen across a global organization like ours -- obviously, use it for voice, data and a lot of other things. But in the future, I think, this global network is going to be the backbone for enabling what I would call network computing, in the sense that most of your activity happens through the network, whether it is in the way you communicate with your colleagues in audio or in video, or in terms of how you interact with the applications that support your business. In many respects, I think these two technology trends, complementary as they are, are going to revolutionize IT and the way we think how IT delivers value to the business.

What business needs are shaping the type of technologies you're investing in?
Panda:
The business drivers are obviously consistent with what we've seen over the past few years, which is, number one, get more with less, so make our systems and processes more cost-effective and deliver more value to the business; but we are also looking at how our communication with our customers is changing. You have seen earlier, people spend a lot of resources on media advertising, but nowadays, a lot of the research process for products like ours happens on the Internet. There is social networking, there is communication and voice of the customer that we collect from the Web, so the Web technology is an area where engaging with our customers, improving the speed and responsiveness of our organization, reducing the friction in communications -- all of that becomes useful, whether it is in the front end with our customers, on the back end with our vendors, or internally within our organization between our colleagues.

So, I think from a technology perspective, enabling these seamless communications and helping us support our long-established brands with the right Web infrastructure is a very key aspect of how our business is reacting to the market and our responsiveness to the market.

This was first published in March 2011

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