May 1 2006

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From The ediTor

Statistics. Probably the reason I almost took up maths in college. Fascinating stuff.

Those who know me well, have to put up with my fondness for chucking figures on a

variety of subjects. For instance, CIO research shows that 33 percent of all infosecurity

attacks on enterprises stem from employees. Mix in former staffers to the pie and that

figure goes up to 53 percent!

And, the source of the attacks ensures that you get to know about them only after the

damage is done. Talking about this, a security expert recently said that when employees turn

rogue they do not hack into systems using flaws in applications. Instead, they use flaws in

the security procedures of the company to carry out their attack.

It often boils down to what IT usage policies are and how well they are enforced. Weak

policies equal weaker monitoring and enforcement.

Often it doesn’t even need malice on the part of employees for them to introduce vulnerabilities

into the system—security, as you are well aware, is not always a priority for end-users. That’s

why it’s vital for you to make policies that are not only up-to-date and understandable but also

work at end-user buy-in (in conjunction with

your HR department.)

Admitedly, there are grey areas here.

How do you enforce policies regarding

passwords? How do you prevent colleagues

from sharing passwords? No amount of

policies or policing will end that. You will

need a mechanism that builds end-user

awareness to the level where they appreciate the importance of not being able to connect

their MP3 players to the network.

One way out is to take a cue from a software services company which insists on a review

of IT policies as part of the annual appraisal process. Another way is to educate colleagues

through articles over email and discuss sticky security issues (like the MP3 player one) in

an open forum. How do you handle such issues?

On an allied note, the next issue (May 15, 2006) is going to be a special on security and

related issues. You’ll find in it case studies, security policy issues, and, yes, the ways of

catching out liars, crooks and the rogues within. Watch out for it and let me know what

you think. Keep your feedback flowing to [email protected]

When employees turn rogue, they hack into your system by exploiting flaws in the company's security procedures to carry out their attack.

Weak policies equal weaker monitoring and enforcement.

Vijay Ramachandran, Editor [email protected]

Sleeping with the Enemy?

REAL CIO WORLD | M A Y 1 , 2 0 0 6 �Vol/1 | ISSUE/12

Content,Editorial,Colophone.indd3 3 4/28/2006 9:14:47 PM

44

Prakash Shukla, Senior VP for Technology and CIO, Taj Hotels Resorts and Palaces, rung up more correct room prices using revenue optimization.

Executive ExpectationsVIEW FROm ThE TOp | 54B. S. Nagesh, MD & CEO, Shopper’s Stop, uses IT to reduce supply-chain shrinkage and brings technology to bear in a continuing test to use every square-foot of his organization.Interview by Gunjan Trivedi

Total Leadership TOxIC! | 28 Some leaders are so bad, they can poison a company. Here’s how to spot them, and what you can do about them.

Column by patricia Wallington

IT WorkThE VALuE InsIDE | 22CIOs should be treating success with an application as an invitation to see what else the software can do for their business.Column by michael schrage

IT Management LEssOns FROm ThE FROnT LInEs | 60The right deployment strategy can dispel lingering fears about voice and data convergence.Feature by John s. Webster

more »

Revenue Optimization

COVER sTORy | hIT ThE suITE spOT | 44

After the view and personalized service, a hotel room is only as good as the money it brings home. The Taj Group of Hotels makes every room count by strategically deploying optimization. Feature by Balaji narasimhan

MAY 1 2006‑|‑Vol/1‑|‑issue/12

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GovernROOTInG FOR ThE GRAssROOTs | 66Governance starts at the village. e-empowering Panchayati Raj institutions is lending power to local bodies and bringing more transparency and accountability. Feature by Rahul neel mani & Gunjan Trivedi

ChIppInG AT ThE BACkWOODs | 70Aman Kumar Singh, CEO, CHiPS (Chhattisgarh Infotech and Biotech Promotion Society), has a unique problem—80 percent of Chhattisgarh’s population of lives in rural areas, and the only way he can ensure that IT makes an impact is by taking IT to them.Interview by Balaji narasimhan

content (cont.)

Trendlines | 15 networks | A Smarter Search for Trouble mobile Computing | No More Stinkin' Batteries E-payment | Tokyo Taxis Take e-money IT medicine | Distributed Computing vs Avian Flu mobile Technology | PDAs Kickstart Coffee Culture IT Budgeting | IT Spending Projections Rise By The numbers | SOA Gains Momentum Analytics | Database Experiment Reveals Darwin’s Inspiration

Essential Technology | 74 Tagging | The Name Game By Michael Fitzgerald

pundit | Get to Know Ruby on Rails By Christopher Lindquist

From the Editor | 3 sleeping with the Enemy? | Weak policies equal weaker monitoring and enforcement. By Vijay Ramachandran

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reader feedback

Practical ValueIt was a pleasure to read the feature on Airtel’s CRM deployment (Customer Relationship Magic; April 15, 2006). Today, business equals CRM specially in the service sector, and handling this properly is half the battle won. I must appreciate CIO’s role in highlighting this, specially since one could derive good insights from the Airtel deployment.

Similarly, I liked the Keep Business Afloat (December 15, 2005) feature on business continuity in the face of disaster. Both these examples are representative of the totally different way in which CIO covers subjects—articles are focused on actual IT operations and their fine-tuning; they are practical and CIO is able to bridge the gap between what is theoretically possible and reality. None of the other technology publications are able to do this.

The selection of subjects is alive to the issues that CIOs face, with rich content and presentation. The care that goes into producing this magazine is evident when one looks at the precise and to-the-point questions that are asked in the interviews it carries.

That’s why I end up reading between 80 and 90 percent of each issue (in fact, I keep the latest copy in the car to catch up between meetings). It’s a great, total

value read. Please keep it focused on management issues—don’t dilute this positioning ever.

Col. ArVind SAxenA,CIO, Air Deccan

Keep it interestingI really admire the way CIO deals with relevant topics. In particular I liked the cover story on Web Services (Are you ready for Web Services?, February 1, 2006). It had a very unique style and approach, beginning with an interactive questionnaire that led to the main article. It was both interesting and helpful. The questionnaire helped me to gauge my awareness level and the readiness of my organization in adopting Web Services. Please continue to bring out articles like these. They are definitely worth reading.

S. B. PAS. B. PAS. B. P tAtA AtAt nKAr, Director - IT, BSE

Comic reliefa recent entrant into the world of IT from the Indian Navy, I have been devouring the fare dished out in the various issues of CIO with considerable relish and interest. The articles are crisp, well-presented and give much food for thought—and action. It has in Naval parlance, kept me afloat, provided wind to my sails and supplied ammunition to forge ahead! To add some flavor and help provide color to the landscape, may I recommend that you consider adding a comic/cartoon strip which conveys a principle or a theme each time. This would also help in

attracting and retaining readership, whilst imparting lessons in a lighter vein.

Cdr. n. A. MohAn,GM, Tally (India)

More on SecurityI am probably reiterating a thought which forms a regular part of your feedback, but it’s worth saying again: I appreciate the quality of your articles and the quality of production and print. I find it heartening that your articles address a wide range of topics all the way from HR to vendor management to IT value. Keep it up! I request you to focus on information security a little more in your forthcoming issues. A security-specific case-study or two will definitely help.

ProSenjit PurKAyKAyKA ASyASy thA, VP-Finance & CIO, Mahanagar Gas

It’s following feedback like yours that we’ve compiled a Security Special issue. It will contain case studies, technology stuff and even advise on how to spot liars. Please look out for the May 15, 2006 issue.

— Editor

What Do You Think?

We welcome your feedback on our articles, apart from your thoughts and suggestions. Write in to [email protected]. Letters may be edited for length or clarity.

editor@c o.in

“Today, business equals crM,

specially in the service sector,

and handling this properly is half the

battle won.”


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M O B I L E C O M P U T I N G mIT researchers have found a way to extend the working life of mobile computers by drawing power from ultracapacitors rather than batteries.

ultracapacitors are still three-to-five years away from becoming the main power source for laptops and handhelds, although they’re already used for backup power in many small consumer products, according to Joel schindall, a professor at mIT’s Department of Electrical Engineering and Computer science. The new

device is called a nanotube-enhanced ultracapacitor or nEu.

Capacitors store energy as an electrical field, which is more efficient than standard batteries that generate energy from chemical reactions. ultracapacitors are even more efficient. The drawback is size—they need to be larger than batteries to hold the same charge.

mIT researchers solved this problem by taking advantage of the enormous surface area of nanotubes: molecular-scale straws of carbon atoms that

enable ultracapacitors to store electrical fields at the atomic level.

The new technology could shake up the computer business, where energy efficiency is becoming a selling point. how fast a battery charges is also important to users. a cell phone powered by mIT’s ultracapacitor could completely recharge in just a few seconds.

— by ben ames

We Don’t Need No Stinkin’ Batteries

N E T W O R K M A N A G E M E N T Sifting through performance logs saps time and money from just about every enterprise. System administrators who oversee networks of hundreds of servers might spend entire days reading files from a variety of devices to monitor overall network health. For even the most meticulous among us, this work is tedious.

Splunk is designed to change this. The software, from a startup of the same name, is a system log search tool that empowers system administrators to scrutinize their network performance logs more easily. While other log management tools exist, few if any cull data from every part of a network.

Think of Splunk as Google for system logs. Customers configure the tool to read logs from different network outposts. To use it, system administrators set their sights on a type of record (say one that would indicate a distributed denial-of-service attack), type a relevant phrase in a search box, and sit back while the software searches for the appropriate report.

The product can be used in several areas, including monitoring network security and keeping tabs on changes to a server. CEO Michael Baum estimates that Splunk can cut log management time to mere minutes in an average-size company and reduce the mean time to recovery after a network failure.

Glenn Evans, lead network engineer for Interop, says he used the software last year to keep tabs on the network for the annual InteropNet conference from one central location, analyzing network data immediately as it churned out. “Having Splunk was like having a second or third pair of eyes,” he says.

— By Matt Villano

n e w * h o t * u n e x p e c t e d

REAL CIO WORLD | M A Y 1 , 2 0 0 6 1 5Vol/1 | IssuE/12

A Better Way to Search for Trouble

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E - P A Y M E N T Taxi passengers in Tokyo will soon be able to start paying for their rides using electronic money according to three taxi fleet operators in the city.

The deals, which involve bitWallet Inc.’s Edy system and East Japan railway Co.’s (Jr East) suica system, are the latest in a string of agreements from major retailers to accept e-money in lieu of conventional cash for purchases and services. They come as the technology for the systems, which are both based on sony Corp.’s Felica touch-and-go proximity smart card platform, is on the verge of becoming a standard feature in cell phones.

The announcement mean that from august this year all 2,552 taxis operated by Chuo musen Taxi will begin accepting payment using Edy and from next year 2,798 taxis belonging to nihon kotsu Co. ltd. and 2,242 taxis belonging to kokusai motorcars Co. ltd. will accept payment by suica e-cash. The three taxi operators are among the largest in Tokyo.

after a slow start e-money is rapidly gaining pace in Japan.Edy, which is backed by sony, nTT DoComo Inc. and a number of other financial

institutions, can be used in around 31,000 places in Japan including convenience stores, restaurants, department stores and karaoke centers. In addition to dedicated Edy cards, the feature is also built into some credit cards, airline mileage cards, office identification cards and recently, cell phones. bitWallet says about 17 million Edy cards have been issued, of which about three million are cell phones.

The competing suica system began as a prepaid travel pass for use on Jr East trains in the Tokyo area but it’s been expanded to include an e-cash function. almost 12 million suica cards with the e-money support have been issued and there are 5,700 places where they can be used. E-money transactions using suica cards, not including travel use, currently total about 260,000 per day, said Jr East.

both systems originally required plastic cards although now many cell phones are avail-able with Felica sup-port built-in. That means users can add Edy or suica functions by just downloading the respective application for the phone. because of the wide penetration of the Felica platform, it’s also being used for other systems such as retail loyalty cards, and DoComo recently began operating a Felica-based credit card payment system.

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I T M E d I C I N E A research institute is harnessing the power of thousands of computers over the Internet to investigate potential drug treatments for the deadly avian influenza.

The Rothberg Institute for Childhood Diseases, based on Guilford, Connecticut, said that it had detailed the first mission for volunteers participating in the distributed computing project.

Volunteers download a screen saver program that simulates the binding of drug molecules with proteins—referred to as ‘targets’—in avian flu, the institute said.

The screen saver, which is visible in a computer’s program tray, kicks in when the computer is idle, the institute said. The institute likens the process to hunting through a batch of keys—meaning the drugs—to find the right one that fits a protein in the virus.

The results are sent back to the Rothberg Institute when the computer is online.

The institute said distributed computing allows for the deployment of new targets to tens of thousands of computers running the program, collectively called the Drug Design and Optimization Lab (D2OL), within minutes.

The institute said the first avian flu target is the H5N1 neuraminidase, which aids in the spread of the disease. Avian Influenza A, also known as H5N1, is the most dangerous one that humans have contracted so far, the institute said.

Officials fear H5N1 is the most likely one to mutate into a form that humans could contract more easily. So far, human-to-human infections have been rare, the institute said.

Governments have ordered widespread culls of chickens in Europe and Asia to halt the spread, but it’s believed migrating birds have brought the disease to new areas.

—By Jeremy Kirk

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Taxis Take e-moneyTaxis Take e-money

East trains in the Tokyo area but it’s been expanded to include an e-cash uica cards with the e-money support have

been issued and there are 5,700 places where they can be used. E-money transactions using

uica cards, not including travel use, currently total about 260,000 per day, said

oth systems originally

by just downloading the respective application for

ecause of the wide penetration of the Felica platform, it’s also being used for other systems such as retail loyalty cards, and nTT

o recently began operating a Felica-based credit card payment system.

—by martyn Williams

REAL CIO WORLD

Distributed Computing Fights Avian Flu

The institute

said 80,000

volunteers in 93 countries are

participating in the project so far.

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M O B I L E T E C h N O L G Y For many workers the morning coffee is an important ritual and with the use of mobile technology a Queensland-based, small, but very mobile business has found a way of getting the precious drink to customers more efficiently.

Inspired by a TV advertisement showing a coffee machine on the back of a scooter, Darren Schultz, a former hairdresser, and Chris Collings, a chef, brought their mobile coffee business, Xpresso, to life.

“Our system was fairly basic when we started four years ago,” Schultz said. “Chris would make the coffee at the van and I would be 20-to-100 meters up the road getting orders—we had our own sign language.”

But 12 months later, the partners decided to franchise the operation throughout Australia. “We had a pen and pad ordering system, then we started using walkie-talkies, which worked well, but the noise was off-putting and we felt too much like security guards or policemen. SMS was too time consuming.”

Consultation with IT solutions company Absoft Group, led them to the implemention of a PDA-to-PDA ordering system running the Microsoft Windows Mobile 2003 platform.

“We now use two PDAs, one to take orders, which instantaneously sends it to the second PDA in the coffee van,” Schultz said.

“This significantly reduces down time and lets us sell, on average, an additional four coffees every 15 minutes. At Rs 99 a coffee, this equates to an additional Rs 23.1 lakh in sales over a one year period.”

There's been positive response from Xpresso franchisees. Out of 44 franchisees, 12 are looking at taking it up and Shultz believes it is only a matter of time before the rest follow.

“We are aiming at 120 across Australia within the next three years in addition to US and New Zealand,” he said.

PDAs were chosen because the touchscreen better replicated normal ordering and they also retained data, which is useful for regulars.

“Most people order the same coffee each day, so the ability to save orders further reduces downtime.” he said.

— By Helen Schuller

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I T B U d G E T I N G IT spending projections increased in the first quarter of 2006, with CIOs predicting increases of 8.6 percent during the next 12 months, up from a projected 7.8 percent in December, according to the quarterly CIO Tech Poll.

Quarter-over-quarter spending projections increased in storage systems, data networking, infrastructure software, computer hardware, telecommunications equipment, e-Business applications software and outsourced IT services, according to the poll.

But a continuing warning sign is the increased number of CIOs who said that IT labor is hard to find and keep, said Gary Beach, group publisher at CXO Media Inc.

“This time last year 13 percent of CIOs said IT labor was hard to find and keep, but in this year that doubled to 26.3 percent,” said Beach.

“When you drill down to very large companies with 5,000 employees or more, it’s at 36.7 percent,” Beach said. “One of the reasons is that businesses cut too quick, too deep, two or three years ago when there was a mad rush to outsource. Now that the environment has improved a bit, talented IT workers doing some job shopping.”

When asked about eight specific IT categories, the average number of CIOs who said they plan to increase spending over the next year was 44.8 percent in January, up from 40.7 percent the month before. The number of CIOs who plan to decrease spending was 13.8 percent, down from 15.5 percent in December. Spending on storage was the strongest sector with 56.7 percent of respondents planning to increase spending

in that category, up from 49.7 percent in the December poll. Security software was the second-highest priority, with 50.8 percent planning more spending, virtually unchanged from the 50.9 percent in December. The latest results also indicate that 48 percent expect to increase spending on computer hardware, while 12.8 percent intend to

decrease spending, versus 17.8 percent in December. “CIOs say the coming age of rational exuberance is just beyond the

horizon,” Beach said. “'Do more with less’ is being replaced by ‘do more, more quickly and grow the business.’ Over the next 18 months we’ll see tech investment get into the low teen digits and stay there for two or three years as the visions that CIOs and businesses come to fruition.”

— By CIO Team

PDAs Kickstart PDAs Kickstart Coffee Culture

REAL CIO WORLD | M A Y 1 , 2 0 0 6 1 7Vol/1 | IssuE/12

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PDAs Kickstart PDAs Kickstart Coffee Culture

IT Spending Projections Rise Steadily

The number of CIOs who find it hard to maintain IT manpower has doubled to 26.3 percent.

Companies target mission-critical areas first.

I M P L E M E N TAT I O N O f s E Rv I C E - O R I E N T E d A R C h I T E C T U R E (SOA) is on the rise, reports the Yankee Group. The consultancy’s survey of 306 U.S. IT executives found that 84 percent had an SOA project or would be starting one within the next year.

SOA is an approach to software design that promotes the development and integration of reusable components that are based on elements of a business process. For example, if the elements of a business process required for customers to order a product online (such as checking inventory, looking up the customer record, checking credit) reside on different systems, writing each component as a service allows the speedy integration and delivery of the information needed to complete the transaction. Because services can be changed without affecting users, SOA reduces development time, lowers costs and allows business processes to be re-configured easily.

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1Best practices

SOA Adoption Gains Momentum

Coordinate SOA investments. Each soa project should be reviewed by a cross-functional team that has responsibility for setting and maintaining IT architecture standards. The team should make sure each soa project can be integrated with the ones that come before it.

Make a business process map. Inventory all enterprise services that support mission-critical operations and figure out how they relate to each other. “you probably won’t get funded to do this,” says Dwyer, “but it will become increasingly important with each soa project.” having a map of existing enterprise services will ensure a company won’t waste money on incompatible or duplicative projects, and make it easier to respond when a business model changes.

Define data. Create a set of data definitions that will be used to build soa-based applications, such as what data is encompassed by the terms ‘order’ or ‘account address.’ Definitions should be standardized throughout the company.

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plans for SoA deployment

16% Within 24

months

43% Within 12 months

41% Already adopted

top Areas for SoA InvestmentCustomer-facing processes, internal integration and data accessibility are priorities

Already Implemented

30% Customer-facing websites/portals

29% help desk and customer support

25% Integration of internal business applications

Evaluating or Deploying

73% Integration of internal business applications

72% Data/content aggregation and accessibility

65% Customer-facing websites/portals

65% Internal supply chain/procurement

sourCE: The yankee group

Because of the cost savings, the best areas to start applying SOA are those with the most impact on the bottom line, says Tom Dwyer, research director with the Yankee Group. He adds that for most companies surveyed, these areas are customer-facing business processes, which affect revenue most directly.

Among respondents that have already implemented SOA projects, most targeted customer-facing websites or portals (30 percent) and help desk and customer support applications (29 percent). But the future belongs to internal integration. Seventy-three percent of respondents said they are evaluating or currently deploying SOA projects to integrate internal business applications, and 72 percent were looking into or currently implementing it to aggregate data and content.

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A N A L Y T I C s British naturalist Charles Darwin is credited with the theory of evolution, but a crucial part of his theory came from his mentor, a lesser known but equally bright Cambridge University professor.

Darwin’s teacher, John Stevens Henslow, may have been relegated to an eternity of obscurity were it not for database analytics. For more than two years, a team of researchers worked to uncover a secret hidden in Henslow’s vast, brittle collection of plants—called an herbarium—from more than 160 years ago.

Using the original collection at the University of Cambridge in England, researchers transferred the data into an early beta version of Microsoft’s SQL Server 2005, said Mark Whitehorn, a database expert who worked on the project. He said the project illustrates SQL Server’s cost efficiency. Microsoft has been actively promoting the case study.

Henslow’s herbarium consists of 3,500 sheets with more than 10,000 dried plant samples he and others collected. At the time, Henslow carefully documented the samples’ origin, quantity, date collected and species, among other data.

Once in the database, scientists with expertise in other areas outside of computer science could pursue inquiries. The team included Professor David Kohn, a Darwin scholar at Drew University in New Jersey; Professor John Parker, a botanist at Cambridge; and Gina Murrell from Cambridge’s herbarium.

Using database analytics, researchers graphed different sets of data and rearranged until patterns emerged, Whitehorn said.

Researchers were able to draw connections from the plants samples, such as when two collectors may have been traveling with each other at the same time. Plant species could be plotted against time to highlight collection trends from certain years.

Manually extracting the statistics would have been possible, but arduous. Professional scientists have spent their lives ‘fighting data,’ Whitehorn said.

A striking conclusion became evident. The concept of variation—meaning differences within members of a species necessary for survival as a whole—was observed first by Henslow, Whitehorn said.

“What is now very clear to us is that Henslow started studying this variation quite systematically in about the 1820s,” Whitehorn said. “He actually trained Darwin to observe variations between the species.”

Henslow aided Darwin in gaining a berth on the HMS Beagle for his 1831 trip to the Galapagos Islands. The trip was influential in Darwin’s writing of ‘On the Origin of Species,’ his 1859 work detailing evolutionary theory.

— By Jeremy Kirk

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The Value InsideCIOs should be treating success with an application as an invitation to see what else the software can do for their business.

Success can be a trickster; be wary. While I was moderating a customer advisory board workshop for the software division of a giant technology company, a disturbing observation dawned on

everyone in our poorly air-conditioned conference room: The software we were all there to improve could do much more than even its most loyal users dreamed of, yet that extra capability was almost never tapped.

The division’s leadership heard story after story of how their software did a terrific job of solving one problem, yet was never considered as a possible solution for any other business problem. Somehow, the software’s early success had branded it a useful ‘point solution’ rather than an innovative platform for an array of apps. For example, while the software was superb for both mass and custom distribution of e-mails and PDFs, it could also handle global distribution of richer media formats—streaming, for instance. But clients were not even aware of the greater capability. In fact, this server software, with minor modifications, was explicitly designed to deal with the bulk of the business and technical issues its users had deemed critical.

Why did early success blunt enhanced adoption? Communication was part of the problem. People just didn’t see the links between digital formats, and the vendor didn’t know enough about its customers’ specific business needs to point out how the software could address them. While it was true the software would have to be tweaked to custom-support specific needs, the vendor actually had tools that made customization cheap and easy. But again, the customers didn’t understand what was available.

Bottom line? The software was a victim of its early success. The customers clearly liked it—why else join the advisory board?—but Il

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the package was woefully undervalued and underutilized. The point solution perception actually undermined its potential as an enterprise business process platform. Oh, the irony! The software had been unfairly ‘niched.’

At a major software company’s CIO conference barely a month later, it was déjà vu all over again. Fortune 1000 IT leaders took turns telling their host’s senior management that the vendor’s enterprise software was underutilized. Business process owners and line executives inside their companies kept looking for alternate software solutions to business needs when the vendor’s existing software could accomplish most everything required—and more.

“You need to make it easier for us to utilize all the software we license from you,” one CIO told the vendor hosting the conference. “Otherwise, our people are just going to go out and buy the software they think they need from someone else.”

Indeed, the common theme of these vignettes turns out to be a problem throughout enterprise computing. Organizations in general—and IT in particular—are underachievers in extracting full value from the systems they acquire and deploy. They’re too satisfied with initial success. For confirmation, you have to look only as far as your own desktop. The overwhelming majority of people use a fraction of the power and potential of, say, Microsoft Office or Google. Survey after survey reveals that managers typically use less than 15 percent of the functionality of PowerPoint or Excel. A recent IT survey by a Fortune 50 company showed that not even 10 percent of the employees over the age of 35 used the corporate e-mail filtering function.

How Vendors Discourage ExperimentationNow ask yourself, What portion of our ‘application backlogs’ are a function not of unwritten code but of unused or undeployed software features and functionality that are simply unknown or untaught to users? My bet? At least half, probably more.

Why do I so confidently assert this? Because I’ve seen it with my own eyes. Fifteen years ago, everyone in the industry joked about the unfulfilled promises of over-hyped ‘vaporware.’ Today, there is not a major enterprise software package—or a desktop app (Web-based or not)—that doesn’t have far more features and functionality than 75 percent of its users need. Are there vendors who fail to deliver? Of course, and there

always will be. But the reality is, for most organizations, a greater variety of ‘off-the-shelf ’ choices with more built-in functionality exists than ever before.

Yes, there will always be circumstances that require workarounds and custom-coding and special subroutines and so on. However, too many IT groups (and their internal customers) haven’t thought through how they can tap existing software portfolios to better meet business needs.

Now I’m the first to acknowledge that many vendors—you know who they are, they know who they are—have stupid, counterproductive licensing policies that discourage willing customers from getting greater value. Shame on them! But when you look at the rate of open-source evolution and how once-simple servers that handle transactions are becoming more multi-dimensional, savvy CIOs have to ask: How well do we really know what our software and systems are capable of doing if we’re really prepared to be clever about them? Are we adequately building on success?

CIOs need to audit the early wins and encourage people to use them as springboards. The implementation challenge shifts when we think less about reaching for something ‘new’ to solve problems than rethinking how we should tap what we possess. Yes, many vendors do a lousy job of documenting or explaining their offerings. And sometimes it’s easier to look for another point solution to solve a new problem.

But if we’ve already learned to run a package that cost-effectively delivers the goods, why not build on it if the price is right? Building on the right experiences is better economics than acquiring novelties that will inevitably pose their own unique challenges anyway.

Sitting in that airless room with a genuinely committed vendor and genuinely committed customers reinforced a simple but hard-won truth: Build on what works, and treat early success as an invitation to innovate—not as a sign that the problem has been solved. Vendors need to push their sales and support people to explain how usage can evolve over time, not just how best to solve the problem du jour. And CIOs need to do a better job of reaching out to their business units and working with them to help identify the features and functionality they need, and then unlock those features from the software they already own or lease.

The true test of our stewardship is not just how well software is used but whether we’re getting the full value that we should. That’s not just a technology leadership test; it’s a business leadership challenge. CIO

Michael Schrage is codirector of the MIT Media Lab’s

eMarkets Initiative. Send feedback on this column to

[email protected]

Michael Schrage IT work

Are we adequately building on success? CIos need to

audit early wins and encourage people to use

them as springboards.

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Toxic!Some leaders are so bad, they can poison a company. Here’s how to spot them, and what you can do about them.

Working for some leaders is as painful as taking a full dose of poison. Their behavior is so bad it is toxic to their organizations. You know the type: More of a despot than a

leader, he pits employees against each other and paralyzes the organization with fear.

Sometime during your career you may have encountered such a toxic leader, or maybe you see signs now of one emerging in your company (hopefully you aren’t one yourself). Here’s how to spot one, how to protect yourself and your team from his venom, and how to nip an emerging toxic leader in the bud.

The Markings of a Toxic BossToxic leaders share some common traits. They often have a rigid commitment to an idealized goal. They view challenges to their vision as akin to treason. Either you’re with such a leader, unquestioningly, 100 percent, or you’re the enemy.

The poisonous leader is arrogant; in her mind, she is always right, and she takes input only from a limited group of yes-men and yes-women. Her chosen few get information, but no one else does, and so there is no discussion about the work being done.

Retribution from such a leader is swift for those not aggressively supportive of his decisions. He treats employees coldly, even cruelly. He assigns blame without regard to responsibility, and takes all the credit for himself. I once had such a boss, and he gave me a new definition of shared risk: If something I did was successful, he took the credit. If it wasn’t, I got the blame. Painful as this was, I learned a lot during his short tenure. He was my first negative role model. Fortunately, I was able to move on, and he left the company.Il

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Why leaders behave this way is the subject of much speculation. Some people attribute it to greed, not just for money but for power or recognition. Incompetence can also drive the toxic leader’s behavior, as his fear of being ‘found out’ influences his interactions with others.

The Toll of Venomous LeadershipPoisonous leaders sap the strength of their organizations. Their demand for loyalty causes employees to fear whether they are doing something the leader will deem to be wrong. In this demoralizing and dehumanizing atmosphere, the toxic leader may drive the organization into paralysis.

Employees will stop thinking creatively; their productivity will decline, and they will miss their goals. In extreme cases, employees desperate to please their leader and keep their jobs will slide into unethical behavior or outright corruption.

One might question why such behavior is tolerated. First, it is not uncommon for toxic traits to be hidden behind a mask of charisma. Toxic leaders are actors, playing a role to achieve their self-styled goal. Second, in many companies, business success tends to overshadow personal weaknesses. In one organization where I worked, a senior executive consistently bullied his employees, yet he was charming to those above him. Even after his superiors witnessed the behavior, nothing was done about it because he always delivered his profit goals. Only after his staff turned over significantly and he missed his goals did he face any consequences. He wasn’t fired. Instead, he worked with a coach and changed his leadership approach dramatically. This outcome suggests that an organization risks encouraging toxic leadership by rewarding results and ignoring how they were achieved.

A Survival GuideIf you’re faced with a toxic leader (whether or not he’s your boss), you can survive. But you will need a strategy to do so.

First, you have to decide whether to stay or leave. Your personal circumstances may require you to stay. If leaders are rotated frequently in your company, you could wait out the poison leader’s tenure. Or your own skills and reputation may be strong enough so that you’re not damaged by the abuse you get.

Once you decide to stay, you will need to decide whether to confront the behavior or lay low. Trying to counsel the boss is likely to work only if you’re already in the inner circle, and only if he decides to listen to you instead of cutting you off from the group. Joining with others to confront him carries similar risks. Only you can decide how far to go. If you decide to take on the leader, make sure you have all the relevant facts, pick an appropriate time and place for the confrontation, and have a plan for bringing the issues forward.

Meanwhile, you can find support from other executives by strengthening those relationships. Take steps to establish your independence. Never defend ruthless behavior. Outside of work, find uplifting activities to nurture your self-esteem.

Whatever you do, buffer your people from the toxic leader. Defend them against any hits that come from above. I once saw a manager sit quietly and allow a member of his staff to be pummeled by abusive questioning during a presentation. How cowardly was this manager that he couldn’t step in and deflect the criticism? Fear of retribution may tempt you to duck this responsibility, but good leaders do not abandon their people. Let integrity and courage lead you to the honorable thing.

Detoxifying the Next GenerationToxic leaders aren’t born, they’re shaped by their experiences. If you have one emerging in your organization, you can turn him on a different path. You can recognize an emerging toxic leader by these signs:

self-centeredness. An employee is willing to harm others in order to come out on top.

Messianic visions. The employee’s vision seems impossible to achieve, or she positions misguided actions as attempts to achieve a noble cause, and she won’t take advice.

arrogance. He displays disdain for others.

Blame-shifting. I saw one executive order a ‘take no prisoners’ approach to setting and enforcing a technology standard, then disavow the ‘non-collegial’ style of his employee, leaving her to repair her reputation alone.

Redirect these rising leaders by making your expectations for behavior clear to everyone in your organization. Investigate low morale, and attack its causes. Ensure that performance reviews document toxic behavior, and make sure offenders know that mistreating others is going to short-circuit their careers. Promote and recognize those leaders who demonstrate non-toxic behaviors.

Finally, set an example. Most leaders are neither good nor bad always, in all things. Recognize your weaknesses and work on eliminating them. Be someone who is able to take advice. Demonstrate integrity. Work unfailingly for the benefit of your team. Toxic leaders’ victories are often short-lived. Avoiding and defending against toxic behavior should lead you, and those who follow you, down the path to sustained success. CIO

Before retiring in 1999, Patricia Wallington was corporate

vice president and CIO at Xerox. She is now president of

CIO Associates in Sarasota, Fla. Send feedback on this

column to [email protected]

Patricia Wallington ToTal leadershiP

some companies risk encouraging toxic leadership by rewarding results and ignoring how they were achieved.

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In 2004, the Indian Hotels Company, which runs the Taj group of hotels and palaces, was satisfied that it was pushing the IT envelope enough.

Central to their IT activities was the TajNet, a WAN that connected almost all their operations. Major hotels in Mumbai, Kolkata, Chennai, Bangalore and Hyderabad were all linked. They used ERP efficiently to centralize the two crucial arms of a hotel—purchasing and finance. Their employees could tell exactly how many coffee cups they owned, and the centralized purchasing system could tell them when they needed to order consumables, from cooking oil or hair conditioner. Project Orion, an initiative to implement an integrated financial and purchasing system, had been successfully rolled out, and gave the hotel chain an edge in getting supplies at competitive rates. Their call centre hummed along efficiently, and received close to 2,300 calls a day, on an average.

Cover Story | Revenue Optimization

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The Taj Group is using revenue optimization to draw as near as it can get to maximum income from every room without tipping the boat. In the process, it has realized that keeping all its rooms occupied isn't the smartest way forward.

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They also employed a Centralized Reservation System (CRS) to manage their guests. A Property Management System (PMS) handled all their properties—which translates largely to rooms to let. This system managed room inventories, the price list for various classes of rooms and the list of customers who were regulars at the Taj and part of the Taj Inner Circle. They had a CRM solution that identified what customers wanted. They even had a data warehousing system that provided them with advanced analytical information. “If you’re 33 and have stayed at the Taj West End for five days, then a search using age and duration of stay will throw up your name,” says Prakash Shukla, Senior Vice President for Technology and CIO, Taj Hotels Resorts and Palaces.

Conventional wisdom has it that a hotel should optimize its revenue by increasing room occupancy. In the process, it’s became standard for many

hotels to ply guests with beverages, food, comforts, and above all, ambience. The Taj group of hotels was on top of this game. Their rich heritage went all the way back to 1903 when the Taj Mahal Palace in Bombay became synonymous with luxury. They had worked hard to maintain this legacy in the intervening decades and with such acumen that the Taj Palace became the only Indian hotel to be awarded with the Best Business Hotel in Asia in 1998. Conventional wisdom suggested that they had dealt every pluggable hole with IT.

But conventional wisdom isn't always right. They didn’t have reve-nue optimization.

Bursting the Bubble: Focusing on the Bottom Line

Revenue optimization has been used by the airline industry for some time, and it

seems to suit the needs of industries that have high demand, change prices often and want to derive maximum revenue. Revenue optimization, as the name suggests, uses optimization techniques to enable CIOs turn their IT prowess to do what every CFO wants them to do—make more money and have an impact on the bottom line.

In some ways, revenue optimization is among the best uses of IT. Some companies tend to treat IT like a stick to beat back untamed costs. But revenue optimization defies this cost-cutting role and enables companies to use IT to earn more revenue and make a positive difference to the bottom line. Finally, the CIO and CFO can see eye to eye.

But to use get the best out of revenue optimization, CIOs and other senior executives need to re-look at the way they view their customers. A new understanding of keeping customers happy that doesn’t compromise the bottom line has turned the conventional

at a hypothetical figure of rs 10,000 a head for a group, the taj stands to make taj stands to make t rs 40,000 and will occupy four rooms. the taj passes up.taj passes up.t

how the taj makes more from lessthe logic behind the taj's revenue optimization depends, not on filling more taj's revenue optimization depends, not on filling more trooms, but on filling—even fewer of them—smarter.

What’s it going to cost for a group

of four?

We can offer you our standard room at rs 15,000 a night.

Check-out is 24 hours.



approach of customer relationship management on its head. It is also the basis of revenue optimization. In the world of revenue optimization, the customer is not always king. Not if he doesn’t bring home the moolah.

A hotel that has only four empty rooms could sell it to a group of four and smile smugly because traditionally hotels make maximum revenue by ensuring that as close to a 100 percent of their rooms are occupied. At a

hypothetical rate of Rs 10,000 a room for a group of four, the hotel could make an immediate Rs 40,000.

A revenue optimization system coupled with data warehousing, data mining and business intelligence will hold such a hotel back from making an immediate profit. RO is useful when a gamble to wait for a better opportunity arises, given parameters such as a long weekend, the reduced cost of travel, etcetera. Eventually the hotel could sell

three rooms to three separate individuals at Rs 15,000, making Rs 5,000 more in the process—with a room to spare.

This is the sort of logic that convinced the Taj to try out revenue optimization software. Initially, a pilot project was rolled out at the Taj Mahal Palace in Mumbai. This hotel was chosen for two reasons—it is closer home, being the flagship of the group, and therefore easier to monitor. More importantly, it has high occupancy, which is critical for measuring the success of RO. Shukla puts it succinctly—“revenue optimization works best in situations where demand exceeds supply, because then you can choose the type of demand you want to address in order to maximize revenue.”

But there is an inherent risk of losing both deals and makingnothing at all. A risk that demand fore-casting alleviates.

Taking the Guesswork out of ROForecasting, however, is always a tricky business, and you can never be sure about how accurate your predictions will be. The risk element has to be balanced—should hotels take a high-risk gambit and face the consequences of their rooms going unoccupied? Or, do they play it safe and negate much of the advantage that revenue optimization can provide? The answer is not easy. Ultimately, companies settle with various systems that manage risks with probable profits with different levels of

Revenue optimization works best in situations where demand exceeds supply, because then you can choose the type of demand you want to address in order to maximize revenue.

— Prakash Shukla, Senior VP for Technology and CIO, Taj Hotels Resorts and Palaces.

by weighing in other factors

such as seasonality, the

taj's revenue optimization

system will make the hotel

rs 45,000 from three

separate individuals—with

a room to spare.

Rs 45,000

Rs 40,000

Revenue optimization works best in situations where demand exceeds supply, because then you can choose the type of demand you want to address in

, Senior VP for Technology and CIO, Taj Hotels Resorts and Palaces.

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risk. But all models need to be fine-tuned to take into account off-seasonal demands, special events such as conventions, and other variables.

Va r i ab l e s a r e n’ t something computers do well. A system can’t know that Bangalore might witness a heavy inflow of visitors in October because Dussera is being celebrated in Mysore, which attracts people from all over India and the world—people who might use Bangalore as a base. But the Taj’s local revenue officer in Bangalore or the local IT team can predict this, and move quickly to keep up with the rising tide of visitors.

Forecasting, however, is a double-edged sword. Wrong assessments have the ability to reduce the earning potential of the Taj group. One way around this is to use computers to assist management in making crucial decisions by providing them with accurate data. Calculations can be made to determine the minimum price for a room—based on special local considerations like the local cost of groceries and alcoholic beverages, cost of the premises, cost of manpower, size of the hotel and its environs, and other factors.

This can be done manually, and according to Shukla, this is exactly what the Taj was doing in the pre-RO era—in those days, managers used Excel spreadsheets in order to do the calculations. But, says Shukla, “the Taj felt the need for a dedicated revenue optimization system, which was more closely aligned with the property management system.” This makes eminent sense because the integration with the property management system eliminated the user-error angle with

seamless automation. More importantly, it enhanced the Taj’s ability to make better forecasts.

To minimize risks further, it’s a good idea for companies installing revenue optimization to take into account ‘no show’ forecasting. Large parties canceling events at hotels are part of the reality of the hotel business. It’s the sort of crisis that can befuddle demand forecasting. Its an area where algorithms are helpless and the best way forward in such cases is to constantly monitor the figures in order to determine

h ow t h i n gs a r e s h a p i n g up. An eye on average room rates and occupancy levels can be used to fine-tune the predictive capabilities of man and machine alike.

In the Lap of OptimizationBut even on its own, RO works well. This is clearly borne out by statistics. A comparison of occupancy between

April to December in 2004-2005 and 2005-2006 reveals that Delhi, with 77 percent occupancy in both cases, could get an average room rate of Rs 7,065 in 2005–2006 as opposed to Rs 5,429 in the previous year. A look at Bangalore yields even more interesting figures—though the percentage of room occupancy actually fell by two percent, the average room rate shot up from Rs 7,905 to Rs 10,639.

These figures, which are post-RO, look interesting—but how did Shukla and his people convince the board that RO was important? Shukla points out that, since the board had hired him to enhance the impact of computerization, buy-in was not critical. “The board understands the importance of technology, and once I showed them the cost benefits, they readily agreed.” Needless to say, this support might not have been continued if results did not materialize.

And results are showing up on Taj’s balance sheet—as expected. The gross revenue of the Taj shot up from Rs 699.16 crore in 2003- 2004 to Rs 873.24 crore in 2004-2005, a respectable leap of around 25 percent. Correspondingly, the net worth of the group went up by over 27 percent, from 887.73 crore in 2003-2004 to Rs 1,130.39 crore in

SNAPSHOT

THE INDIAN HOTELS COMPANY GROSS REVENUE (2004–2005) rs 873.24 crore

GROSS REVENUE (2003–2004) rs 699.16 crore

NET WORTH (2004–2005) rs 1,130.39 crore

HOTELS IN INDIA 54

TOTAL HOTELS 67

1903 the taj Mahal Palace Hotel, Bombay creates history as India’s first luxury hotel. It precedes the gateway of India by over 20 years and serves as a first sight for ships calling at Bombay’s port. It is also the first building in Bombay to be lit by electricity.

a legacy of heritage


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Cover Story | CRM2004-2005. Not at all incidentally, thje Taj’s revenue optimization software was installed in 2004.

More excitingly, profit before extraordinary / exceptional items and tax stod at Rs 118.69 crore in 2004-2005 and was significantly higher than the previous year by a staggering 119 percent. Profit before tax at Rs 141.68 crore and profit after tax at Rs. 105.86 crore were also significantly higher by 77 percent and 74 percent respectively for the same period.

This growth can be attributed to better management, more aggressive marketing and growing demand; although figures for average room income point to RO. Room income in 2004-2005 was higher than the previous year by 34 percent and the average room rate (ARR) also increased by 24 percent over the previous year, contributing 75 percent of the total increase in room income. Clearly, the revenue optimization mechanism was working well and was enabling the Taj to work out increasingly sweeter rates.

This is not to say that revenue optimiz ation neutralizes the importance of customer relationship management—it merely sets it in the right perspective. A customer is no doubt the most important visitor

upon our premises, to quote Mahatma Gandhi, but only if he pays. In any hotel, the big rollers putting up in the Rs 50,000 per night suite are worth a lot more—and therefore get more attention—than ones staying in the Rs 7,000 suites. Revenue optimization merely moves the lens on the bottom line, where it should have always been anyway.

When you Can’t Go Up or Sideways, Increase the Rack RateOnce you get revenue optimization, in some ways, it can boost customer satisfaction. This is because, thanks to revenue optimization, you know exactly what value a customer means to the

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revenue vs. occupancy

How revenue optimization helped the Taj price their rooms better.

1971-72the group pioneers the concept of authentic palace hotels with the Rambagh Palace in Jaipur, the palace of the Maharajah of the erstwhile state of Jaipore.

1974Conceptualized as a unique beach resort, Fort Aguada, goa is built within the walls of a Portuguese fort overlooking the Arabian sea.

10639

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Bangalore’s revenues cut a classic

example of how revenue

optimization can bring home more

money, despite falling occupancy levels.

220mm



Cover Story Final.indd 49 4/28/2006 10:00:20 PM


organization, and can take extra care to ensure that his needs are fulfilled. Shukla, who joined the Taj in 2000 and was involved in the Customer Reservation System – Customer Information System (CRS - CIS), says that the system knows everything about the preferences of a customer, and can build a profile that can be used for subsequent visits. So, if you are frequently staying at the Taj, then you can expect a cake if you are staying with any Taj hotel on your birthday.

RO works well in an industry where demand outstrips supply. Thanks to booming demand, hotels cost more but customers keep coming. Tourism is also growing at a fast clip, and it is estimated that if five million more tourists visit India a year, hotels will have to construct another 100,000 rooms. These can cost anywhere between Rs 8 lakh a room for a one-star hotel and all the way up to Rs 1 crore a room for a five-star hotel.

Money, however, is not an overriding concern with hotels like the Taj. The bigger problem is space. Most hotels cannot expand beyond a point because of buildings adjoining their properties. Many attempt to set up new hotels in other parts of town, but it’s harder for five-star hotels to follow their example because location is the key to them. Revenue optimization is, therefore, where hotel luxury chains are going, including the Taj group.

Revenue optimization also helps service customers better in an indirect manner because the money that it helps to earn can be ploughed back into the business to provide better services to customers. The Taj has introduced a variety of services for its guests, like personalized butler service, enhanced concierge services, and door associate program. Such initiatives are strengthened by revenue optimization because the company will be able to use it to know exactly who will appreciate or require such customized service.

From Belt-tightening to Wealth-creationIt’s also possible to re-invest some of that money into expansion. According to the Taj’s annual report released on March 31, 2005, international tourist movements were at an all-time high of 760 million, and this is a figure, many estimate, will go upwards. International arrivals into India have also increased by 23 percent to 3.5 million, while domestic travel has also grown at an equivalent pace to both business and leisure destinations. The arrival of low-cost airlines has made quick and convenient air travel more affordable, and this in turn has had a positive impact on the hotel

industry. In this context, revenue optimization becomes even more important because you have to cater to an even greater demand with almost no significant increase in the supply of rooms

This is perhaps why the Taj group is revamping its revenue management system, and getting in a more robust one in place to meet the needs of its customers and add significantly to its own bottom line.

Revenue optimization for the Taj gains greater importance in light of the fact that it is planning to expand outside India at an accelerated pace. In November 2005, the Taj unveiled plans to acquire five-star properties in China, Australia, United States, Europe, West Asia and Africa. They have plans of investing in the range of Rs 225 crore to 4,500 crore to take the Taj brand to new markets overseas. The company is also keen on a presence in China, so that it can cash in on the heavy inflow of visitors to Beijing for the Olympics in 2008. The Taj group has already enteredinto an agreement to purchase, for Rs 121 crore, the ‘W’ Hotel located in Sydney from the Harilela Group of Hong Kong. The company has also entered into a management contract for a hotel at The Palms in Dubai.

Apart from this, the group also has several ambitions plans for India. In

1978-82taj Mahal Hotel launches in Delhi, so is taj Mahal Hotel launches in Delhi, so is tthe taj Palace, with the largest convention taj Palace, with the largest convention tcentre in the country.

1982taj establishes a presence in the Western taj establishes a presence in the Western tHemisphere with the historic st. James Court Hotel near Buckingham Palace, London

1984-92 Well before they became world-renowned tourist havens, taj expands to Kerala and taj expands to Kerala and tsri Lanka.



March 2006, the company said that it plans to invest Rs 100 crore in the next fiscal to setup budget hotels in various locations across the country. In this context, Project Orion, the Taj’s e-procurement initiative, could give the budget hotels a boost by allowing these hotels to manage purchases more efficiently, while revenue optimization could enable it

to derive the maximum benefit from all the property it manages.

A Deal you can’t RefuseThe Taj also has what it calls the ‘Inner Circle’—frequent users of its hotels, from whom the group makes its greatest revenues. Naturally, their utmost

satisfaction is of paramount importance to the Taj, and these people need to merely flash their ‘Inner Circle’ card at the front desk while signing in to earn points. These points, says Shukla, “can be redeemed for items like plasma TVs and MP3 players,” and the revenue optimization software can also help in other ways to give these people the best in hospitality so that the group can derive even greater financial gain from them.

Shukla also says that today the special offers of the Taj “are linked to the loyalty program and have nothing to do with revenue optimization,” but considering IT’s swift march, its only a matter of time before the two are rolled together. One day, revenue optimization linked with purchasing costs and loyalty programs, just might enable the Taj to come up with perfect personalized holiday offer that will live up to the name of the Taj. CIO

Special Correspondent Balaji Narasimhan can be

reached at [email protected]

From a certain angle revenue optimization (ro) flies right in the face of Crm, which it is closely related to, because the need to fatten the bottom line outweighs the need to ensure that customers are satisfied. and sometimes that means turning customers away.

making customers unhappy, no doubt, seems like an odd way of doing business. but numbers can be cold. Crm is great if your company’s spending rs 1,000 to rope in a customer’s who’s likely to burn rs 1,100. but it hardly makes sense to spend rs 1,200 on someone to make rs 1,100. as a CIo who thinks of business, defining a middle ground is part of your job, which is where ro steps in.

Suppose you’re selling a 10-second (rs 1 lakh) ad slot on primetime tV and you have a customer who takes it seven times out of ten. the slot’s value is rs 70,000 (rs 10,000 x 70%). as your deadline approaches and you find yourself still waiting for him, another client comes in and

hands you rs 60,000 for the slot. the question is—do you sell it to him?

the answer is a resounding no. In the long term, it is more profitable to hang on till the last minute for your loyal customer. In effect, you are still practicing customer satisfaction since you haven’t turned away a reliable customer.

but, if the new client offers you rs 80,000—then, do you take it? of course! because now, the bird in the hand is worth more than the one in the bush.

In effect, revenue optimization software automates the process of calculating the prices businesses need to charge to maximize profits. It can adjust prices using an algorithm that factors in variables such as demand forecasts and inventory.

ro is a lot about gambling on the bird in the bush. to to tensure that ro is properly used, it’s a lot smarter to look at the long-term; delayed gratification was never sweeter.

— b.n.

When two birds in the bush are Worth more than the one in your hand

1992-97 taj rolls out business hotels taj rolls out business hotels tin key cities and towns across the country, called taj taj tResidency hotels

2002Within six months of its launch, the taj Exotica Resort & taj Exotica Resort & t spa, Maldives is awarded the ‘the Best Resort in the World’ in the first-ever Harpers and Queen travel Awards.travel Awards.t

Courtesy: taj Hotelstaj Hotelst


Footfalls to Fortune

Making every footfall count, Nagesh still believes in IT like few other C-level executives. From reducing supply-chain shrinkage to making stakeholders of business partners and bringing in corporate governance, Nagesh brings technology to bear in a continuing test to use every square-foot of his organization

CIO: You are a pioneer in adopting technology, and 15 percent of Shopper’s Stop’s net worth is invested in IT. What is behind this approach?

B. S. Nagesh: Everybody says Shopper’s Stop’s shrinkage (loss of goods due to theft and inventory mismanagement)

is the lowest in the retail business. For the fourth year running, we have stayed at a 0.4 percent shrinkage level.

Financially-speaking, shrinkage is put down as another part of the costs of goods. With the high cost of goods, one percent of shrinkage seems relatively low. However, if shrinkage is looked at as a percent of profit, then a mere three-to-four percent shrinkage seems huge. This is where technology plays a very important role. It identifies areas of shrink.

Our approach to IT has always been governed by our mission statement which is ‘Nothing but the Best.’ We have also been governed by our ignorance. As a company, most of us do not come from large-retail backgrounds. Initially, we did not have the

In early 2000, B. S. Nagesh, MD & CEO, Shopper’s Stop, faced a very tough decision. The retail software he had staked his name on, to help Shopper’s Stop cross over into a pan-Indian chain, was costing the company dearly. Few understood why he wouldn’t give up the software worth Rs 4.5 crore and save Shopper’s Stop Rs 20 crore. As pressure from his suppliers mounted and the media wrote him off, Nagesh stuck by his guns—a decision he does not regret today.

By G u n j a n t r i v e d i

view from the top is a series of interviews with CEOs and other C-level executives about the role of IT in their companies and what they expect from their CIOs.

B. S. Nagesh, MD & CEO, Shopper’s

Stop, believes IT is at the vanguard

of his endeavor to grow the

organization into a global retail giant.

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View from the Top Selected.indd 54 4/28/2006 9:09:48 PM

View from the Top

B. S. Nagesh, MD & CEO, Shopper’s Stop, sees the next wave of IT investments taking

the retail behemoth in two directions—one to the global arena and the other, sharply

towards his customers.

REAL CIO WORLD | M A Y 1 , 2 0 0 6 5 5vol/1 | iSSUE/12


vision or the budget to hire consultants to help us decide on the right technology. But we were sure that we would not settle for anything but the best in technology. If we are to make an impact on our customers and on our organization, human, financial and IT resources are highly critical.

For example, our IT product store, HyperCITY, will run on E3 technologies, which is among the most advanced dynamic replenishment technologies; it develops its own replenishment logic by studying trends. This has brought a lot of business intelligence to Shopper’s Stop.

Will you continue to invest in IT at a similar rate? What will motivate you to do so?

Our investments in IT have steadily been increasing. There are two reasons. One, IT is crucial for corporate governance. To me, this mean knowing which parts of my business are adhering to the law. This cannot be done without IT. Governance within IT is another challenging task and the second reason. Even that needs technology. While adhering to Clause 49 of SEBI’s Listing Agreement, we realized that a high-risk area within the organization was IT. Business is so dependant on technology that IT governance is paramount. Going forward, I do not see our investments in technology decreasing at all.

Your first ERP deployment, crashed and took over six months to fix. Did it leave behind a bitter taste? What did it teach you?

If I were asked to do things all over again, I’d make sure that human resources were deployed first, followed by financials and then technology. At that time, we decided to get technology first with financial and HR trailing behind. It was one of the key reasons behind the failure of the initial implementation. We bought the car and then looked for the drivers. It was a fundamental mistake.

We were a smart organization, though, and had the foresight to spend between Rs 10-12 crore, on technology at a tine when our turnover was a mere Rs 28 crore. What we lacked, in hindsight, was the ability to tackle change management; getting the right people to drive the technology initiative and supporting it with financials. At that time, we ruled out hiring JDA consultants from abroad because of foreign exchange regulations and because they cost a bomb. A lack of resources and too few change management initiatives running across the organization, made our lives tough. We have leant from it. HyperCITY, which is to be launched soon, has very advanced applications running on JDA. Its implementation has been done by an internal task force, which is more sensitized to these issues than we were.

Personally, the biggest challenge after the crash was to chose between two courses of

action. One was to persist with the failing system and see it through and the other was to dump the software in its entirety. At that time, everybody suffered a high-level of de-motivation and blamed the software for the organization’s woes. Nevertheless, we decided to continue with the technology. I think it is the toughest decision I’ve had to make.

Today, people refer to how great we are technologically, but few know of the time when we questioned our belief in technology. Today, we open our store at 9 AM and at 9.30 of the very next day, we see figures flowing in from the SKU level.

This is where CIOs can play an important role. During the implementation of a technology, CIOs must understand its consequences—both its upside and downside—to a business. They must prepare the whole team for possible downsides. Otherwise—and this is true for upcoming organizations with large IT initiatives—CIOs become sacrificial horses. When things go wrong, everybody blames technology. I always believed that when it all went wrong, it wasn’t technology, but change management, that failed us.

Today, how do you see IT helping you provide better customer experience?

In retail, when people talk of customer experience, they always refer to a customer’s experience on the shop floor. But from a customer’s standpoint, the experience is broken down into more than a few attributes. The first is ambience. Part of ambience is safety and security. Technology plays a crucial role in defining a safe and secured environment. The more important components that influence a customer’s experience are the knowledge of our sales associates, the availability of merchandise, and the billing process.

We have found that 50-to-55 percent of a customer’s experience revolves around two of these components: The availability of merchandise, and the ease and speed of a billing process. Out of the two, the

View from the Top

“CIOs must play an important role by preparing the organization for the possible downsides of a technological deployment.”

— B. S. Nagesh

5 6 M A Y 1 , 2 0 0 6 | REAL CIO WORLD vol/1 | iSSUE/12


availability of merchandise is more important. Here, I see IT playing a much more important role.

How does IT help you follow your paradigm of ones?

My whole thinking revolves around a paradigm of ones (one customer in one moment, to sell one product from one square foot.)

I see this concept applied from pawn shops to the Walmarts of the world. In retail, if you are do not understand that one customer, that one SKU, the productivity of that one square foot and gauge the outcome of these three in that one moment, you cannot succeed. In India, mom & pop stores will never go out of business because they follow the paradigm of ones. When a customer visits a small retailer, he is sure that the retailer will try to keep him happy. Customers are okay if that square foot is in bad shape. They are also okay if the SKU is not available because they know that the retailer will deliver their merchandize home. To these retailers the most important thing is the outcome—it is in their control. It is the outcome which determines the other three.

In our business, we use technology to watch the SKU, the square foot and the customer, and hope for a positive outcome. Two facilitators outside of the paradigm are our sales associates and technology. There is an emotional connect that our sales associates build and rational connect between customers and technology.

In the near future, when sales associates become very expensive like they are European countries, the onus of the outcome will fall on the rational connect. Technology enables that rational connect.

To me technology is core to the paradigm of ones.

You have among the most advanced SCM systems in Indian retailing. How has the company reaped from it?

The number of stakeholders has increased. It wasn't an objective but it’s become a benefit. As I’ve mentioned before, the biggest concern of our customers is the availability of products. Here again, there is a play of an emotional and rational

connect with our supplier. Our suppliers provide us goods based

on purchase orders that we issue them. Here is where an emotional connect comes in: Using technology, can he want to sell more? Our B2S applications have actually increased this. It enables the supplier to stay informed of what we’ve sold and in what quantities. The supplier has evolved into an interested stakeholder as he keeps a close tab of the availability of his products on our shelves. If a supply of a 100 pairs of trousers, which is supposed to last us four weeks, has been bought up, a supplier can ask for a purchase order for the next lot. If more and more of stakeholders become proactive parties to business success, the outcome is always positive. This is what our B2B and B2S initiatives have done. They have also made people more responsible and accountable. Additionally, they are taking away mundane, repetitive jobs out of the merchandizing process. For example, we have one of the largest dynamic auto-replenishment processes among the Indian retailers. Twenty-six-to-thirty percent of our purchases are done on auto. The moment

I sell a hundred watches, our distribution centre, based on an auto-purchase order, sends the store another hundred watches and dispatches a purchase order to the supplier to replenish their stock. We are also one of the users of reverse auction. All our projects generally go through reverse auctions. We not only use B2B for supplying but also for sourcing.

Going forward, what would you like IT to do for Shopper’s Stop?

Since the base of Shopper’s Stop IT structure is more or less in place, progressively a large part of our investments will tend towards user education. We will also invest in understanding our customers with the help of CRM technologies; we have a large amount of customer information but few insights. We will focus on building data warehousing, data-mining, and CRM capabilities. There will also be further investments in enhancing corporate governance, information insight, scaling and managing our SKUs, network and infrastructure management, and disaster recovery.

We’ve had large IT investments in 1999-2001, and then worked with incremental investments. Now again, I see a situation in which we will be making sizeable investments. We will scale up in the next two-to-three years. We are looking forward to a complete integration of systems across our group of companies and full connectivity using the Internet to facilitate B2B, B2S and to B2C. CIO

Senior Correspondent Gunjan Trivedi can be reached at

[email protected]

View from the Top

SNAPSHOT

Shopper's Stop

TuRNOvER (2004-2005): rs 526.6 crore

EMPLOYEES: 1,835 employees with 129 in subsidiaries

IT STAff: 28 employees

NO. Of STORES: 21 stores (plus 30 Crossword stores)

NO. Of SKuS: 260,000

CTO:

Unni Krishnan t. M.

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The right deployment strategy can dispel lingering fears about voice and data convergence.

By J o h n S . W e B St e r

Lessons from theFront Lines

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When Erlanger Health System chose Nortel Networks to provide its IP telephony hardware and software, Nortel’s first performed a full network audit. The inspection revealed how little the IT staff understood about impending network requirements, says John Haltom, Network Director at Erlanger.

Th e audit “was shocking proof of how much we needed to get a better understanding of our network prior to going large-scale with VoIP,” Haltom says. For example, networking gear that could handle data traffic with only minor delays would not be capable of handling the stress of voice data, he adds. “We had duplex mismatches, NIC cards chattering in several locations—all of which have some minor effects on data-based traffic,” but with voice they would be a menace.

Of course, audits are a prelude for vendors to sell products, and they “aren’t always looking out for your best interest,” cautions IDC’s Stofega. With that in min d, internal expertise, in addition to conferring with consultants and outside colleagues, becomes invaluable.

Ensuring that users get the voice services they need also hinges on cabling, according to Joanne Korsuth, CIO at Olin College of Engineering. Cabling will determine the viability of future services. With an eye toward expansion, you’ll want to consider stackable switches with 24 or 48 ports each.

Power is also a consideration, Korsuth says, “so we have UPSes. That seems like common sense, but with VoIP, wireless, and power over Ethernet, it’s as important a consideration as cooling in closets.”

Much of the reluctance can be attributed to the burden that VoIP can place on even the most efficient networks, in addition to concerns about voice quality, scalability, and QoS. Still, many experts say present-day technologies have smoothed over most of the potholes. Nonetheless, there is extensive provisioning involved in implementing and maintaining a VoIP system. Fortunately, the right deployment strategy can dispel any apprehension.

“People were told that VoIP is going to be the greatest thing,” says William Stofega, VoIP research director at IDC. “But in some cases, people didn’t do the necessary network planning. Ninety-nine percent of all VoIP network implementations that fail, do so because IT departments didn’t do their homework.”

So, what do you need to make it work? How will you manage it? And how much will it cost? The answers vary and depend on numerous factors. Practically no one is ripping and replacing, but rather installing hybrids that put VoIP where it yields the greatest benefit while leaving legacy systems in place elsewhere. Regardless of the scenario, early adopters are providing clear answers.

Proceed with CautionGood planning begins with a review of infrastructure. Most telecom equipment vendors will help you decide which systems can take on voice traffic and perform adequately, and which ones need replacement. A pre-assessment also aids in identifying potential network bottlenecks.

VOIP Management

ill 2006 be the year that voice and data convergence really takes off? Looking back, VoIP was one of

the hottest and most hyped technologies of 2005. Yet, despite all the attention, only about a third of IT departments have rolled out full-fledged deployments, according to a recent survey by Forrester Research.

In what year do you anticipate fully moving to VoIP for all of your outgoing calls?

Don't know 8%2005 4%

2006 9%

2007 12%

2008 12%

2009 or later 11%

No plans to fully move 45%

Source: Forrester Research

?

W

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VOIP Management

Martin County, Florida, chose to deploy VoIP at sites that already had fiber optic cable in place, says Kevin Kryzda, the county’s CIO. “We had to consider the network connection and bandwidth. We chose sites for VoIP that have fiber-optic cable broadband connection with a limited number of data network connections, thus considerable available bandwidth,” he points out. The network equipment changes began in 2001, when legacy voice services were either replaced or left as separate BellSouth circuits such as fax lines. Voice session quality was the yardstick; so far so good, he says.

Knowing your phone users’ calling habits plays a key role in assuring clear, uninterrupted conversations over IP. “How long are people on the phone? How much voice mail do they want?” Korsuth asks. “Because voice is another IP packet, if students flood the network with MP3s or peer-to-peer connections, you have to rate-limit traffic.”

Analysts estimate that for typical VoIP rollouts, it’s safe to assume that users are on the phone about 20 percent of the time. That percentage rises dramatically, however, at large call centers where employees may be on the phone as much as 85 percent of the time. Those environments typically demand extensive upgrades.

Manage With CareUpgrading the network was essential when the Arizona Cardinals NFL football organization deployed its VoIP system. The Cardinals’ IT staff planned a new training facility and headquarters with VoIP in mind from the start. This ensured that its IP network would be capable of supporting voice, video, and multimedia. The first step was to upgrade its cabling from category 3 to category 6 to handle the demands of video, which is used increasingly by NFL coaches on their laptops, says Mark Feller, the team’s technical director. “We upgraded because we were thinking ahead. VoIP demands less bandwidth than video. We put in cable that could handle video.”

At Erlanger Health System, it was hard for the IT staff to believe that their tried-and-true switches and cabling would prove unworthy of voice. After close inspection, Haltom says, substantial changes were necessary. “We were hesitant at first to ‘doubt’ our network because we had just gone through a complete core/edge upgrade with all new [Nortel] Passport 8600 and BPS2000 edge switches,” he recalls. “In terms of deployment, we think of this as ‘distributing’ all the things you may take for granted in a larger computer room facility. Push

larger UPS and HVAC units, as well as more and more switch ports out into the closets. Layer in the redundant infrastructure and fiber-optic paths to mission-critical areas, and you have effectively converted your campus, or campuses, into giant c omputer rooms.”

To keep voice moving in Martin County, Kryzda says voice-packet prioritization by means of service-based ‘tagging’ is one ‘way to ensure that voice data gets delivered to where it needs to go first . This method assigns priority to voice traffic and thereby allows it to move on the network at an acceptable rate. It differs from the other common technique, in which a portion of available network bandwidth is ‘carved out,’ or reserved for voice services.

With plenty of available bandwidth, Kryzda says the QoS technique did not have

Train internal staff

70%

30%

7%

7%

26%

Hire full-time staff

42%Hire outside consultants

Buy outsourced or managed services

No plans for LAN-WAN VolP training or system improvements

Don't know

Source: Forrester Research

How will your company monitor and manage the VolP systems and services it acquires?

706050403020100

VOIP Management

?


connections using open source-based software monitoring tools, checking for performance and outage issues,” Kryzda adds.

A big part of initial planning should be devoted to how to manage the increased load of voice data. Voice data comes with a raft of additional requirements, such as increased bandwidth and packet prioritization, and several tactics must be employed to minimize voice disruptions.

“The biggest area of concern for IT managers is performance management,” says Irwin Lazar, senior analyst at Burton Group. Managing a real-time application such as voice across a data network can be problematic, he notes, because IP networks were never designed for the strict latency and jitter requirements of voice. “Enterprises require not only a good QoS architecture, but the tools to manage voice performance in real-time, and to be able to both proactively and reactively troubleshoot problems as they occur.”

to be implemented. “We also had concerns about having to implement QoS to guarantee delivery of voice traffic, preventing echo and warble, but we seem to have enough bandwidth to have precluded implementing this feature.”

Tagging voice packets allows Kryzda to assign packet-tagging priority to the VoIP traffic and monitor it using network monitoring tools for packet loss on each link.

“We upgraded network switches where necessary to support this service-based QoS. We proactively monitor all voice and data network

VOIP Management

VLANs Avoid the Migraine of Maintaining Separate Networks

Although there may be no such thing as a dumb question, there is a persistently misguided one involving VoIP deployments: Should VoIP be installed on a dedicated network separate from the data network?

It would seem to make sense, but according to Kevin Kryzda, CIO of Martin County, Florida, a separate deployment negates the primary advantages of VoIP. “The physical considerations of deploying separate networks flies in the face of the whole game, which is convergence,” he says.

When Martin County began to consider adding VoIP back in 2001, Kryzda’s IT staff explored the idea of separating the voice network and its services from the rest of the county’s IT infrastructure but soon abandoned the idea. because the county uses 100Mbps fiber-optic cable broadband connections to its VoIP sites and keeps the number of desktop computers to a minimum—fewer than 10—on that segment, bandwidth has not been an issue. In some cases, the IT department used dedicated fiber for voice traffic over its Alcatel-supplied IP PbXes for PbX-to-PbX node connections, which also helps keep voice data moving evenly across the network. “Instead of building a separate network, you build a virtual network, or VLAN,” Kryzda says.

Essentially, you want to place your IP PbXes in different VLANs than your other application servers and put them behind a firewall. This separation doesn’t mean you need two different infrastructures, but it does mean using your switches’ 802.1Q capability. by setting up your VoIP network using VLANs with dedicated QoS resources, IT managers can divvy up traffic into data packets, voice packets, and signaling. In the case of VoIP, the VLAN sits between the desktop and IP phone, and the closest IP-enabled network-attached switch.

IT staffers at Erlanger Health System went through a planning process similar to Martin County’s and asked the same question. The answer was still no. The organization’s voice services switches are isolated in its computer room—otherwise, it has maintained a unified environment. Although the VLANs prevail, Erlanger is holding out until the technology can support port-level segmentation, says John Haltom, network director at Erlanger.

“All our IP Phones have pass-through hubs built into them. We felt it was just too much of an administrative issue to maintain separate VLANs or voice and data.” Haltom says.

He adds, however, that Erlanger’s use of Nortel’s IP Media Gateway—part of the

company’s IP multimedia server products—allows him to “extend analog and digital devices out into the edge closets and choose how best to get the traffic back to the core.

”In the future, Nortel’s Secure Network Access end-point security will help the organization segment voice and data, in effect creating VLANs at the port level, each with its own rules and policies, before an end device such as an IP phone can gain access to network resources. This will allow him to be “a traffic enforcer to interrogate packets and, with threat detection, shut off the port if necessary,” Haltom says.

In the end, nobody seems to savor managing two separate networks for voice and data. “That’s the old line of thinking,” says Hank Lambert, director of product marketing for the voice technology group at Cisco Systems.

William Stofega, VoIP research director at IDC, agrees. “There is no point in deploying VoIP if you do it on a separate network.”

— J. S. W.

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Telecom vendors such as Alcatel, Avaya, Cisco Systems, Nortel Networks, a n d o t h e r s p r ov i de management tools along with their VoIP product offerings, while network management software vendors, including Brix, NetIQ, Qovia, and Telchemy, have licensing agreements with vendors or sell their products directly to end-users.

The software usually consists of a console that lets IT staff view how well voice traffic is moving across the network, and agent software, which gets embedded in equipment that sits in the VoIP calling path—gateways, routers, switches, vendor-supplied appliances, and, more recently, IP phones. The agent can report in real time on VoIP quality of service problems, such as packet loss, discard, latency, jitter and signaling issues. But VoIP management software alone is no substitute for expertise in telephony.

At what part of the network should you measure voice performance? There are several options: At switches, routers, and gateways, for example. The most crucial spot, however, is at the end point where problems are most noticeable to users.

“Nothing can substitute for the end-user experience,” says Alan Clark, CEO of Telchemy, a provider of network management software to telecom vendors. “There are 12 different router interfaces between here and India, but only one end point.”

Sticker ShockFinancial constraints are still an obstacle for many IT departments, according to Forrester Research, but users are finding ways to justify expenditures through significant ROI. (Hardware and solutions can range from Rs 4.5 to 45 lakh.) According to Erlanger’s Haltom, “Our fit is a pure ‘cost avoidance’ model where

we utilize new construction and renovation in all areas and campuses to rip out existing voice and data networks and consolidate it all into one single network, thus avoiding the expense of [things like] the second line, patch panel ports, other materials, and the best part—managing one network infrastructure instead of two.”

Those who have gone the distance say the cost is worth it. Hank Lambert, Director of Product

Company Product Description

Agilent Technologies Agilent Voice Quality Tester Performs voice quality testing Agilent.com and analysis for VoIP networks

Alcatel OminVista 4670 Monitors VoIP call traffic and Alcatel.com quality

Avaya Converged Network Analyzer Assures availability of IP Avaya.com communications along with business

applications

Brix Networks BrixWorks, BrixMon Provides carrier and enterprise-grade BrixNetworks.com control, visibility, and analysis of

VoIP performance

Cisco Systems CallManager Ships with Cisco’s Media Convergence Cisco.com Server and includes voice QoS features

ClearSight Networks ClearSight Analyzer Performs voice quality measurement and ClearSightNet.com VoIP troubleshooting

Fluke Networks OptiView, NetTool VoIP Monitors and troubleshoots bandwidth FlukeNetworks.com usage and QoS for VoIP

NetIQ AppManager for VoIP, Monitors performance and availability of Netiq.com Vivinet Diagnostics, Vivinet IP telephony systems and apps; performs

Assessor call diagnostics and VoIP predeployment network assessment

Nortel Networks Enterprise Network Identifies and resolves problems and Nortel.com Management System, performance bottlenecks

Enterprise Policy Manager before they impact network services

Qovia Qovia for Cisco, Qovia E911 Provides VoIP call quality monitoring and Qovia.com for Nortel, Qovia for NEC management across voice networks

(used with Qovia Central software)

Siemens HiPath QoS 2000 Includes VoIP monitoring, policy, Siemens.com implementation, and reporting tools

Telchemy VQmon series Detects and diagnoses VoIP call quality Telchemy.comTelchemy.com problems

WildPackets OmniPeek Voice Allows users to view, analyze, and WildPackets.com troubleshoot VoIP traffic

VoIP Management Solutions

VOIP Management


Marketing, Voice Technology Group at Cisco, emphasizes the importance of an initial network audit, saying that it will save the company money in the long run.

In addition, “you have to look at the vintage of all the Ethernet switches,” Lambert says. “You should have Ethernet layer 2 and routing layer 3. You also do want to get the tools. Make sure they’re good and in your budget from the beginning. That causes disappointment among executives when all of a sudden the cost of tools is added to the equation. You can pay [up to] Rs 9 lakh for Cisco’s tools in a medium-sized company,” Lambert says.

On the HorizonCosts aside, performance stands to improve even more in the year ahead. For one thing, vendors are expected to offer products that allow for QoS reporting calls based on SIP. Meanwhile, standards such as RTPC-XR (RTP Control Protocol Extended Reports), currently in the RFC stage with the IETF, will allow for better end-point monitoring, according to Telchemy’s Clark.

“Performance management frameworks use these standards, and they need IP phone suppliers to support these,” Clark says. “Test-equipment vendors use them. We gave [the IETF]... key information they needed about protocols,” Clark says.

Emerging standards will also help keep voice performance at a satisfactory level. Haltom says he looks forward to the IEEE’s emerging PVQM (Proactive Voice Quality Monitoring) standard, developed with Telchemy and based on RTCP XR. “This is what we are truly waiting on to get [fully] implemented over the next couple of months in order to gain a pro-active handle on VoIP session-related issues such and echo, jitter, and other latency-type issues,” he says.

Whether these maturing technologies will entice the holdouts to move to at least the pilot stage in 2006 is uncertain. Being sure about what you’re getting into is the only way to craft a deployment strategy to carry your company forward.

“You’re blending two network worlds that are fundamentally different,” says Tim Gaines, Vice President of Field Sales at Covad, a provider of integrated voice and data service. But, he adds, they can and do coexist peacefully. CIO

John S. Webster is a freelance writer in Providence, Rhode Island. Send

feedback on this feature to [email protected]

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Complete Data Protection StrategyBuilding a robust data protection strategy is now a business requirement.IT Consolidation Drivers and BenefitsOrganizations are finding themselves in a position where consolidation does not necessarilyThe Software RiskA steel perimeter around your infrastructure isn’t enough to protect you from the real IT security threat; your software. Does your software meet your security standards? Read how the answers to seven key questions can help you.Download more web exclusive whitepapers fromwww.cio.in/resource

Features

Popular Apps May Compromise SecurityNew versions of common software used on Windows could be your machine’s Achille’s HeelHigh-Performance Computing:Super charging the EnterpriseThanks to lower barriers to entry, compute clusters and grids are moving out of the labs and into the mainstream.Read more of such web exclusive features at www.cio.in/features

Columns

The Vision ThingThe first thing this CIO of a brand-new university had to do was lay out his vision for getting IT up and running. Then, it was a race against time--and the inevitable glitches.Shopping for a FutureCIOs will soon be able to pick their career paths according to their strengths as leaders and whether they want to focus on technology or business.Read more of such web exclusive columns at www.cio.in/columns

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Feature_Spread.indd 65 4/28/2006 8:24:04 PM

e-Panchayati Raj


Govern main.indd 66 4/28/2006 9:02:23 PM

Mahatma Gandhi once said, “The true India is to be found not in its few cities, but in its villages.” Five decades later, there’s still plenty of truth in his words: Seventy-two percent of India resides in 550,000 villages. It’s another thing that rural

establishments have never made a substantial mark on progress charts. As cities and towns leapfrogged into modernity, the village, it seemed, struggled to get off the blocks.

To bridge this fast-growing divide, the centre and state governments have focused on piping governance at the grassroots and empowering local-level institutions to further the development agenda. One of the means with which the Indian government chose to further Panchayati Raj, or village self-governance, was information communication and telecom technologies (ICT). Inviting them into a dialogue, it was hoped, would strengthen participative democracy at the grassroots.

To give the concept of Panchayati Raj more punch, the national ministry of Panchayati Raj and state governments embarked on one of the most ambitious—at least in size—e-governance projects ever undertaken and christened it e-PRI or the e-enablement of Panchayati Raj Institutions.

“Today, most people associate technology and its uses with an urban population. Few consider its advantages in a rural setting. But, you’ll find,

that in the long run, it’s technology that will bridge the gap between urban and rural India. e-PRI is our plan to smoothen the process of extending government services to rural areas in the most convenient, user-friendly and efficient manner,” says Dr. N. Vijayaditya, Director General, National Informatics Centre (NIC), which is spearheading the nation-wide project.

The IT Challenges of Gram SwarajMahatma Gandhi also envisioned a decentralized form of government in which each village would be responsible for its own actions and called it Gram Swaraj (village self-governance). e-PRI empowers the Gram Swaraj concept by automating various governance processes within Panchayati Raj institutions. Twenty-nine areas, such as agriculture and education (and the services and information they provide), are in the spotlight. Information and

services from these areas, however, will differ according to the level of governance—village panchayats, block panchayats, district panchayats and others.

To complicate matters further, each state has been allowed to map out how it wants to tackle serving these 29 areas. Their discretion extends to assigning roles and responsibilities to the zila panchayat, block panchayat and

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Reader ROI:

How ICT can bring transparencyto grassroots administration

Empowering 235,000 institutionsthrough using technology

How ICT enables the right toinformation

Governance starts at the village. e-empowering Panchayati Raj institutions is lending power to local bodies and bringing more transparency and accountability.

Vol/1 | ISSUE/12 REAL CIO WORLD | M A Y 1 , 2 0 0 6 6 7

GraSSrooTSrooting for the

e-Panchayati Raj

gram panchayat. “A state has got the liberty to adopt a back-end solution and contribute to the core content of our national website,” says D.C. Misra, Senior Technical Director & Head, Rural Development Informatics Systems Division, NIC.

Misra, and his team at NIC, are faced with a monumental task. The primary goal of the e-PRI exercise is to put as much information as possible on the public domain through a national portal. It’s partly NIC’s job to ensure that information from every Panchayati Raj institution in the country finds its way to the national website. This website, conceptualized by NIC, and better known as the National Panchayat Portal (NPP) (www.panchayat.nic.in), is meant to act as a digital face for all Panchayati Raj institutions and was launched by the ministry of Panchayati Raj in early 2005.

The back-end of NPP, however, will be found on the premises of zila parishads and block and village panchayats all over the country. There are 2,35,000 village panchayats, 6,096 block panchayats and 540 zila parishads.

The front and back-end have been loosely-coupled, ensuring that when the Internet comes to the panchayats—which is the most challenging aspect of the national e-governance plan—information can be uploaded on the public domain.

“It was considered a good idea to introduce ICT aspects in the initial phases. This way, there would be fewer conflicts in later phases and a better level of proliferation of governance at the grassroots,” says Misra. The idea, he says, was to introduce the e-PRI project to automate the process of Panchayati Raj administration and introduce transparency.

States like Chattisgarh and Orissa, where block panchayats already have good connectivity, are in the process of uploading information. The rest of the states are uploading information offline through various media.

According to Misra, the back-ends have already emerged as strong pillars and have provided good results. Various projects in different states are already operational; these include Infogram in Goa, e-Gram in Gujarat, PanchLekha in Madhya Pradesh, PRIASoft in Orrisa, and e-Panchayat in Andhra Pradesh.

More states are progressively trying to get a higher number of panchayats online. For example, in Andhra Pradesh, 25 Gram Panchayats have received computers and 75 more are slated to get theirs soon and Orrisa plans to send computers to 1,000 Panchayats. Tamil Nadu hasn’t yet given 4,000 computers an Internet connection, but is planning to—mainly in the evening when speeds are better, says Misra.

Gujarat, which is moving quickly on the project, has already deployed computers in 8,000 Gram Panchayats and has put in operation e-Grams in approximately 900 Gram Panchayats. It is determined to cover all 13,721 Gram Panchayats by end of the financial year.

This sort of activity is keeping NIC on its toes as it is makes a huge amount of bandwidth available to various district headquarters. From there, the districts have to figure out how they are going to connect to their Panchayats. Mobile technology is being considered an alternative where wired connections are impossible.

The NIC says it working closely with the ministry of Panchayati Raj to do everything possible to rollout e-PRI. Some of that effort is being channeled in training Panchayati Raj instituition officials to make maximum use of the initiative. “Our primary focus now is on capacity building. We want to ready the people who are going to populate the website with information. We are bringing in more and more people at district and state levels so that we don’t have a dearth of resources when it comes to implementing the project,” adds Misra.

SNAPSHOT

VILLAgE PANCHAyATS:2,35,000

BLOCk PANCHAyATS:6,096

ZILA PARISHADS:540

OBjECTIVES Of E-PRI:Messagingfacilitiesbetweenvariousministriesandthethree-tiersofPRIsMonitoringflowoffundsTrainingofficialsinICTuse

Gujarat, which is among the leaders in Panchayati raj, has been proactively working on Panchayat empowerment.

“Whenever we take on project, we keep the poorest in mind. this ensures

projects designed to serve their purpose first,” says

Dr. Varesh Sinha, Principal Secretary, Panchayats,

rural Housing and D e v e l o p m e n t

Department, Gujarat. the government of Gujarat rolled out its e-Panchayat initiative and named it e-Gram.

During the initial budgeting process, the state decided to let rural entrepreneurs run kiosks since quite a few villages were prosperous. But, not all villages followed this pattern and the government was asked to subsidize infrastructure costs. “We couldn’t introduce commercial entities because

they would have invested only in areas where they have commercial interests,” says Gopal.

today the state helps with infrastructure. today the state helps with infrastructure. tIt designates rural entrepreneurs to run kiosks across the state. “Pachayati raj in Gujarat has already devolved 19 functions. e-PrI covers almost 70 percent of villages under the project. In next two years, we will include the remaining,” says Sinha.

— G.t.

e-gram—Pioneering Panchayati governance

the poorest in mind. projects designed to serve

their purpose first,” says Dr. Varesh Sinha, Principal

Secretary, Panchayats,

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6 8 M A Y 1 , 2 0 0 6 M A Y 1 , 2 0 0 6 || REAL CIO WORLDREAL CIO WORLD

e-Panchayati Raj

road to InformationPanchayati Raj, says Misra, is a subject for state governments and their active participation is vital. e-PRI is in a consultation stage and NIC is in talks with various states to take down their suggestions. Once this is in place, the central ministry will zero-in on six major elements: Hardware, applications, system software, connectivity, capacity building and content management. Capacity building and content management are considered the two most important issues for the project’s success, adds Misra.

The majority of states have responded positively to the idea of an e-Panchayat. Several governments have taken proactive measures and have done a substantial amount of groundwork in anticipation of the project rolling out.

Simultaneously, the Government of India is in consultation with various states to push the project into final shape. “Well-begun is indeed half done,” says Misra. Primary architecture, in terms of the front and the back-end, has already been laid out.

Much of e-PRI is about the right to information and though the project is in its infancy, some of its activities are already live and are front-ended at the NPP.

“The NPP does not have barriers of languages, caste, and creed. As a final interface, it represents an open door for citizens to find information. Today governments invest a lot of money in rural areas through many schemes. But people aren’t aware of the benefits of these schemes. With technology, we’re trying to put out a single source of important information,” says Vijayaditya.

The NPP attempts to provide that information to the greatest number. It details basic categories and issues on which every Panchayati Raj institution has to eventually upload information. This could range from names of elected representatives to funds received from the government and spent on public projects. It will empower common citizens to keep tabs on village panchayats.

“Unless people are close to Panchayat officials, it’s not likely they are going to see this level of transparency. Villagers can never find out how much money has come in for a certain project and how it has been spent. The e-PRI project will bring in more transparency,” says Misra.

“Another example of the effectiveness of NPP will come through the National Rural Employment Guarantee (NREG) Program. Today, it’s being run successfully in Orissa where over

ten million people have already registered on the program. The general public now has a mechanism to check whether deserving people are getting their due shares” says Vijayaditya.

The rural job guarantee scheme will assure people 100 days of employment in a year, explains Misra. “The Gram Panchayats identify people and register those looking for jobs.”

Since the NREG is Panchayat-centric, it means Panchayats have to maintain records of work allotment.“Putting information in the public domain is now a fundamental requirement and is the cornerstone of governance at the grassroots,” he says.

Vijayaditya says they have received a variety of “piecemeal projects,” which they plan to integrate into the NPP. e-PRI, he feels, will lead the country towards a knowledge society in which those living in rural areas will contribute substanially to a general body of information. “We want to see a smile on the face of every person who has access to the knowledge and information that the NPP will provide. If we can achieve this, I think we would have done a great job,” says Vijayaditya. CIO

Bureau Head North Rahul Neel Mani can be reached at [email protected].

Senior Correspondent Gunjan Trivedi can be reached at [email protected]


“Unless people are close to the panchayat, it isn’t likely that they’re going to see the level of transparency the e-PRI project will bring.”— d.C. Misra, Senior technical Director & Head, technical Director & Head, t

rural Development Informatics Systems Division, nIC

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Aman Kumar Singh, CEO, CHiPS (Chhattisgarh Infotech and Biotech Promotion Society), has a unique problem—80 percent of his state’s population lives in rural areas, and the only way he can ensure that IT makes an impact is by taking IT to them.

CHIPPING at the


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Interview.indd 70 4/28/2006 7:52:50 PM

Interview | A.K. Singh

CHIPPING at the

CIO: ‘Driving Development through Democratic Governance’ is the vision of the Chhattisgarh government. How does IT ensure this?A.K. SINGH: Our IT policy lays stress on building comprehensive infrastructure down to the village level. This will not only help in enhancing access but will also introduce social development by supporting rapid economic development, facilitating distance education, improving levels of education and attracting investment.

The development agenda is very challenging for a state like Chhattisgarh given that 44 percent of our population belongs to Scheduled Castes and Tribes. Eighty percent of Chhattisgarh lives in rural areas and almost 45 percent of the state is covered by dense forest. IT helps in involving all the stakeholders in the process of governance in far-flung areas by cutting across distance and caste. It’s a very important tool for aggressively pushing the agenda of development.

Chhattisgarh’s taken a phased approach to e-governance. What does your road map look like?

The task of framing an e-Government Road Map has been initiated in order to identify various IT needs and to set priorities for departments. The first

phase, which was completed in January 2006, saw the framing of the e-Government Vision, e-Government Strategy and e-Government Blueprint framed. The aim of framing an e-government vision is to provide a strong focus on what is to be achieved by the state in five years. The objective of e-government strategy is to provide a high-level plan that will enable the government to realize its e-government vision and attain a position of leadership in e-

governance by 2010. The e-Government Blue Print presents the big picture (top layer, linkage layers and operational layers) of the e-government portfolio of the state in terms of application, infrastructure, and standards and policies. It will serve as a ready visual reference to the key aspects of major e-government applications and initiatives. The document is currently under departmental review. In due course of time, it will be issued to all departments, who will be able to use it as a basis to implement e-governance in Chhattisgarh.

The second and third phases of the e-government road map deals with the e-government program and e-government ecosystem respectively, which will be taken up subsequently.

Can you give us details on e-procurement and SWAN? What do you expect from them?

A professional approach has been adopted in implementing e-procurement and SWAN in Chhattisgarh. E-procurement will provide the state with complete automation of the procurement cycle from cradle to grave. This includes proposal preparation, online approvals, online bid submissions, online agreements, online measurement books, e-payments and a comprehensive MIS on procurement activities. The system will encourage

healthy bidding, resulting in an increase in bid numbers, reduction in both bid value and procurement cycle time. E-procurement is expected to enhance efficiency and transparency in public procurement. The government aims to implement a single, unitary and end-to-end e-procurement solution across the state on a Build-Own-Operate-Transfer (BOOT) model. The system will be implemented on a pilot basis in four departments before it is rolled out to all departments in a span of five years.

BaCkwoods



The SWAN project will provide the state with a basic IT backbone, which will be used to carry data and voice traffic, thereby faci litating inter-departmental communication and data-sharing within the state. It will be a safe, fast, reliable and cost effective network that will connect all the 146 blocks of the state through a hybrid network consisting of WiMax, leased lines and other network technologies set up on a Public-Private Partnership mode operated on Build-Operate-Transfer (BOT) model. The total project cost is Rs 91.27 crore, which consists of Rs 51.25 crore from the Government of India and Rs 40.02 crore from the state government.

The state expects to save 10-to-15 percent of its procurement expenditure by implementing e-procurement, apart from the fact that it will serve as a transparent and effective system. SWAN will aid the state with a firm network backbone and will be very helpful in increasing the base of the citizen-centric services and provide much needed last-mile connectivity to the state.

CHOiCE (Chhattisgarh Online information for Citizen Empowerment) uses biometrics and digital signatures. Why was this approach adopted?

CHOiCE provides a one-stop solution for anywhere, anytime, secured services for all citizen requirements. This project deals with online disbursement of government services to citizens and is a comprehensive solution that covers 137 services (G2C, G2B and G2G). It includes the issuance of certificates, ration card, land records, electronic payment, information on schemes, MIS, and others.

The project uses digital signatures and biometric security devices for online approvals. The CHOiCE project authenticates various users with biometric devices that use fingerprints to access CHOiCE. Initially, CHOiCE agents and government officials need to register

online for biometric authentication through a biometric device. Fingerprints are stored in a central database with usernames, which are matched every time a user logs into the CHOiCE portal.After a successful implementation in Raipur, the project will be rolled out in other districts of the state in the next financial year.

What about implementation issues with open source? Has it helped reduce the total cost of ownership?

The state government recognizes the need to democratize IT ownership, its control and use. It promotes the use of open source, which helps the state to compliment/supplement proprietary software by lowering the cost of IT ownership without compromising the quality of an application. The government will also facilitate research and development in the use of open source in the field of education, governance and even for general use to ensure that Chhattisgarh becomes a truly IT-enabled society. While it is too early to talk about the role of open source in reducing the total cost of ownership, the state tries to strike a balance between the use of open source and proprietary software.

The CHOiCE project, for instance, has been developed on open-source front-end tools with an open-source interface using a Tomcat-Apache Server, which enables clients to access the CHOiCE portal using a browser. The various devices used for user authentication are made platform-independent to facilitate their use on any operating system.

You have deployed a comprehensive GIS system that consists of 37 layers. Has it started delivering value?

The state of Chhattisgarh is among the first states in India to develop a comprehensive Geographical Information System (GIS) consisting of 37 layers that include hydrology, demographics, land maps, and others. Several applications are being

Interview | A.K. Singh

We’re among the first states to develop a comprehensive Geographical Information Systemconsistingof37layersthatincludehydrology,demographicsandlandmaps.



developed to utilize the GIS in various departments. The forest department is using the system to demarcate forest boundaries, estimate forest density and find details of vegetation, firewood and timber. The revenue department uses it to digitize land maps and manage online land records. The election office employs the system to demarcate Gram Panchayat boundaries, Janpad Panchayat boundaries, Vidhan Sabha boundaries, get pictorial representation of census data and habitat, analyze poll trends, track polling party movements and ballot box movement.

The hydrology department is using GIS for watershed mapping, water-table mapping, demarcating catchments and submergence areas, ground-water simulations including site characterization, model development, post-processing, calibration and visualization. The Chhattisgarh s tate electricity board applies the GIS to install HV lines in remote areas and effectively plans the installation and operation of HV lines throughout the state. The mining department draws on the GIS to demarcate mining lease boundaries and identifying potential exploration and mining lease areas.

The state intends to provide GIS data to all government departments, agencies and NGOs to help them identify areas for improvement, thereby increasing the productivity and GDP of the state.

A g r i c u l t u r e c o n t r i b u t e s significantly to the state’s income. Do you have special e-governance initiatives to aid this sector?

Agriculture is going to be our next thrust sector for initiating IT projects. We have already framed e-governance strategies under the e-government road map for the agriculture department, which includes agriculture, horticulture and animal husbandry. Though we are in the process of initiating IT projects that directly aid

the agricultural sector, we have implemented some IT projects that indirectly serve as an effective aid in improving the agricultural scenario. The e-Gram Suraj project, through its use of Simputers, helps villages with instant data on agriculture, weather, mandi rates and various agricultural schemes operated by the state. The Bhuiyan project helps villagers access prompt computerized land records, which helps them to apply for various loans. The GIS maps aid the state to judiciously allocate resources, thereby improving agricultural productivity.

Education seems to be strong focus area for the state, which plans to use e-classrooms, besides training for all employees and MLAs in IT. What has been the initial response?

Chhattisgarh has established an e-classroom, has conducted IT training programs for all classes of employees (Class-I to Class-IV employees) and has trained the entire cabinet on the use of IT. The Chhattisgarh Soochna Shakti Yojana has provided schools with desktops and touch screens, alongside basic training to students on operating computers. By and large, the response has been good. The most important aspect of pushing IT in a state like Chhattisgarh has been political commitment coupled with administrative support.

Convincing people of IT’s advantages is normally a tricky problem for most e-governance initiatives. How has CHiPS tackled this?

CHiPS has adopted a collaborative and institutional approach in initiating IT projects. Stakeholders have been

extensively consulted before conceptualizing various IT projects. M e e t i n g s w i t h industry associations, NGOs, corporates and others have been held in order to get a macroscopic view of IT implementations. C o n su l t a nt s h ave been hired to conduct studies to appraise the state on various infrastructure gaps, and gaps in process, human resources, technology and capacity prevailing in the state. CHiPS has been able to tackle this since it has a techno-managerial team that understands the languages of both IT and non-IT people.

The state’s SC/ST population is said to have been largely untouched by modern development. How has your IT policy helped such people?

The IT Policy has been instrumental in initiating state-wide mega IT projects and computer education programs, which reach the remotest parts of the state, benefiting the SC/ST population with instant reach to modern developments.

The citizen service centers (CSCs) that are being established in various villages will have a strong impact on the SC/ST population through citizen empowerment. The State Wide Area Network will play a key role in empowering the SC/ST population. CIO

Special Correspondent Balaji Narasimhan

can be reached at [email protected]

SNAPSHOT AREA: 135,194 sq.km.

DISTRICTS: 16

VILLAGES: 20,378

POPuLATION: 1.761 crore (1991 census)

PROjECTS uNDER

IMPLEMENTATION choicE e-Gram Suraj e-procurement SWAN e-treasury Bhuiyan GIS



The Name Game BY MICHAEL FITZGERALD

INFORMATION MANAGEMENT | Tagging offers a potentially powerful way for a company to organize information by making fresh content immediately searchable, letting users designate terms that make sense to them and providing users with a sense of ownership. This ability for tags to provide so much content-describing power for ordinary folks has given rise to the term ‘folksonomy,’ as opposed to the more restrictive sounding ‘taxonomy.’

But like taxonomies, tags are all about finding data. “It’s another tool in the toolbox for CIOs,” says information architect Louis Rosenfeld. Rosenfeld notes that companies typically organize meta-data around attributes and values. Taxonomies often handle attributes well; a corpo rate library, for instance, can be organized quite well around book titles and authors. But if you want to search on a value—a book’s topic, say—things get harder. Searching through non-text, such as video, can also be a challenge.

Given their information density, Rosenfeld thinks intranets will be a prime testing ground for tagging at the corporate level. One company that has seen encouraging results using tags is IBM. “Tagging makes it easier for you to go back and find something,” says Maria Arbusto, IBM’s director for user experience, who is responsible for how

Tagging tools let users describe

the world in their own terms

as taxonomies become

‘folksonomies.’

technologyEssEnTIAL From InceptIon to ImplementatIon — It that matters

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IBM presents its internal information, websites and applications to employees.Arbusto says IBM is ‘still in the early days’ of using the terms employees provide to improve discoverability. She says it has worked well in a pilot involving ThinkPlace, the intranet application IBM uses as an internal suggestion box for ideas the company should consider commercializing or developing and deploying to employees. In the system, employees can comment on the ideas and rate whether they should be pursued.

ThinkPlace originally classified ideas using terms from IBM’s official taxonomies for content such as industry and products. But “we observed the users and saw that the terms they used didn’t always match the formal taxonomy,” she says. So IBM created a way for users to enter keywords, or tags, that would be appended to the suggested terms from the formal taxonomy and thereby improve their ability to find relevant ideas. The results have been promising,

says Arbusto. “You can see what your colleagues are interested in,” she says. “From a collaboration and knowledge-sharing perspective, that’s what’s neat about folksonomies.”

Tags are synonymous with the keywords familiar to anyone who has done a search either on the Internet or in a corporate content management system. Indeed, many current applications come with tagging tools that let users append descriptive terms to their documents. (The upcoming Microsoft Vista operating system will even include tagging as a part of its file system.) Another valuable

element of tagging is that it works with any kind of file, including video or audio. Users can simply add descriptive terms such as ‘exterior,’ ‘building,’ ‘blue,’ ‘quiet,’ and so on. This flexibility makes tagging “a very pragmatic technology—simple to understand and use,” says Andrew Jaquith, a Yankee Group analyst. No taxonomy can come up with every term employees might have for something. But with tagging, users gain the flexibility to work outside the taxonomy.

Thomas Vander Wal, who coined the term folksonomy and is founder and senior consultant for InfoCloud Solutions, says he thinks that in the next couple of years, companies will adopt tagging widely. “Having a folksonomy means you can use people to fill in the gaps in a taxonomy and track emergent vocabularies,” he notes.

Tagging for DollarsSuch flexibility is what is likely to make tagging useful to companies, says David Weinberger, a research fellow at Harvard

Law School’s Berkman Center for Internet & Society. “It’s so easy, so cheap, and the benefits are immediate,” he says.

Tagging is already spreading quickly through the Web. The initial ideas are fairly old—the Bitzi online tagging tool (www.bitzi.com) has been around since the year 2000—but tagging as a phenomenon didn’t start until mid-2004, with the rise of sites such as Flickr, where users upload and tag photographs, and Del.icio.us, where people tag webpages. (Both Del.icio.us and Flickr were acquired by Yahoo in 2005.) Such sites have already shown that tags can be effective even if only small

percentages of users adopt them. In fact, Caterina Fake, cofounder of Flickr and now director of technology development at Yahoo, says that a typical group probably needs fewer than 15 percent of its members tagging something for the tags to be useful in helping all members find things, and that number could be as low as one percent or two percent, depending on the si ze of the group.


Outside corporate intranets, tagging

can be used to let consumers define the

things they see. a prime example is the art

Museum Community Cataloging Project

(www.steve.museum), an effort by eight

art museums (including the Guggenheim,

the Minneapolis institute of arts, the san

Francisco Museum of Modern art and the

Metropolitan Museum of art) to identify

ways in which tags could be used to help

their visitors find pieces.

“There is no way that you would or could

have museum professionals—academics,

art historians—sit down and look at every

work of art and come up with every way you

could possibly describe [them],” says len

steinbach, Cio at the Cleveland Museum

of art, which is also involved in the project.

steinbach says the issue compounds

when museum visitors come looking

for something they remember seeing

before. While the visitor might remember

a painting because of an element within it

(a brick building, for example), that same

detail might be unremarkable to an expert.

steinbach says his museum hopes the

tags will make its collections more useful

to teachers. “Wouldn’t it be neat if teachers

of science could find all the drawings and

paintings that had the moon in it?” he says.

— M. F.

artistic Tagging

Tagging is useful because it works with any kind of file, including video or audio. users also gain the flexibility to work outside taxonomy.

REAL CIO WORLD | M A Y 1 , 2 0 0 6 7 5Vol/1 | issue/12


Mis-TaggedDespite the amount of hype surrounding tagging, it pays to remember that it is still in its very early stages. “We’re in the voyeurism phase here,” says Greg Blonder, a venture capitalist at Morgenthaler Ventures. And he doesn’t believe all the early tagging leaders will stick around (he tags things like Flickr and Del.icio.us as ‘fads’).

But Blonder does think tagging is useful. Morgenthaler has even invested in a company called Digital Railroad, which takes advantage of already-defined tags used in commercial photography to help photographers sell their images.

Tagging is also young enough that serious disagreements still exist within the tagging community about something so basic as how to use it. For instance, should museums let people tag a painting ‘beagle’ if it in fact depicts a dalmatian?

On a more practical level, “tags really don’t fit well with the way corporations tend to organize information,” notes Jaquith. “Organizations like file folders, nested hierarchies and those ways of classifying things.” But, he says, few companies do a good job of organizing information in this way, and some may find tags offer a more commonsense approach.

Can you Tag your Enterprise?No one sees companies abandoning workflow tools, however, in favor of tagging alone. For one thing, most current tagging tools are not available commercially—though there is interest. Chris Fralic, Vice President of Business Development at Del.icio.us, says that a number of companies had contacted the company before it was purchased by Yahoo, looking for a corporate version of its tagging tools.

Yahoo offers Del.icio.us and Flickr and has some beta offerings in the works, and Del.icio.us has inspired other things that might help CIOs. For instance, Jonathan Feinberg, an advisory software engineer at IBM, saw Del.icio.us and decided

he wanted a version for the host of bookmarks he has on IBM’s intranet, so he built a program he calls Dogear. It functioned so well that IBM’s CIO Bob Greenberg designated Dogear as part of the company’s Technology Adoption Program, which IBM uses to help it leverage good ideas from research. Dogear was opened for use across IBM in November, and a mere 1,235 of IBM’s 329,000 employees have logged in to the tool more than once.

But Feinberg and his manager, David Millen, an IBM Research scientist, have already refined Dogear, giving it privacy designations (for instance, for those bookmarks people want to keep to themselves). And they’ve added Really Simple Syndication to let people know when content has been ‘dogeared.’ What the company doesn’t know is how many users you need to make Dogear worthwhile. That will become clearer in 2006, says Millen, as several IBM customers are expected to try Dogear.

No matter the company’s size, there will be management issues. Yahoo’s Fake says the tendency within a company is to think that social software is driven by users and thus self-managing, but this is often not the case. “Somebody needs to take responsibility for [the systems], and that’s something companies don’t understand,” Fake says. “They need a community manager.”

Fake says all sorts of companies will find that tagging helps them define their actual culture. She talks about the value of the ‘cool lamp’ test—if you type ‘cool

lamp’ into Google, the first thing that comes up is a lava lamp, which to her is decidedly uncool. But in a group she’s involved with on the tag-driven site Yahoo MyWeb, typing in ‘cool lamp’ generated results that she thought were very cool indeed. Similar technology could prove very valuable in corporations, for instance, where people in research and others in sales might have very different opinions about, say, what kinds of ‘product details’ are interesting, with one group concerned more about material lists and manufacturing constraints and the other interested in profit margins and sales incentives. Companies could also test product concepts by letting users tag them and see what terms they use.

Whether tagging is a poor man’s database search tool, a quick-and-dirty search tool on an intranet or an inherent, ground-up part of corporate collaboration doesn’t really matter. What does matter is that users do most of the work, and both they and their corporations get the benefit. CIO

Michael Fitzgerald is a freelance writer based in

Massachusetts. send feedback on this feature to

[email protected]


Tagging is young enough that disagreements still exist within the community. For instance, should museums let people tag a painting ‘beagle’ if it depicts a dalmatian?

7 6 M A Y 1 , 2 0 0 6 | REAL CIO WORLD Vol/1 | issue/12


PunditGet to Know Ruby on RailsLots of people are blinded by the haze of intricacies that surrounds standard programming. If you're one of them, Rails could be your train out of the dark.By Christopher Lindquist

open source | My programming days pretty much ended in the early 90s. At that point, I had some experience with Pascal and was playing around in C, but the dawn of the graphical user interface and my unwillingness to take the time to decipher the intricacies of the component object model snuffed what was left of my wannabe programmer past-life.

Since then, I’ve done some cut-n-paste coding and made fits and starts

at learning some Perl, PHP and Java, but reality has always intervened, and whatever progress I’d make would be overrun by the life that pays the bills and spends time with my family.

But recently I discovered Ruby on Rails. About the same time I was giving up on

programming, Yukihiro ‘Matz’ Matsumoto was creating Ruby, an object-oriented language Matsumoto hoped would focus on the needs of humans—the programmers—rather than the needs of machines. The idea is that Ruby shouldn’t surprise the programmer with its behavior.

The mature language is supported by a number of easy-to-use tools, including

Gems, which lets Ruby developers quickly update their Ruby installations and integrate add-ons with simple text-based commands. And then there’s Rails.

Rails is a Ruby-based Web development framework that seems tailor-built for productivity—at least for my productivity. With Rails, the emphasis is on convention. A Rails app is largely preconfigured—as long as you stick to the required directory structure

and file-naming conventions, it handles a lot of the behind-the-scenes tedium for you.

For instance, building a Web-fronted database app in Rails takes about ten minutes—tops. Rails automatically generates the interfaces necessary for adding, editing, viewing and deleting database entries. The default interfaces aren’t pretty, but they work. And you can quickly customize things to suit your exact needs.

In about an hour, I put together a basic database-driven app for a project I’m tracking, and I have plans for more Rails development in the future. The nice thing is, with Rails I don’t have to suck a lot of

time from other parts of my life to get things rolling. I’m just hanging my own ideas off the pre-built framework.

I’m not the only one who’s been bitten by the Ruby on Rails bug. I was able to find dozens of commercial sites that involve Rails (some are listed on the Ruby on Rails site: RubyOnRails.org/applications.) And Ruby and Rails book sales are apparently going through the roof.

I’ve even created a complete development environment that runs off a 2GB USB thumb drive and includes my code editor, MySQL database, Ruby, Rails, Apache server and more. Portable productivity! (Keep in mind, it’s not necessarily the speediest option—just the most convenient for me. Installing Eclipse on the drive—for example—can take more than an hour because of a USB drive’s stodgy performance compared with a hard drive. But it runs fine once installed.) CIO

Chris Lindquist is technology editor. send feedback on

this column to [email protected]

A Rails app is largely preconfigured—as long as you stick to the required directory structure and file-naming conventions, it handles a lot of the behind-the-scenes tedium for you.

essentIAL technology

7 8 M A y 1 , 2 0 0 6 | REAL CIO WORLD VoL/1 | IssUe/12

ET-Pundit.indd 78 4/28/2006 9:11:52 PM

May 1 2006

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