It's not an exaggeration when it is said that IBM symbolizes
innovation. Its innovation exercise started with Bharti Airtel in a big way
three years ago, and now it's a continuing practice-thanks to 3,200
dedicated professionals deployed across IBM R&D labs in India. And, this
number is increasing with each passing year, and so is innovation in different
verticals.
Innovation is not only in terms of solution, but also in terms
of business model. And, this new thought process has transformed IBM India.
Presently, IBM is the only IT networking company in the world-and in India-to
offer end-to-end solutions to customers right from hardware, software, services,
and consulting. The company has been successful in morphing business and
technology integration.
Technology can enable and drive innovation. However, technology
must be combined with business insights to capitalize on technology's
potential, and be capable of unleashing an organizations' creative energy. IBM
is good in both of them-thanks to its consulting acquisition.
IBM is also bullish about BRIC (Brazil, Russia, India, and
China) market. It is expected that over the next four years, the IT markets in
Brazil, China, India, and Russia will grow with revenues more than two times the
worldwide revenues, creating a market opportunity of more than $150 bn by 2010.
And, it seems IBM think tanks were aware about the huge opportunities in BRIC
countries, and were working on India strategy for last four to five years to put
in place the missing links.
Under the leadership of Shanker Annaswamy, MD, IBM India/South
Asia, the missing links are already in place and it's time to reap benefits.
India is not only an exciting market, but also an innovation center for IBM
worldwide. In terms of growth, IBM India has grown by 38% in 2006, and India is
the highest growing market among BRIC countries. Not only this, the company has
been growing at around 30% over the last four years-an achievement not many
companies can boast of in the networking, hardware, and software space.
The company credentials are impressive. In terms of customers,
IBM India can boast of around 3,000 customers. It is also the biggest MNC
software exporter in the country. IBM manages more than 250,000 sq ft of data
center for more than fifty-five clients. It also helps more than fifteen state
governments to drive e-Governance related projects in their states. It has also
helped more than 100 plus clients prepare their business continuity processes
and disaster recovery systems. All this has resulted in 38% growth in employee
base from 38,500 employees in 2005 to 53,000 employees in December 2006.
Sensing India opportunity, Samuel J Palmisano, chairman and CEO,
IBM, on his India visit in 2006 says, "We will triple our investment in
India from $2 bn invested in the last three years to nearly $6 bn in the next
three years. This investment will ensure that we make the most of the
opportunities to grow this marketplace, while it also enables IBM to fulfill its
vision to become a globally integrated company."
The First Step
Number one in hardware and software space, the company had to increase its
foothold in the services space. This too happened with two acquisitions. The
first was Daksh eServices acquisition in April 2004, which helped IBM to enhance
its ability to deliver CRM and back office services to its clients in key
verticals like banking, insurance, retail, technology, telecommunications, and
travel and transportation. In addition, this initiative will increase the scope
of its business transformation delivery centers. Presently, IBM Daksh has over
20,000 employees and has over 200% growth in the last three years. The company
is servicing 200 processes at sixteen delivery centers spread across seven
cities.
The second was the acquisition of Network Solutions by IBM in
November 2005, which enabled IBM to augment its networking and managed services
portfolio of offerings in India, and broaden its reach across the country. It
also helped IBM to consolidate its leadership in the Indian domestic services
market by strengthening its service capabilities in the enterprise and
mid-market business segment.
Apart from this, the first of its kind model in the world called
the "On Demand Model" or "Risk Reward Model" got prominence,
thanks to IBM's willingness to share risk and opportunity with Bharti Airtel.
As part of the agreement, IBM was asked to deliver IT to Bharti as a service-and
not as a product or solution-and was paid certain percentage of Bharti's
revenue.
On March 26, 2004, Bharti signed a 10-year agreement with IBM to
consolidate, transform, and manage comprehensive infrastructure and
applications, joint development of marketing IT and telecom solutions and
services for India, and to be the preferred supplier of telecom services to IBM
India. Since then IBM has been focusing on IT and back office business
processes, while Bharti has been focusing on aggressive marketing. All this has
resulted in Bharti Airtel increasing its base from 6 mn to 42.7 mn.
IBM worked on parameters like: customer-facing interfaces,
thereby helping customers manage their accounts, view bills, make and track
service requests, register complaints, and more through multiple channels, like
the Web, phone and text messaging; predicting customer needs by building
business intelligence to the tune of 7 Tb and over 250 mn call data records
(CDR) per day; billing and mediation helped in integrating key business
functions like marketing, speeding up new product development and rollout; and
intelligent network monitoring, which monitors networks for issues even before
they might occur.
The company has increased its trust in IBM by expanding its
outsourcing relationship with additional $100 mn to incorporate next generation
servie delivery platform, which will enable Bharti to offer VAS to its customers
and open up new business opportunity in terms of innovative content and video
services. IBM is also working with Bharti to develop capabilities to implement
number portability and carrier access code as and when these services are being
allowed in India.
The Multi-year Deals
Having successfully completed Bharti Airtel outsourcing project for a period
of three years, IBM has also been successful in signing up with Idea for a
10-year business transformation pact to integrate, innovate, and transform Idea's
business processes and IT infrastructure. The pact is designed on an innovative
risk-reward revenue sharing model and covers Idea's existing operations and
potential new additions. The 10-year pact, depending upon Idea's business
revenues and circle expansion, would vary from $600-800 mn.
Revenue* |
|
Country |
%age growth |
Brazil |
19 |
China |
16 |
India |
38 |
Russia |
21 |
Total |
21 |
*Excludes PC |
This partnership will enable Idea to meet the needs of its 14 mn
current subscribers and future growth; accelerate time-to-market of new
services; leverage opportunities from the convergence; add new revenue streams;
improve end-to-end customer management; and provide advanced revenue assurance
capabilities for top and bottom line growth. In addition, IBM, will also take
care of IVR self services. And, Bharti's learning will definitely help IBM to
complete the first phase of transformation in record time.
IBM is also working with Vodafone worldwide to speed up the
rollout of customer services. The company is also managing Vodafone's
application development and maintenace services to help improve software
capability. And, there are strong rumours of Hutchison Essar IT transformation
project also going to IBM once the integration formalities are completed.
"Outsourcing in India is not offshoring as the drivers are
different. And in India, the drivers are scale, explosive growth, flexibility in
system and time to market," says Vivek Gupta, director, communications
sector, IBM India/South Asia.
On the enterprise side too, IBM started to do wonders, as the
focus was on innovation and multi-year business transformation deals. The IBM is
focusing on six verticals -financial services, public, industrial,
distribution, communications, and small and medium business. With Indian market
booming, an increasing number of organizations started outsourcing non-core
functions to improve competitiveness in the market. IBM was able to leverage the
opportunity and win significant multi-million deals and multi-year deals. IBM
has been effectively leveraging its global know-how across different sectors,
combined with innovative technologies to boost its customer's business
efficiency and performance. Apart from this, IBM Global Financing helps in
providing flexible and attractive financing and leasing programs to fund IT
requirements of enterprise customers. Some of the unique deals signed recently
are CBDT, DIAL, DLF, FINO, and Apollo Hospital Group.
Innovative |
Central Board of Direct 5-year services agreement to modernize CBDT's (a nodal taxation body for government of India) IT infrastructure. The pact is designed on a unique public-private partnership model whereby IBM will make upfront investments, and will be paid over a period of five years for services rendered to CBDT. IBM will offer integrated
Delhi International IBM will implement an
DLF: IBM IBM will undertake
Financial Information The technology platform
Apollo Hospital Group: IBM IBM will offer its |
"We differentiate in terms of integrated suite of service
offerings with innovative solutions, depth of industry skills, and integrated
value proposition," says Sandip Patel, managing partner, Global Business
Services, IBM India/South Asia.
All these projects were unique and there were lot of
innovations. For instance, CBDT focused on public private partnership model and
payment was for services rendered, whereas in case of DLF, it was transformation
and management of IT infrastructure. In FINO, the focus was on core banking
platform coupled with distribution component and transaction acquisition system.
In Apollo Hospital Group, the focus was on joint go-to-market initiative to
build a National Health Data Network.
The Future
The company is preparing itself for the next phase of growth ie SMB and the
company has invested in the development of product and services specifically
priced and designed for the SMB marketplace under the IBM express portfolio. The
express portfolio comprises of hardware, software, services, solutions, and
financing, and is designed to meet specific criteria for SMBs that will provide
the requisite know-how to broaden its market base.
Seeing IBM's (India) success on enterprise side, the company
is also planning to focus on the SMB sector, trying to tap business potential
across fourteen cities. Though cost is still a priority for SMBs, the companies
have also begun to realize the opportunities provided by IT. This is where IBM's
domain expertise coupled with technology prowess and track record will make a
difference. The company has plans to spread its wing in smaller towns like
Nashik, Surat, Bhubaneshwar, Jamshedpur, Jaipur, Ludhiana, Dehradun, Vizag,
Madurai, Coimbatore, Goa, Lucknow, and Bhopal. The company is also planning to
spread its wing to other cities and towns through 2,500 business partners across
200 cities.
"We believe that we are at interesting point of growth in
this market and in this country. We will continue to focus on those areas which
are important to our clients," says Sandip Patel, managing partner, Global
Business Services, IBM India/South Asia.
In future, IBM is set to focus on enhancing partnership with the
government on e-Governance projects, expand industry specific business services
through the use of SOA, drive innovations through research lab and software lab,
and solidify leadership position in telecom, government, SMB, automotive, and
pharmaceutical sector.
Pravin Prashant
pravinp@cybermedia.co.in
(with inputs from Sonia Sharma)