IT spending based on organizational needs: RIS Sidhu, PNB

PUNE, INDIA: RIS Sidhu, General Manager-IT, Punjab National Bank, is heading the bank's IT division. Under his able and dynamic guidance, Punjab National Bank has scaled heights of technology deployment. We present excerpts from an interview focusing on IT spends in enterprises in India.

CIOL: What was the expenditure on IT systems in 2006-07 Punjab National Bank?





RIS Sidhu: The overall IT expenditure, inclusive of capital as well as revenue expenditure, for the financial year 2006-07 has been Rs 151.51 crore.

CIOL: What will be the expenditure figures for this fiscal year? What is the growth rate?

RISS: The IT budget has been fixed as Rs 217 crore for the financial year 2007-08.

CIOL: How much budget does your enterprise allocate for IT expenditure each year? What is the expected change with respect to the previous year?



RISS: The IT budgets are finalized every year on the basis of IT activities planned for the year and not on the basis of merely last year’s budget/expenditure. We prepare the annual plan for implementation of IT initiatives. The IT budgets are approved and allocated in synchronization with the IT plan.

CIOL: What part of IT implementations play a more prominent role -- software or hardware or networking?

RISS: While software and hardware are equally important, networking remains the most prominent part of IT implementation as it enables connectivity between two and more remotely placed systems. This helps in remote monitoring and management of systems. Besides, it helps in faster communication as well as cost reduction.

CIOL: Name the top five IT items that you spent on last year?

RISS: During 2006-07, our IT expenditure has been on following major projects:

* Setting up of Zonal Network Centres at seven zones.

* IPSec implementation in branches.

* Online trading facility.

* E-procurement system.

* Expansion of RTGS/CBS/SFMS/NEFT etc. in branches.

CIOL: Name the top five items that you expect to spend on this coming fiscal year?

RISS: During 2007-08, we have planned to spend on the following:

* Setting up of Zero Data Loss Site.

* Data Warehouse Preparation and Implementation

* Setting up of Security Operating Center(SOC)

* Stress Test for CBS and RAC Implementation

* Integrated FEO Treasury Solution- ADS & Back Office Operations(software and hardware)

CIOL: Do you feel that enterprises are spending more on hardware than software? Elaborate.

RISS: We do not agree with this assumption. The spending on various IT items is purely based on the organizational needs. Generally, we purchase hardware for running required software/applications. Therefore, where the cost for hardware remains somehow constant, the cost incurred for software varies with the output required. For example, a PC is used for running MS Office or Finacle. However, the cost of MS Office and Finacle is different.

CIOL: Do you feel that the amount allocated for IT is sufficient? If yes, why? If not, why not? How much should you be spending?

RISS: The amount allocated for IT expenditure has been sufficient all the years. As already explained, the IT budget allocation is done purely in synchronization with annual IT action plan. So, there is no question of short allocation of IT budget in our bank.

CIOL: Has the cost of the IT hardware/software been constant or has it been growing? Elaborate on specific hardware/software.



RISS: The cost of hardware is more or less on constant trend. Rather, it is declining in case of personal computers (PCs). However, the cost of software is increasing. The reason lies in the life cycle of software. The software needs upgradation very frequently as per the requirement.

CIOL: Has the prices of the IT products (hardware/software) been on the decline due to the current stronger rupee against the US dollar?

RISS: Not exactly. However, the cost of purchase is coming down in case of import of IT products due to stronger rupee against dollar.

CIOL: Since the rupee is growing stronger against the dollar, don't you think it is the right time to purchase IT products (both hardware/software)?

RISS: It may be a good time for dealer of IT products to add stocks. Bust as far as an enterprise is concerned; it is not supposed to create a heap of IT products. Rather, an enterprise should purchase IT products based on the organizational needs. Yet, one can certainly get benefited by making an early decision on implementing IT projects in the given scenario of rate decline.

Pratima Harigunani from CMN, Pune Bureau, conducted this interview on behalf of CIOL.