Hardware investments, the debate continues

GOA: There was much debate and deliberations amongst the CIOs attending a panel discussion on ""Risks involved in hardware finance", moderated by Suresh Kumar, National Head-IT, KPMG. The panel members included Vikram Srihari, CIO of Coca Cola, Mukta Bihari, Additional GM, IS and IT, ITI Ltd, Bipin Pandy, VP-IT, Cites India Ltd and Ritu Madbhavi, Systems Director, FCB Ulka Advertising.

Said Suresh Kumar, "Hardware financing depends on a lot of parameters like the life of the product, whether the company has short term or long term goals, size of the business and criticality of the process. I feel that for short term projects and if it does not involve mission critical process, it would be ideal to go for hire —on- need model which would save the cost to a large extent while for long term projects, enterprises can go for outright purchase model".

Agreeing to this Ritu Madbhavi, "When it comes to decision taking in hardware financing, we take into account lot of issues like the life of a standard hardware, size of the projects and the total utility required. We go for leasing model of short term projects".

However, Vikram Srihari had a different view on leasing model when he said that leasing model might not suit organization primarily for the risk factor involved. Also organization should not ignore the tax break they would get if they go for outright purchases. Just to save costs, enterprises should not take the easy way out and they need to do the homework right. As CIOs, they need to plan for the right kind of upgradation at the right time, look at extended warranty for parts and services and appropriate SLAs.

Rajeev Batra of Ernst and Young said, " It is not advisable to generalize the decision-making especially when it comes to investing in IT hardware. CIOs need to be specific while negotiating with the vendors. We need to keep in mind that business cannot function without technology enablement. We need to take into account the life of the hardware product, the depreciation factor and the technology obsolescence."

Vikram Srihari felt that for organization it is application, which drive the organization business and hence costing model could be tried out in the application investment projects. To which Mukta Bihari replied that application criticality are different for different organizations and as suggested earlier, it is not wise to be case specific.

The discussion continued to hold the audience for a long time but nobody could come to a conclusion on the much `heart-felt’ topic of discussion.

CIOL Bureau