"IT has to justify each investment"

MUMBAI, INDIA: Arun O Gupta, Group Chief Technology Officer, Shoppers Stop Limited,  shares

his shopping experience and cart for IT on what he has shopped so far and what is he wishing next as he keeps driving technology hands-on at this retail major.

Cybermedia News: What was the expenditure on Information Technology (IT) systems in 2006-07 (figures) in your organization?

Arun Gupta: IT spend in 2006-2007 was approximately Rs 20 crores

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

A.G: We track our operating expense on IT to remain under 1 per cent of the revenue. While the value does go up year-on-year, the total as a percentage of revenue has been falling. In the coming year 2008-2009 this will be around 0.7 per cent of estimated revenue.

CMN: What part of IT implementations play a more prominent role -- software or

hardware or networking? Why?

A.G: All of them in tandem enable the business as they are interdependent on each other. Thus I cannot say that any one of hardware, software or networking has prominence over the other. The final benefit accrues from the software which delivers the tangible results, which cannot be said of the hardware or networking in isolation.

 CMN: Name the top 5 IT items that you spent on last year?

 A.G: 1. Server consolidation and Storage virtualization

  2. Old technology refresh

  3. Business Intelligence

  4. Customer systems

  5. Data center outsourcing and disaster recovery planning

  CMN: Name the top 5 items that you expect to spend on this coming fiscal year?

  A.G: 1. Business intelligence and analytics

  2. PeopleSoft implementation

  3. Customer Relationship Management

  4. WIFI implementation

  5. Warehouse Management System

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

A.G: We are definitely not; cannot comment about others.

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

A.G: Across the Shoppers Stop group, the IT initiatives are adequately funded. All projects go through an approval process jointly with the respective business units clearly illustrated benefits of the project. IT has to justify each investment, that's current reality for everyone. The spending finally depends on whether the organization is in sustenance mode, growth or facing market challenges. All these scenarios will see different levels of

investments.

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

A.G: Cost of IT hardware and software has been coming down in unit terms, however with increased usage, we experience higher outflows. Any example, be it desktops, laptops, servers or business application licenses, all have followed the same trend. Exception to this has remained licenses for the desktop office automation software of which the prices have risen moderately.

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

A.G: We have not seen any impact due to currency rates as yet.

CMN: 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)?

A.G: As I said, thus far have not seen any significant impact of the currency appreciation on the prices.

CMN: Does your enterprise consider spending money on the latest IT implementations as a burden on your expenditure or do you feel it is an investment and mandatory for any enterprise? Elaborate.

A.G: Spending on latest IT is a function of the risk appetite of the enterprise. We continuously explore new trends and technologies working with our vendors to assess suitability. Shoppers Stop group has been at the forefront of technology usage in the retail sector and we believe that it has given us due returns. All such initiatives are not always successful; so we learn from these experiences and endeavor not to repeat them.

CMN: What are the major implementations made over the years? Please specify.

A.G: 1. We implemented our core merchandise management system a decade ago along with the point of sale system.

2. We put in a robust financial accounting system at the turn of the century

3. Basic business intelligence and reporting was implemented 4 years back

4. Warehouse management systems and replenishment systems have been with us for more than a couple of years

5. We also implemented wireless scanner based systems in our stores and warehouse last year

6. Our auto-replenishment system is operational since 2007

7. We have completed our first engagement on floor and space planning at stores

8. There are many more systems that we implemented over the years, the list is long !

CMN: Mention the critical usage of any three of your major IT implementations over the last fiscal and define their benefits?

A.G: Last fiscal the 3 projects worth mentioning are:

1. Data center outsourcing and server virtualization, which has helped reduce our management overhead

2. Wireless receiving at stores and distribution center, which has improved efficiency of operations many fold

3. Enterprise project management, which has created high visibility of key activities internally that we track

CMN: How big is the IT staff in your organization?

A.G: The IT Team is 50 people excluding contractors and outsourced resources.

CMN: Do you expect your IT staff to grow? Do you feel you are adequately staffed?

A.G: We are adequately staffed for current and near future requirements.

CMN: Do you outsource a portion of your IT project? What percentage?

A.G: We outsource all IT projects that involve software development or implementation. Facilities Management, Helpdesk, asset tracking, IT service, Network and core system administration are all outsourced.

CMN: Has the nature and pattern of IT adoption become more sophisticated? If yes, to what extent?

A.G: The demands from the organization have been changing and this involveseffective usage of the systems. Thus from earlier basic operations, we are now in a stage of enhanced usage and moving towards optimization.

CMN: Are some enterprises under the myth that modernization processes such as automation and IT deployment can take place only in large enterprises?Elaborate.

A.G: I am not aware of any such myths. In my experience, I have found that organizations small and big are keen to adopt technology!

CMN: Do you feel you are getting your money's worth buying the latest IT products in the market?

A.G: The answer to this question will always be no ! Rarely anyone buying IT believes that they are getting "value for money". More realistically, volume and early adopters which provide case study material to vendors, tend to get better prices. Shoppers Stop group has been at the forefront of this wave.

CMN: What would CIOs like you wish to hear from vendors during the next fiscal?

A.G: 1. Sharing of knowledge and information based on the usage of their products and services by other companies.

2. How can I help you rather than this is what I want to sell.

CMN: If you were to name five top technologies that you would consider using, what would those be?

A.G: 1. RFID

2. Wireless networks

3. Digital rights management

4. Analytical and statistical modeling solutions

5. Master Data Management

CMN: If you were to name five key verticals that are heading for growth in the next fiscal, what would those be?

A.G: 1. Telecom

2. Retail

3. Manufacturing

4. Information Technology

5. Biotechnology

CMN: If you were to name top five vendors in various IT areas, who would those be? (At least name the top two, according to you, in as many technology areas as possible, such as software, servers, routers, networking equipment, mobility solutions, security, storage, etc

A.G: 1. IBM

2. Microsoft

3. EMC

4. Intel

5. Oracle