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Lean IT but, with a diet plan

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CIOL Bureau
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BANGALORE, INDIA: Getting rid of flab is more than temporary bouts of curtailing consumption. A lean and fit system is a product of well-planned work-outs, metabolism-tuned regimes and a great diet plan. In short, when to eat, what to eat, how to eat instead of just ‘not to eat’ as most people err on. And that clearly separates one-day flashes from sustainable wonders. Prioritizing, planning and introspection-based consumption is what makes a fit, healthy, lean and agile organization stand out among a bevy of knee-jerk enterprises.

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Something that probably underlines the very concept of Value Engineering , out of SAP’s box and defined as essentially an exercise for an ERP project performed through a layered approach to create a business case for IT investment.

We get a chance to chat with Atul Bhandari, vice president, Value Engineering and Industries, SAP Indian Subcontinent, to learn more about how this concept is very relevant in the current times, when we have just overcome the crisis situation of recession. We also get to know his views on Business and IT paradox, the risk of over-engineering and why value-engineering is more than just an autopsy.

Value Engineering? What is it all about?

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It’s all about diagnosing the source of value creation for business enabled by IT. An IT project is never just an IT project. ERPs etc are big enterprise-transformation projects where IT is one part and requires significant time and business investments.

It’s about picking out pain areas and how can IT help there. We do this in collaboration with customers. It’s about how to prioritize and how to invest in projects that bring value to business, where improvement and optimization is important.

So it makes IT’s case better?

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Value engineering helps enterprises to be smart investors. It has for its purpose the efficient identification of unnecessary cost, i.e., cost which provides neither quality nor use nor life nor appearance nor customer features.

It results in the orderly utilization of low cost alternative materials, low cost alternative processes including new processes, and abilities of specialized suppliers to procure items at lower costs.

Does and how does it address (scope/time/cost) creeps in IT projects?

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Failure of the most IT projects to deliver “promise-land” within budget makes most companies skeptical of large scale IT endeavors such as ERP. The ramifications of budget overruns are especially severe for small and medium scale enterprises (SMEs) as they have limited resources. SME’s can significantly reduce the risk of cost overruns by going through value engineering exercise and defining value realization roadmap.

Would it be applicable only to existing customers or can it make sense for virgin segments too?

If you are a company who is fairly new to this, we would like you to understand a good roadmap. But also for a fairly mature organization on IT, we look at IT as a strategic enabler. Real time visibility, management by exception, corporate-wise IT roadmaps, and best-of-the-world benchmarks, are all part of this exercise.

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Does this exercise have a post-mortem flavor or is it futuristic-from-the-scratch? How can one leverage an autopsy?

It has both diagnostic and future orientations. Like where do you stand today, plus where do you want to go and prioritizing accordingly. We do it as a diagnostic assessment. We meet with senior executives to see where the company is headed. We interact with all C-level people, and then follow with workshops at functional levels to get a day-to-day view and then move to benchmarking. The three-to-five year IT roadmaps that customers get are based on their priorities, and by using maximum pockets of value.

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Would you agree that there is indeed a paradox between business and IT and it’s quite challenging to address?

This reminds of a finding in the Mckinsey Quarterly in June 2005. It shows how 20 per cent companies represent a quadrant that have been able to get performance and productivity but by combining good management practices and good IT deployment. Additional spending on IT can raise productivity, but only in well-managed companies. 

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What’s your interpretation?

According to my opinion, the key to any transformation project is the perfect alignment of business and IT. In most organizations these project are looked as being owned by IT. But you need your best people in business to define processes and execute them. Top management has to be involved in the project and unless you have your best business people in the team, it can’t work wonders. IT and business work together during implementation. But after the go-live, they go separate ways, which is not good.

The concept sounds good. And recession would have been a perfect take-off time. But is there a risk of over-engineering with the engineering connotation? And how do you intend to sustain its attractiveness to enterprises, after recession?

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We are helping customers to establish value management as an internal function. It’s good for this economic environment but will be a good language for the future too. It is coherent to IT strategy, to visibility, roadmap direction etc. It’s definitely not just a point-in-time concept. It will be as necessary in hyper-growth phase too.

Also, the typical connotation of value-engineering is product and cost. We are trying to optimize business process and re-enable, IT-enable them but at the same time not in a typical engineering or R&D flavor. Corporate strategy is where we start off.

How has it gone for SAP so far?

In collaboration with customers, the Value Engineering team has delivered over 2,500 business cases, IT strategic roadmaps and benchmark reports for all industries and customer sizes. The SAP Value Academy is intended to provide IT and Business leaders and senior team members with an introduction to the strategy, methodology and tools to support the adoption of value management. 

We have globally conducted more than 100 value academies and certified more than 1,000 companies of the value management approach and tools. Within Indian sub-continent, we have conducted more than 10 value academies, which have been attended by more than 50 companies.