Friday, September 25, 2009

Indian IT: From Artisans to Global Industry


Indian Software: From Artisans to Global Industry

Shivanand Kanavi
Vice President (Special Projects), Tata Consultancy Services, 4th and 5th Floor, P.T.I. Building, No. 4, Sansad Marg, New Delhi - 110 001, India. Email:

It is a great pleasure to contribute to this Festschrift in honour of Dr. Keki H. Gharda. He is a pioneer who innovated in process industries. India’s current global position in agrochemicals and generic drugs owes a lot to technocrats like him who used innovative process routes to produce high quality specialty chemicals. I am fascinated by him since I first met him in 1994 while researching for a cover story in Business India titled “India’s Technology Leaders” [1].

Today, India has achieved an undisputable leading position in the global software services. Most outsiders think that this has been primarily achieved due to labour arbitrage or availabilityof low cost computer programmers in India as compared to the US and Europe. However, that is only one of the contributing factors. The primary factor has not been noticed yet by many business historians. In fact, software development used to be an essentially artisan like activity about four decades ago. This paper argues that innovative industrialisation of such an individualistic activity to large-scale industrial activity by Indian firms has led to the current pole position of India in the field. To illustrate this thesis, the author will use the example and experience of Tata Consultancy Services (TCS) because he is familiar with it and also because being the oldest Indian software company it has also been an innovative pioneer.

Snake Charmers and Software

In 1968, when TCS came into being, there was no Microsoft, Apple, SAP, Oracle, Sun Microsystems, Dell and many others. Hewlett Packard (HP) was known for its oscilloscopes, signal generators, handheld calculators and not computers. EDS and Cap Gemini had just come into being as data processing companies.

Clearly, it was an audacious startup from India.

TCS had a couple of IBM machines of 1401 vintage and an ICL machine as well. They were providing bureau services, better known today as business process outsourcing (BPO), services for Indian telephone companies, power utilities, universities and so on. At the same time TCS also started scouting around for any work it could get abroad.

In those days India had gone through a severe financial crisis, the Rupee had been devalued by 57.5%. The US Dollars required for importing large and expensive mainframe computers were definitely in short supply. Besides, there was also a perception amongst the public and the politicians that computers would take away jobs and, hence, were best avoided. However, TCS leadership was convinced that computers could play a major role in not only making Indian businesses and banks more efficient but also in helping much of Indian society leap frog from the 19th to the 21st century. Surely, many people thought that the dream was incredible, but they kept chipping at the walls relentlessly. How TCS has been able to contribute to nation building in India through these efforts is a story to be told another time.

Collaborate and Flourish

In the mid-1970s, TCS decided that it would be good to get into an alliance with a computer maker. The one they chose was Burroughs Corp. Though Burroughs was not the biggest name in computer industry their technology was impressive. The deal was that TCS would sell Burroughs computers in India and support them. This helped TCS engineers gain first hand expertise in operating their systems and troubleshooting. TCS also bought a system for their computer centre to provide Burroughs based services to their clients. Burroughs soon realised that they had hit a gold mine of engineering talent and started outsourcing software work to TCS. Burroughs’ clients in Europe, US etc., who were switching their systems from some other manufacturer to Burroughs, would need their already running software to run on the new Burroughs machines. In those days each machine had its own dialect of COBOL and, hence, unless one carefully mapped the old programs onto the new Burroughs-understandable instructions, they would not work. TCS executed some interesting and challenging migration assignments in this mold.

TCS set up a strong Systems Group, which took the lead in assimilating technology as well as developing new ones. This Group came up with a tool called Data Dictionary, which helped automate software migration considerably. Burroughs was impressed. It tried its best to convince the Tata Group for a buyout, but the latter decided against selling out TCS and instead agreed to form a new joint venture, Tata Burroughs Limited. Interestingly, IBM, which was a competitor of Burroughs, was also impressed with TCS tools. TCS continued to execute migration and development work for Burroughs and at the same time look for other clients. Later, TCS decided to invest in IBM’s technology and started the most sophisticated IBM based computing centre in Asia of that time at Chennai. It was risky and expensive, moreover TCS had to convince the Department of Commerce, US Administration in Washington, D.C. that it was not going to use IBM computers to develop nuclear bombs, but in fact help US businesses become more efficient!

Henry Ford and Toyota

An important achievement of TCS has been the successful industrialisation and globalisation of software services. It has many similarities and a few dissimilarities with what Henry Ford and Toyota did to manufacturing. This has enabled TCS to execute large projects successfully. Year after year TCS has been delivering software solutions in targeted time and budget with a greatamount of certainty.

TCS did not have a model to follow, it had to invent one. Forty years ago computer programming was practiced by a few exceptional individuals. Each programmer had her/his own way of doing things, many of them brilliant but hardly replicable. It was difficult to debug or improve a program written by someone else. Naturally, it was almost never a product of teamwork. Obviously, it could not be scaled up. The situation was very similar to that faced by the auto industry when Henry Ford and his peers were developing quadricycles in their workshops in the 1890s. These workshops could not scale up and serve a mass market. That is why Ford’s assembly line, for Model-T, was pioneering and revolutionary in 1913. It was a product of meticulous planning and hard work in the background and it changed manufacturing forever [2].

Today TCS has achieved the depth and breadth to follow the same processes and achieve the same high quality and deliver them from any of our centres, be they in Hangzhou, Budapest, Sao Paolo, New Jersey, Toronto, Tokyo, Melbourne or in different parts of India. In Clayton Christensen’s terminology it would no doubt qualify as a “disruptive business model” [3].

Innovation Engine

Like any grand narrative it would be presumptuous to say that four decades ago TCS saw clearly its goal of industrialising software services, then charted the strategy, the path and, eventually, planned and executed to reach where it stands today. Like all big things, TCS started small with powerful ideas like Data Dictionary, a migration tool. TCS was involved in the software engineering standards and quality movement with IEEE from the very beginning. It also had to set up appropriate training of recruits, when there were hardly any colleges teaching computer science in India. TCS had to develop and set up processes to test and debug software.

In the late 1980s, TCS executed a large challenging project to set up the clearing and settlement system for banks in Switzerland. It was won against competition from established companies, purely on the basis of TCS’s innovative design. The project helped TCS “push the envelope” in all directions and also helped hone its software design and architecture skills as well as develop a core group of software architects. TCS also developed the systems required to integrate its client site work with the work done by teams of developers in India, known as ‘off-shoring’ and so on.

In 1981, TCS set up its R&D centre, Tata Research Design and Development Centre (TRDDC)in Pune [4]. A strong group in software engineering took shape at TRDDC in the mid-1980s. The group started articulating and evangelising concepts of software engineering, some of which were already in practice within TCS. This group was able to develop a highly successful suite of Computer Assisted Software Engineering (CASE) tools and carried forward the work initiated by TCS Systems Group in a methodical way. At another level, TCS also internally evangelised theSystem Engineering approach to software problems.

The agenda now involved identifying reusable components, knowledge repositories, creating a software tool foundry, developing highly sophisticated reverse engineering tools for software maintenance. The jigsaw pieces of industrialisation of software development started falling intoplace. One of the byproducts of this industrialising process was the development of the highly acclaimed MasterCraft™ – a suite for automatic code generation once the business logic is fed into it [4].

Setting Standards

On the front of standards TCS intensified its earlier work with IEEE and brought in SEI’s CMM philosophy into the organisation quickly. TCS is the world’s first organisation to achieve an enterprise-wide Maturity Level 5 on CMMI® and P-CMM® based on the most rigorous assessment methodology.

TCS has now combined its own vast store of home-grown processes with the best aspects of global standards, such as the SCMM, the PCMM, Six Sigma, ISO 9001 and the Tata Business Excellence Model, to develop its own proprietary quality model, the Integrated Quality Management System (iQMS™). TCS hopes that this archetype will soon become an industry standard.

The iQMS™ is central to project management at TCS; it comprises a major chunk of its DNA. This system provides guidelines for the conduct of every project and the means for monitoring it. Together with the various software development methodologies laid out by TCS’s software engineering process groups, iQMS™ lays out a comprehensive roadmap for each project. TCS has ensured that all its development centres, be they in China, Hungary, Chile, Brazil, Uruguay,US, Canada, UK, Singapore, India, Australia, Japan etc., follow the same processes and achievethe same high quality.

Learning from Manufacturing

TCS could not have set up the software equivalent of Henry Ford’s assembly line, if it did not build an efficient supply chain. In the 1960s and 1970s TCS started working in close collaboration with the newly set up Indian Institute of Technology (IIT) at Kanpur, Bombay and Madras and later expanded the company’s academic interaction to over 200 engineering colleges in India and several universities abroad. Today, TCS’s Academic Interaction Programme covers a whole spectrum of activities from faculty development; curriculum development in some colleges; scholarship and financial aid to deserving graduate programmes as well as sponsored research and collaborative development of Intellectual Property.

In India, this programme has contributed to raising the standards of computer science and software engineering education. As a result, TCS could recruit over 100,000 high quality engineers in the last four years and move them through its strong internal training programme that covers everything from software engineering to soft skills. The spade work and internal systems have helped to absorb this large human resource into the organisation quickly and deploy them into large projects.

To make TCS operations more efficient it setup a system meant for a global services company,very similar in concept to ERP in manufacturing. This system covers ‘everything’ – project billing, employee services, leave, pay roll and other HR services, internal communication, branding, online appraisal processes, knowledge management etc. Youngsters in TCS (incidentally, the average age in TCS is 26 yrs) thought that such an ultimate tool should be named Ultimatix, a la RenĂ© Goscinny and Albert Uderzo.

Truly Global Networked Delivery

In global manufacturing, it is well recognised that Toyota has taken the assembly line revolution of Henry Ford to the next level by introducing distributed manufacturing, Just in Time manufacturing, Single Minute Exchange of Dies (SMED) etc., which collectively have come to be known as the Toyota Model [5].

Similarly, TCS had to take its software factory approach to the next level. As its client list and diversity grew across continents, the company could not remain an India-based software developer serving global clients. About a decade ago TCS realised that it needed to further globalise its software development system, which became possible due to the global telecom revolution. The solutions and products offered by TCS are in bits and bytes and not in steel or aluminum. Hence, in some ways, TCS could venture into uncharted territory where a brick and mortar manufacturer like Toyota could not physically go.

Initially, TCS created the hub-and-spoke system in global delivery where India was the huband other centres were feeders. Today, however, TCS has gone further ahead to an entirely news ystem where any of its major global development centres could act as a hub or an anchor for a global collaborative effort. This leads to reduction of time zone issues for clients; facilitates services in a variety of languages and cultures; allows real time collaboration and parallel development with teams sitting in distributed development centres and so on. It also brings out optimum utilisation of in-house expert resources. TCS clients also enjoy de-risking greatly from putting all the eggs into the basket of one centre. Incidentally, TCS already has over 10,000 non-Indianemployees.

The TCS Global Network Delivery Model™ is the business equivalent of what Paul Baran proposed in his work entitled Introduction to Distributed Communications Networks for Rand Corporation, in 1964. It later became the conceptual framework for packet switched networks with no single centre, and no single path, like Arpanet and, ultimately, the Internet [6].

The pioneering conceptual and systemic work done by TCS percolated to other Indian IT companies in the last 10-15 yrs and lo and behold, India now has a vibrant, highly competitive, and high quality software services industry! The author has been asked many times about an order of magnitude difference in size between software companies in India and China. Even IBM, Accenture and HP have very large development centres in India with tens of thousands of Indian engineers. Are the engineering human resources in China any less in quantity than in India? The answer, as we all know, is no. However, Chinese software companies lack scale and the largest among them have less than 5,000 engineers. The reason is simple: they have yet to master the industrialisation of software development.

Many observers have pointed out the role played by English education, mathematical and analytical abilities among Indian students, propensity of Indian youth towards science and engineering as careers, labour arbitrage etc., as the determining factors in the rise of Indian IT industry. No doubt all these factors have played a role.

However, all such deterministic analysis ‘forgets’ the human factor of leadership. It is similar to saying that if a country has steel, gasoline and machinists then they will have a vibrant auto industry! Without the genius and hard work of Henry Ford and Toyota, the global auto industry could not have reached the scale and sophistication that it has today. Similarly, without the development and adoption of software engineering methodology in TCS and other Indian companies, global software services would not be a vibrant large scale industry that it is today.

1. Business India, July 4-17 (1994),
2. Ford, H. and Crowther, S., My Life and Work, Garden City Publishing Company, Inc., New York, USA (1922),
3. Christensen, C.M., The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business School Press, (1997).
4. Kanavi, S. (Ed.), Research by Design: Innovation and TCS, Rupa & Co. (2007).
5. Liker, J.K., The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, McGraw-Hill Professional (2004).

Tuesday, September 22, 2009

State Bank of India: Story of its tranformation

Quaternion, September 15, 2005

A Colossus transforms

State Bank of India is a great story of transformation in the making. The implementation of TCS’s centralized banking solution in nearly 14,000 branches of the group will play a major role in it, reports Shivanand Kanavi.

If you ask Arun Kumar Purwar, Chairman, State Bank Group, about Operation Vijay, ("Operation Victory"), you will not get much in return other than a question shot back, "Where did you hear about it? That is still under wraps." But when strategy is being discussed with branch managers, who number in five figures, it would be difficult to keep it a secret. Apparently, it is a plan to transform the banking colossus in a tangible, quantifiable way. "It would be tall talk now. When we are close to achieving the targets, we will talk about it," says he.

Simply put, while the bank's position in Indian banking is unassailable, it wants to be number one in other financial services as well, be it credit cards, mutual funds or investment banking. "We have the fourth largest life insurance company of our country, the third largest merchant bank, the seventh largest mutual fund, the fourth largest credit card company, and the third largest factoring company. We have strategic interests in the credit information business and in an asset reconstruction company. We also run, within the group, 40-plus regional rural banks. Thus, State Bank's presence in the economy - in the financial sector - is very strong," adds Purwar.

Operation Vijay wants to take it to the next level. When stock market analysts call State Bank of India (National Stock Exchange: SBIN) as a 'play' on the Indian economy, in their own frenetic lingo, they are reflecting what SBI stands for. The bank, with its massive network of nearly 14,000 branches, is rivaled by none for its reach,
except a couple of Chinese banks. However the numbers cited by the Chinese are a little suspect because they list points of sales, including extension counters, as branches.

SBI controls an enviable 25% of the entire banking business in the country and services a whopping 100 million accounts. The bank has a wide network of 5,400 automatic teller machines (ATMs) in nearly 1,800 centers, and another 1,000 are being added this year. It includes an ATM at the highest altitude, at over 12,000 ft above sea level, in Leh, Ladakh, south of Tibet. At the other extreme SBI has an ATM on a river boat in Kerala. "Mind you, it is not a cash dispensing machine, but a fully networked ATM," assures Purwar. In January 2004, the total number of transactions from the ATMs was 6 million, and the total money drawn, between $138 million and $149.5 million (Rs 6 billion and Rs 6.5 billion). ATM usage is growing at 12% to 15% per month, according to Purwar. In fact, by Jan 2005, the total number of transactions on ATMs increased to 270 million, and money drawn amounted to over $ 644 million (Rs28 billion).

The largest competing network has less than 2,000 ATMs. Thus market analysts are justified in calling it a proxy for the Indian economy. That is, if the bank is doing well, then the Indian economy is doing well and vice-versa. (See box: The Bank)

The Bank
It is said that three organizations touch vast majority of the people of India: India Post, the Indian Railways and the State Bank of India.
The State Bank of India (established in 1806) is one of the oldest banks in the world and predates many well known names in the banking world: Citibank (established in 1812), Chemical Bank (established in 1823), ANZ (established in 1830), Standard Chartered (established in 1853), HSBC (established in 1865}, and the Bank of America (established in 1874).
Today, the State Bank of India, along with its nine associate banks form the State Bank Group, which does over 25% of all banking business in India through a network of 13,767 branches in India and 54 overseas, and over 5,400 ATMs in India's metros, and urban and rural areas. The group serves over 100 million accounts and, in the last four years, deposits have grown with a compound annual growth rate (CAGR) of 12% from $72.01 billion (Rs3,514 billion) in 2001 to $115.72 billion (Rs5,061 billion) in 2005. It was the only Indian bank to be listed among the top 100 banks of the world by The Banker in July 2005.
The shares of the banks are listed in the Indian stock exchanges and its global depository receipts are listed in Europe. SBI has a market capitalization of about $10 billion (Rs.441 Billion) on the Indian bourses (as of September 7, 2008). The Government of Indian owns 59.73% of the shares, through the country’s central bank, the Reserve Bank of India. It is the only bank in Asia, other than the Bank of Japan, to have a rating, from international agencies, above the sovereign.
The State Bank is a financial powerhouse with its arms in Insurance, mutual funds, investment banking, etc, and owns:
• SBI Capital Markets Ltd.
• SBI Mutual Fund (a trust)
• SBI Factors and Commercial Services Ltd.
• SBI Cards and Payment Services Pvt. Ltd.
• SBI Life Insurance Co Ltd – Banc assurance (Life Insurance)
• SBI Funds Management Pvt. Ltd.

The bank came under pressure in the late 1990s, with the opening up of the economy and competition from private banks. These new banks have no legacy issues, are lean and mean and could build themselves on hitech platforms and thus provide highly competitive services to both corporate and individual customers. But they lack reach and have largely confined themselves to the metros and large cities.

A Bicentennial
This year, SBI began celebrating it 200 years of existence. It traces its origin to the Bank of Calcutta, started in 1806 with the active participation of the British East India Company as a joint stock company. From it founding until 1936, the Bank acted as a central bank and currency issuing authority. In 1809, the bank received it charter and was re-designed as the Bank of Bengal. The Bank of Bombay (founded on April 18, 1840) and the Bank of Madras (founded on July 1, 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India. They came into existence as a result of the compulsions of imperial finance and the felt needs of local European commerce. They were amalgamated as the Imperial Bank of India on January 27, 1921.
When India attained freedom in 1947, the Imperial Bank had deposit of $ 63.273 million (Rs2.751 Billion), a network of 172 branches, and more than 200 sub-offices all over the country.

The commercial banks of the country, including the Imperial Bank of India had, till then, confined their operations to the urban sector and were not equipped to respond to the emergent needs of the rural areas, in order to serve the economy, in general, and the rural sector, in particular, the State Bank of India was created by taking over the Imperial Bank of India and integrating with it the former state-owned or state-associated banks. An Act was passed in Parliament in May 1955, and the State Bank of India was constituted on July1, 1955.
The Bank’s museum in Kolkata is a treasure house for economic historians, with detailed balance sheets and minutes of board meeting dating back two centuries.

"It was clear to us that either we transformed, or perished," says Purwar. But transforming is easier said than done. After all, it had 300,000 employees, systems that were not standardized, and some practices that are peculiarly Indian. The advantages of introducing advanced IT solutions with centralized databases, good networks, 'anytime, anywhere' banking through ATMs and so on, were clear to the leadership. "New technology would lower our transaction costs by 15%-25%," says Purwar. The bank's service level would rise with core banking. Its ability to monitor funds would dramatically improve with management information systems and daily reports. The available funds could thereby be deployed better in the money market, and the NPAs (short for non-performing assets, or bad accounts) could also be tracked in time, and action taken. New financial product-could be developed with what-if analyses, test marketing and deployment in record time. Technology would also enable the bank to enter new businesses and fee based services as the economy entered a low interest rate regime, with decreasing spreads for banks.

When old habits resist change, it takes leadership to drive change. The story is far from over but the signs of change are visible and indicate the potential this institution has. Today, over 4,800 branches are networked in a dedicated network called SBI Connect. Besides data communication, the network has vastly reduced the bank's telecom bills, as all these branches are using Voice Over IP phones for inter-branch communication. Over 5,400 fully networked ATMs in nearly 1,800 centers are bringing modern banking to even small towns and rural areas. Over 5100 branches of the SBI Group have gone live on core banking (a centralized database system). "In Belapur, we have our core banking systems, where over 800 officers are working hard to meet deadlines for the rollout," says Purwar. "A village may not have regular electricity and proper telecommunications, but our branch there will be computerized and connected to core banking," adds he.

And all this has been achieved with no downsizing! The number of branches on core banking in October 2004 was hardly 250. If the number today stands at 4,300, it works out to roughly 400 branches going live per month!

That is a truly amazing number by any standards. No wonder The Banker magazine, in London, honored SBI with its Technology Awards 2005, for the core banking project, and as the Best Outsourcing Project of the Year.

The project was outsourced to TCS as the prime system integrator. TCS developed a customized solution for SBI's needs. The implemented solution includes B@NCS from Financial Network Solutions (FNS), and Eximbills from China Systems interfacing with each other and the existing legacy system.

The building in Belapur, which houses the core banking servers in the data center and training facilities for the bank's staff, also has 300 TCS engineers working day and night.

That is where Krishnan Ramanujam, of TCS, who is the Director of the Core Banking project, sits. The blackboard outside his office tells it all. The numbers scrawled on it seem to change every time you visit him. If you did not know better, you would think he was running an illegal numbers racket out of his office. On closer inspection, however, they look more like the production figures of a shopfloor foreman. In fact, the latter would not be too far from the truth. He runs a virtual factory that is customizing the solution, testing code, fixing bugs, and training. He sits in meetings with SBI officers to set standard operating procedures and suggest any changes, if necessary. After a year and a half of hard toil, he is smiling today. "I have been in several large projects in 14 years at TCS but this has been the most challenging one," he says. What started as a trickle is now a roaring river, with dozens of branches going live every day.

Core banking gives tremendous power to the bank’s leadership to be nimble in the market but it also imposes a lot rigor on the employees. For example, how do you open an account? What information do you need to input? And who double checks each step and signs off? All this seems cumbersome initially, but the people who have used the system for three months and longer are getting the hang of it and enjoying the benefits.

“We are only training the trainers but State Bank’s HR is doing a wonderful job of evangelizing and letting the knowledge percolate through the bank, despite difficult condition,” says Ramanujam. When you are short staffed, it puts tremendous pressure on others if you have to send 25% of the employees for training by turns. But the staff has risen to occasion, and the benefits have ripple effect.

Despite an environment that was not friendly to computerization in the banking sector for three decades (1960s-80s), SBI has had a tradition of experimenting with new technology. According to Uday Shankar Roy, currently Chief General Manager of SBI, Kolkata who, till recently, headed the core banking project, SBI was one of the first banks globally to use the IBM 1401 mainframe for interoffice transactions an reconciliation, back in the early 1960s. "In the '70s, as load increased, we brought in brand new Burroughs machine, which was cutting edge at the time. Branch computerization started in the ‘80s and '90s, and a clear cut IT strategy was put in place in the late '90s. It started with local area network and branch automation, along with a massive interbranch networking project to connect over 4,000 branches. This laid the ground for taking up core banking two year ago," adds Roy.

Though the B@NCS solution chosen has been implemented elsewhere, the State Bank project involved a scale that was an order of magnitude larger and which demanded a high performance solution. "After all, the largest core banking project implemented in the world so far involves three different systems in different countries and a total of 2,400 branches. Here, it was 9,000 branches of SBI and 5,000 branches of its associate banks, all on one system. Scalability was a prime issue. It was only because we demonstrated it that TCS won, despite tough competition," says Jagdish Bhandari, head of the financial services practice at TCS.

Did they have to change the code significantly to customize it for State Bank's needs? “Of course. It is almost a new package now. The original package had about 3 million lines of code. Now it has 6 million!" says Ramanujam.

Why was such drastic change needed? What were the challenges? The original product, in its basic form, was a simple online transaction processing system, which was scalable. But, in this case, the customer made demands that created conflicts in the system. Basically, scalability depends on the product doing only one or two things in an efficient manner. Secondly, it has to adhere to some basic principles of databases. Scalability and maintainability require that all the information required should be stored at only one place. However if the system is expected to generate reports that involve data from different tables, this pulls down performance of the system. High performance requires normalized databases and puritan view of database design. But that would not meet branch requirements in SBI because such a system would not generate reports in the required format.

An online transaction processing system typically does not have a database designed to suit report generation. However, the branches felt that, unless reports were easily generated, their daily operations would not be complete. Yet even if the system did generate reports, it could still not handle 100 million accounts!

“We had a monumentally difficult time doing the correct tradeoffs,” says Ramanujam.

N chandrasekharan, EVP at TCS and Head, Global Operations adds, “The key to our success were the right design for the database and the program. It was a combination of and in depth knowledge of technology and banking business. We have demonstrated our competence to build large scale high performance systems.”

But at what cost? “Oh, we are building probably the lowest cost system in the world. In China the cost per branch for this technology is $25,000. In other developed countries, it has been $50,000-plus. But, in India, we spent only $11,000-$12,000 per branch. This is a very big advantage to us,” says Purwar.

How was that achieved? It is said that TCS reduced SBI's costs by not going for a mainframe based system. But Ramanujam disagrees. "Cost is not a function of just the hardware or infrastructure that you put in. The total cost involves hardware cost, software cost, maintenance and modification cost, and so on," says he.

"Just like a car. If it costs $11,500 but 'breaks down every 10 days, then we end up spending a lot more. We might as well buy a better car that costs more up front but needs less maintenance. Similarly, if software is poorly designed and cannot make the modifications required in a dynamic business environment, then it will prove expensive. For example, the Finance Minister may declare a new Cash Withdrawal Tax. But if the code cannot quickly absorb it, then it is poorly designed. Moreover, new product introductions should be very quick. In fact, recently, State Bank came up with four new product ideas in record time. One of them was rated as the quickest product that the bank had brought into the market ever.

Subramaniam Ramadorai, CEO & Managing Director, TS says, “The challenges in the implementation of a solution in a large banding group are manifold. It is due to great teamwork and hard work form the SBI and TCS teams that we have, to say, reached a stage of aggressive solution rollout across branches. SBI is truly a ‘bank that the nation banks on.’ We are privileged that it is banking on us for this unique project, which will tremendously impact the operations of the entire SBI group.”

All who doubted the capacity of this giant to change are now watching it transform itself rapidly. When complete, it would make for a great case study in change management for global managers. Clearly, in five years, India will have a new financial powerhouse.

Our aim is to provide ‘Class Banking for the Masses’, proclaims Purwar. That would indeed revolutionize banking in India as never before.
We say Amen.

Monday, September 21, 2009

Dr Keki Gharda: A profile

Eccentric Entrepreneur, a Genius—Dr Keki Gharda

We reproduce Dr Gharda's profile on the occasion of his 80th birthday, which is being celebrated by friends, colleagues and well wishers in the Indian chemical industry on 26th September, 2009

Excerpted from, “India's Technology Leaders” by Shivanand Kanavi, Business India, July 4-17, 1994

Perhaps, the incident that, best sums up Dr Keki Gharda, the leader of Gharda Chemicals, is a story that has become part of Indian chemical industry folklore. In the early 1980s, Dr Gharda was invited to an Monopolies and Restricted Trade Practices Commission’s hearing, which revolved around a multinational's application for a licence to produce isoproturon. Some Indian companies objected to the application for fear that they would not be able to compete. But Dr Gharda, alone, was of the opinion that there was nothing superior about the multinational's technology. To prove his point, he declared that his company would introduce a new, more efficient process within 18 months and compete with the multinational.

Most of the people who comprised the stunned audience that day would not have imagined that Gharda would be able to pull it off. But he did. True to his words, Gharda realised the danger of using the highly toxic isocyanate route in making pesticides, and came out with a process to produce isoproturon, using urea. Today, he is the second largest producer of isoproturon in the world with large exports to Europe, US and the Far East. The superiority of Gharda's process, which is today internationally known as the ‘Indian process’, made even Rhone Poulenc, the European giant which had a monopoly in isoproturon, sweat.

Since then, Gharda Chemicals has become the leading Indian company in technical grade agrochemicals. Cypermethrin - a popular insecticide; cypermethric acid chloride - an intermediate for cypermethrin; anilophos - a herbicide used, for rice, originally discovered by Hoechst though it now uses Gharda's process; chlorpyrifos- a new generation insecticide; and napropamide -- another herbicide, have all made Gharda a power to reckon with in the global agrochemical scene. In the last three years, a number of international agrochemical magazines have written about Gharda and even put him on their cover.

Gharda Chemcals started as a three-men-in- a-garage operation in the late 1960s, in Santacruz, a suburb of Bombay. Dr. Keki Gharda who had returned from the US after a PhD in Chemical Engineering from the University of Michigan, Ann Arbor, joined the faculty of University Department of Chemical Technology (UDCT), Bombay. However, he could not get a permanent teaching position and he turned instead to entrepreurship.

His first success, in the field of dyestuffs, came fast. He synthesized pthalogen blue, a dye that was very popular in the textile industry but had to be imported from Germany. Later azo-dyes provided the bread and butter. However, with the tremendous proliferation of process technology in the small-scale sector, dyestuff manufacturing was no longer attractive, so Gharda changed course midstream into agro-chemicals.

This time it was not as easy. The early 1980s, the years of transition, were difficult. As a plant engineer in Gharda’s Lote factory remarked, “In those days we were literally living hand to mouth. But unlike other industrialists, Dr. Gharda did not retrench any of the R&D staff. The later years vindicated his visionary faith in in-house R&D”.

That vision has helped him to move with the times. When quality and purity were absolutely essential to gain entry into export markets of Europe, Gharda welcomed the challenge. Today, his analytical lab is not only top class but has made a number of original contributions: half a dozen of them (in Fourier Transform Infra Red spectroscopy and in High Pressure Liquid Chromatography) have become part of international standards.

Today, Gharda is going through another round of diversification into bulk drugs and engineering plastics. But why get into bulk drugs when there are so many players already? “While the Indian' bulk drug industry is strong in organic synthesis, they are not so strong in chemical engineering,” answers Gharda. “With our strength in both, we will be more efficient.” In their typical style, Gharda Chemicals are building plants for products that are yet to come out of their R&D.

But this confidence has got him his fair share of detractors. “He is an eccentric,” says an indignant major player in bulk drug manufacture. “He wants to spoil the bulk drug market by driving down the prices.” His anger is partly fuelled by the not-so-polite letter he received from Dr. Gharda, which categorically stated that since Gharda Chemicals is going to enter the bulk drugs market in fluroquinolones at a lower price, the existing competitors might as well quit!

Therein lies the essence of the man. Variously described in the industry as a missionary, a Gandhian, an eccentric, and a spoilsport, he has nevertheless always approached the market in his own unique manner. His strategy is to come out with new products at prices that are at least 20-30 per cent lower than the prevailing ones and hold them at that level for years. Aside from driving the competition out of the market, it even makes giant multinationals wary of him, perhaps one of the reasons why some of them are queuing up to tie up with him.

And he lives by his own rules. For examples, though he has received many awards for novel processes, he has not patented any. He believes that the superiority of technology should be decided in the marketplace rather than in court rooms. He also shies away from breaking up the manufacturing process into a number of stages and carrying these out in different plants to guard his trade secrets, as most of his competitors do. “This will lead to the right hand not knowing what the left is doing. And you would lose the team spirit where you troubleshoot together and learn from each other” he says. “The name of the game is to come up with newer and better processes and products through R&D and always stay a step ahead of the competition.”

Friday, September 4, 2009

Rajiv Motwani Interview Part-2

Rajeev Motwani Unplugged-II
(This interview was conducted by Shivanand Kanavi at Stanford University, Palo Alto, CA in July 2002)
For the first part of the interview

Rajeev Motwani: The last one year I am spending a lot of time at Google, at least an hour or two every day. In the summer I am spending half my time at Google working on research projects and the next generation. These guys are working on something that I could contribute to and I am happy about it.

Shivanand Kanavi: What is the next generation? People are talking about contextual searches, semantics and all that. Can it be done at all, it all sounds like a wish list.
RM: Science progresses by making up wish lists. They are always unattainable but on a scale of one to hundred if one takes three small steps it is a big thing. How get appearance of semantics and context, without solving the big problems of artificial intelligence.

SK: Machine translation itself is big issue.
RM: Yes but a lot that one can do before you get there which is in the direction of context and semantics. Google has 50 plus PhDs among about 300 people. A lot of them good Stanford PhDs a lot of them do machine learning, artificial intelligence, systems, algorithms… everything. I am enjoying it.

SK: Is there any competition for Google?
RM: There is always competition. Once when I was interviewed by TIME magazine, when Google was just being set up as a company and the PR people at the Google said it would be good if you talk to the journalists. I said Ok but I did not know that you have to talk to them differently. You have to be careful with them. In the end while they were packing up they said by the way is there any competition to Google? I said ‘the biggest competition to Google is Google itself. There is always arrogance of youth. One forgets that just as they were 21 year old at one time when 30-40 search engines existed and they started with a shoe string budget. (I know it because I was one of the contributors.) With less than $50,000 dollars they started this, which has become so big. They did not know that they have no right to do what they were doing and succeed.’ They put all of that in the article in TIME.

SK: That is anyway good advice.
RM: The problem with being young, I was there once, is that you always believe that you can do whatever that you set out to do. Usually you are wrong but some people turn out to be right and go on to change the world. Someone will figure out a better way of doing things than us. That is why Google is hiring all these smart PhDs. They are doing a good job so far. But I will never underestimate the PhDs that are coming out. But you need to be very smart to do better because it is a non trivial thing to do better than Google.

SK: If the next step is understanding the question and then searching for the answer then the machine should be able to first understand the question. When we don’t have that how are we going to go ahead. Then there are people who are talking about an Indian language Google!
RM: Even what Google is doing now, which is very shallow semantics, in Indian languages is a very big thing. Without trying to build it from scratch can you do in other languages what you have done in English, that itself is a big challenge and there enough people in Google working on that. It is hard for various other reasons also. Google claims it has 2 billion pages. I don’t know how many they have, but let us say they have 20 billion pages. Each page has 1000 words and if you are getting a billion queries a day, then you have to search through a trillion words a billion times a day. Can you imagine the scale of that! You might have the best technology that understands the semantics and context and all that but how do you build a machine that does it billion times trillion every day! I have seen other people who have shown to me that they can come up with better answers than Google if they are given 100 web pages. If they are given 10,000 pages they take an hour and if they get a billion then they are never going to do it. So the greatness of Google is not just technology, understanding the structure etc but doing it in 0.2 sec regardless of the query.

SK: Does the answer lie in quantum search algorithms?
RM: That is still science fiction. Even if you were able to make them work, making tens of thousands of machines work with each other is a different ball game. There are pure system problems and not AI or search algorithms. Storing, indexing, searching and then when thousands of queries come each second you have to make them all happy by giving the answer in 0.2 seconds. If you take 0.5 seconds then they are not happy. They are not paying for it but they are unhappy then they may not come back and what keeps Google’s business model going is that millions keep coming back.

SK: It is a great project no doubt. People are talking about building Universal Digital Library. But if you have scanned and built a large digital library finally you need to search out the relevant information. It is back to Library Science! The digital library is supposed to be one great spin off of the Internet technology.
RM: Yes. I used to go to Stanford library on the average twice a day. I have not set my foot in the library since ’96. Everything I do sitting on my machine here. That is the difference it has done to my life. Everything is on the web, unless it is some paper written 50 years ago and is only in hard copy. If that is the case then I should go and do something else anyway.

SK: Besides Google what is provoking you intellectually?
RM: I get bored too soon in everything I do in life. The new thing in my life is the start-up work partly motivated by what I saw happening in Google. I invest in companies, I mentor companies, I sit on board, the whole business side of it. That has its own challenges. It stretches different parts of your brain. It is a strange mix of common sense and technology. I have invested in software companies, box companies, security, chip companies, storage and search everything. I have become a start-up junkie right now.