Digital Transformation lessons for CIOs from legacy companies

Technology transformation is almost never centerpiece for most traditional or legacy organizations, but rather one of many considerations facing business leaders looking to modernize. In the absence of its inclusion in a business’s overall strategic intent, IT can become merely a back office or secluded department expected to simply keep the lights on.

Being left out of the strategy-setting makes the work of a CIO much harder. We spoke to top Indian CIOs from traditional enterprises to get insights into the challenges they have confronted and the strategies they employed to overcome them.

IT not seen as transformational

Tata Motors (formerly Tata Engineering and Locomotive Company) was founded in 1945, long before the digital revolution began. Such traditional companies have witnessed a growth wave without necessarily riding on technology. Top management, therefore, has often assumed that what brought success in the past would continue to deliver in the future.

“To expect growth in the absence of IT becomes a part of the leadership’s belief system,” says Jagdish Belwal, who served as the CIO of Tata Motors from 2009 until 2017. 

“A major chunk of their time is spent on aggressive marketing, channel building, etc. The IT department is not viewed as transformational and, therefore, not accorded importance.”

With low levels of confidence in internal IT, Tata Motors tended to lean heavily on outsourcing. Applications were farmed out to one partner and infrastructure to another, while the CIO was expected to simply sign the bills of technology partners.

Belwal decided to change the image of the company’s resident IT department by showcasing its transformational capabilities.

Each of the company’s seven manufacturing facilities had thousands of precision tools such as vernier calipers, torque wrenches and mechanical gauges. After using the tools for a certain period, they had to be sent to a calibration agency for certification, the logistics of which were massive.

“There was no solution in the ERP to handle this challenge. We initially came up with an MS Excel-based system to run the entire process of calibration in a particular plant. It was later converted into a web-based solution to be used across all locations. Not only did this improve compliance but it also enhanced productivity by 30%,” Belwal says.

“With the disruptive power of technology now visible, the management began to see IT in a new light. The IT department moved from the back office to front and center.”

Bottlenecks from tech complexity, limited skills

Kapil Mahajan joined Safexpress, a logistics company born in the pre-digital era of the ‘90s, as the CIO at a time when it didn’t have a CRM, mobile apps, or even a customer portal.

“On the one hand there were no cutting-edge solutions deployed, while on the other hand there were n numbers of software running on n numbers of hardware, leading to tech sprawl and complexity. There was no differentiated architecture and the IT team was skilled on a specific tech stack that comprised Java, .NET applications and an on-prem Oracle EBS,” Mahajan says.

While the leadership understood the importance of technology in business, the challenge for Mahajan came from a departmental culture that was lacking in self-confidence.

“Not only was the technology dated, the IT team was also insecure and self-doubting to change it,” he says.

 Mahajan addressed this challenge by retaining the employees and reskilling them.

“As a CIO, I made them feel safe by protecting their jobs and allaying fears that technology would replace them. Their skills were enhanced and they were involved in the co-creation of newer versions of applications rather than just managing older ones. This gave them a sense of ownership, spurring them to do even better,” he says.

Mahajan went on to modernize the technology architecture. “From not having a single app on cloud to becoming cloud native in the next four to five years, Safexpress came a long way. Today, our ERP is on microservices and Kubernetes, we have CI-CD as part of our overall devops, and we are leveraging Force.com to build custom use cases,” he says.

“Gaining the trust of all the stakeholders and taking everyone along on the journey to digital played a crucial role. The results of these efforts were clearly visible. Over the next five years, the company achieved its goal of expanding its geographical coverage to 30,000 pin codes on its own infrastructure.”

Yawning gap between business and IT

Modern and/or born-digital companies adopt the CI-CD model to ensure continuous development. This is not the case with legacy companies, which often approach IT on a project-to-project basis with engagement that is purely project driven.

Technology leaders feel that a regular channel of communication can bridge this gap between business and tech. To ensure continuous engagement with the heads of business, some companies have set up a dedicated office of transformation.

Atul Govil at India Glycols, a chemical manufacturing company established in 1983, is one such IT leader who dons the roles of chief transformation officer and head of technology.

“The role of transformation officer was set up to co-create value with business heads and make them aware of the potential of new-age technologies through regular engagements,” Govil says.

However, the engagement with business is not only around technology. “Under the umbrella of transformation, technology is just one lever, it’s not the sole lever,” he says. “If we continue to talk technology, business won’t be interested. To catch the attention of business heads, the key lies in identifying a business case opportunity. Leveraging IT to build the case comes next.”

By adopting this strategy, Govil has successfully implemented several technology solutions to streamline business functions such as production and logistics.

It may seem daunting for a CIO to join a legacy company, but that shouldn’t prevent him or her from taking up the challenge, according to Arvind Sivaramakrishnan, CIO of Apollo Hospital.

“Legacy is not a bad word. In the healthcare vertical, I would want to be known by my pedigree,” says Sivaramakrishnan.

“A 40-year-old hospital would certainly have an advantage over a six-month-old hospital. For a CIO, it’s important to first understand the organization’s structure, costs, and goals. When undertaking digital transformation, the CIO shouldn’t accelerate from zero to 100. The IT leaders should find a mutually agreeable pit stop with the business stakeholders.”

As a parting advice to CIOs, Mahajan says that “bringing about digital transformation in a legacy company can be overwhelming.”

“If you must embark on transformation, let it come from the leadership, and not from you. Understand where the company is right now and where it wants to go. The ideal approach would be to then figure out the closest step to go there by leveraging a technology stack that complements it.”