Hero MotoCorp’s IT spending methodology examined

CIO Interview

Hero MotoCorp’s IT spending methodology examined

Vijay Sethi, vice president and chief information officer at Hero MotoCorp—India’s largest two-wheeler manufacturer— in an interview with SearchCIO.in, offers insights into how his company carries out its IT spending . With more than 22 years’ experience in IT implementation and consulting, Sethi describes how IT purchases are made, keeping the interests of the organization and end users at heart.

How is IT structured at Hero MotoCorp?
The organizational structure at Hero MotoCorp consists of separate teams that are responsible for key business solutions that include customer-facing solutions, R&D solutions, infrastructure and security solutions, application development, application support, and the program management office (PMO). Each team is equipped with its own project managers or business solution managers. At Hero MotoCorp, project managers are separately assigned for specific outsourcing projects that the organization undertakes.
Being head of IT at Hero MotoCorp, I report in to the CEO. Reporting directly to me is a dedicated, two-member IT procurement team. Although these members have responsibilities other than IT spending as well that is their primary duty.

What role do individual members in the IT team at Hero MotoCorp play in identifying products and services that you may want to spend on?
For any IT project we undertake, the procurement team looks at acquiring hardware, software, networking, consulting and various services.
However, the need for these requirements arises from a variety of sources such as:

  • End users: Various project heads, project managers and business solutions managers, who are not part of the procurement team, interact with users and come up with strategies on how IT adoption can help the overall organization. Based on end-user inputs and feedback, project managers suggest requirements and create a business case, which is presented to me. If approved by me, it then goes to the procurement department for spending negotiations.
  • Internal IT policies and guidelines: Much needs to be done to adhere to internal policies and guidelines with respect to IT spending. For example, as part of the organization’s policy, we have to refresh PCs, laptops and servers after a particular number of years, so an inherent need automatically arises and this has to be addressed by my team.
  • Internal requirements: As part of IT, there are times when we want to introduce new technologies in the company, which may not have been asked for by our users. We initiate the project and discuss it with our users only if it will have a business impact. In some cases the need is purely technical and in-depth discussions with end users are not necessary.
  • For peripherals and consumables that form part of the regular routine, the procurement team is involved when renewing contracts or spending on licenses.

 

What is your role in the overall IT spending process and what feedback do you look at from your team members to decide on the IT products and services you finally spend on?
The primary responsibility of project heads or business solution managers is to understand the business requirement. From then on begins the research phase wherein they eliminate options, thereby creating a business case for the project. This business case covering the various options is presented to me, with the preferred option highlighted. As the IT head, I then take a call whether we want to spend on the preferred option, after weighing the positives, negatives, and risks. The project heads or business solution heads cannot finalize on products or services themselves.

What kind of research processes do you use? Do you use the Web for researching?  Does your team have any specific way of going about this?
We at Hero MotoCorp are one of the leading adopters of technology, so from that perspective we need to do a lot of research on the current trends and technologies in the market.
The Web is the biggest source of information while undertaking research activities. In addition to that we also have an arrangement with Gartner through which we have regular interactions with Gartner analysts and complete access to their research documents. Therefore, whenever we have to finalize on a particular technology spend, we send in a query to Gartner and their analysts respond with their comments on technology trends, positives and negatives, thus giving us credible inputs for the final decision. Also, informal discussions we have within the CIO community contribute to the research process.

What kind of personal research do you do? In doing this research, what kind of material would be most relevant to you? Do you look at whitepapers or case studies?
I read a lot of Gartner articles and attend Gartner calls and webinars. I personally view other webinars too. I also look at whitepapers provided by vendors or consulting companies. Project heads in particular analyze these white papers for insights as part of building the business case for a particular project. The Web is not the only medium we refer to, though; we also look at printed reports and documents from Gartner or vendors.

Who all are involved in the final IT spending decision making?
At the end of the day it is my decision, as any IT spending is finally my responsibility and I am answerable. The procurement team works on it, finalizes the commercials, and presents recommendations, but I am the final authority on making the decision.

How does the research and purchasing approval process vary for big-ticket IT as against small commodity items?
For spending on commodity items, there will be no in-depth research or involvement of Gartner analysts. We carry out market research and get feedback on quotations received by users across locations, enabling us to establish a benchmark of costs. On the Web too, we get a broad indication of pricing, and this helps us during the purchase of small commodity items.


This was first published in March 2012