Indian Companies Pivot To Digital Even As IT Budgets Are Under Pressure
As the proverbial light at the end of the Covid-19 tunnel increasingly seems like a mirage, with every day bringing new challenges, IT budgets are under increasing pressure. But Indian companies are also spending on initiatives that will help them recover quickly after the pandemic-driven slowdown. The focus on building digital capabilities for resiliency also means that the chief information officer role in companies is receiving greater attention from boards.
Budget cuts are in place, but not every company has a standard approach. According to Sanchit Vir Gogia, chief analyst and chief executive officer at Greyhound Research, some are even trying to find creative ways of turning IT from a cost centre to a profit centre. "Some boards have asked CIOs to look for unique nuggets that were built in-house—supply chain tools for instance, that could be spun off into a product that could generate revenues."
According to Greyhound's latest Global CIO Priorities 2020/2021 study, big-ticket spenders have been hit hardest and Gogia says that while earlier 33% of traditional organisations surveyed expected to spend more than Rs 50 crore on technology annually, the number now stands at virtually zero. Greyhound is reporting budget cuts across all kinds of businesses.
The CIO of a large auto company, who did not want to be identified, said the cuts are temporary, continuing till demand rebounds. "If demand revives, budgets will also rise. Where there is a business need to be met through IT, budgets will be made available," he said. "Because IT is critical for recovery when the business returns to form, visibility of IT to the management has become significantly higher as compared to earlier."
Pertisth Mankotia, CIO at Sheela Foam Ltd., said the board of his company is looking closely at how IT adds value to the business. "Yes, there is a focus on quicker return on investment, understanding how an IT initiative contributes to top-line and bottom line. It's all about demonstrating value."
The Greyhound study reveals that 83% of large organisations believe that technology will be a key differentiating factor as companies navigate Covid, and in the post-Covid world. "Organisations are investing in technology and assets that allow them to revive and thrive. Most importantly, the need of the hour is to keep these investments and strategy fluid to allow the room to improvise. All that has been spoken about technology over the past five to six years will be or has started being implemented in a five- to six-month scenario," explains Gogia.
The Technology Pivot
Most companies are spending more on security and collaboration as they navigate this new normal.
For some it’s about bespoke technology—airlines and hotel chains are investing in technology that enables contactless check-in and check-out. Some are even looking at infusing a digital layer at all possible points of contact between employees and customers to ensure that customers can avoid contact with employees without losing out on any service feature or convenience.
For instance, developers are offering virtual walk-throughs of properties on sale and negotiations are being conducted via video conferencing, while the government has done its bit by enabling e-registration. Real estate services company Anarock claimed in April that they had successfully closed the digital sale of homes worth Rs 214.6 crore and office spaces worth Rs 37 crore across India, with the majority coming from the Mumbai Metropolitan Region market.
Carmakers are introducing or significantly beefing up their online car booking and buying platforms, taking them from technology demonstrators to ones that are now expected to deliver actual sales. Auto dealers today offer interactive virtual demos, followed by socially distanced test drives and even paperwork for registration and financing options is handed virtually through these platforms.
For banks, new accounts that can be opened online with no physical interaction between customer and employee is no longer an ultra-niche solution showcasing technology prowess, but a necessity.
It is not just customer-facing industries that are under pressure to transform. Yogesh Zope, chief digital officer at the manufacturing-driven Kalyani Group said, "The nature of business has changed, and, in this scenario, the resulting volatility can only be managed using digital”. He admits that his company management is pushing him to reduce costs, prompting him to push his team to reduce the operational cost of IT, while still focusing on solutions that leverage AI and analytics as areas to invest in. Zope believes that these newer, cutting-edge technologies are crucial for long-term business competitiveness.
Anjani Kumar, chief information officer at Strides Pharma Science Ltd., said that this crisis has helped some boards acknowledge their organisations have been left behind in the digital stakes and they need to catch up. While he is among the core leadership at his company, he said organisations that have not included CIOs in the boardroom or in management committees are quickly opening those hallowed doors to CIOs to ensure that digital can become a competitive advantage.