Strategic CIO // Executive Insights & Innovation
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2/14/2014
12:00 PM
Chris Murphy
Chris Murphy
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Can Digital Business Make Tata A Software Company?

As IT outsourcer launches a new business unit focused on licensing software, it faces three key challenges.

Seeta Hariharan has been hiring -- 235 people in the last seven months, with plans for more than 100 more in the months ahead. She has brought on software veterans from Microsoft, Red Hat, and Informatica, with skills from software engineering to channel sales to software contract negotiations.

Hariharan's job: Build a software business from scratch inside Tata Consultancy Services, a company best known for doing IT outsourcing in India and other lower-cost countries. She insists the software push isn't just a means to get a foot in the door for TCS's huge outsourcing and consulting business, India's largest IT service provider with about $11.6 billion in annual revenue and almost 300,000 employees worldwide.

"My mission in life is only to make revenue for TCS through licensed sales of software and solutions," said Hariharan, a former IBMer who's now general manager of the new TCS Digital Software & Solutions unit. The focus of TCS's fledgling software unit is digital business.

For example, one of its first two products is Customer Intelligence & Insights, a package of software modules for managing customer data, analyzing customers' behavior, and recommending actions that employees can take to get more sales or reduce churn. The second product is Digital Commerce, for tasks such as supply-chain management, supplier communication, and demand analysis. Hariharan promises more software packages from the new TCS unit in the coming months.

[Want to network with CIOs wrestling with digital business issues? Attend the InformationWeek Conference March 31 and April 1.]

TCS joins other consulting companies looking to cash in on the digital business trend, whereby companies use channels such as mobile and social to build new customer ties, and use new analytics capabilities to better understand and interact with customers. Accenture launched Accenture Digital in December to pull together its digital consulting and software offerings. IBM started its Interactive Experience consulting practice in January aimed at customer experience. Deloitte started something similar in 2012.

Here are three key challenges I raised with Hariharan about TCS's new business unit:

Is digital business too fuzzy a concept to hang a business on?
"Every customer we serve, in every industry, they believe they need to address this transformation," Hariharan said. She described two big factors driving digital as a specific priority right now: technology change and time. On the tech front, companies are expected to communicate with and learn from their customers via new social and mobile formats. Customers tweet their complaints instead of calling, and they expect to be heard. They want mobile as part of their experience, whatever the industry. More powerful data analytics capabilities make it possible for companies to get that understanding, and cloud computing makes that analysis more affordable.

On the time front, companies think they need to get this new digital customer relationship right within two years, at the latest, Hariharan said.

Seeta Hariharan, TCS digital software GM
Seeta Hariharan, TCS digital software GM

Why focus on banking, telecom, and retail?
"These are by far the industry verticals where the transformation is happening today," Hariharan said. Banks are struggling to offer omnichannel services and develop digital wallet products. Telecom carriers are making huge investments in next-gen wireless capacity even as new competitors arise in the form of "over the top" voice and messaging services. Retailers must build digital ties to customers without turning stores into showrooms for Amazon.com. Because TCS is crafting its software for industry-specific needs, it can beat out existing software in areas such as customer data management and analysis, Hariharan said. "We are a startup today within a very large corporation" she said. "We needed focus."

Does TCS have the reputation to sell software?
Hariharan's sales pitch has three pillars: Having industry-specific software based on TCS's experience working in those industries; offering fully-integrated stacks of software (though in modules that companies can buy and implement as needed); and having "affordable" products considering the full costs of ownership, including integration.

She characterizes the competition as either niche software providers, each focusing on one pain point, such as customer segmentation; or broad technology providers that offer a platform that doesn't meet specific industry needs.

In terms of geography for this new software group, TCS will do most development and support in India, mostly moving people over from other parts of TCS. It has been hiring customer-facing roles -- sales, marketing, solution architecture, consulting, and the like -- in target markets of North America, the UK, and other parts of Western Europe. Hariharan is based in North Carolina.

Hariharan knows she must convince would-be buyers that TCS is serious about the software business. No CIO wants to bet on a big customer-data platform only to see the vendor walk away and leave it with no support. She says she meets monthly with TCS CEO N Chandrasekaran, who has helped shape this strategy. As a parent company, Tata Group isn't the quickest to jump into a new market, Hariharan said, but "once they make the commitment, they don't take their eyes off it."

Engage with Oracle president Mark Hurd, NFL CIO Michelle McKenna-Doyle, General Motors CIO Randy Mott, Box founder Aaron Levie, UPMC CIO Dan Drawbaugh, GE Power CIO Jim Fowler, and other leaders of the Digital Business movement at the InformationWeek Conference and Elite 100 Awards Ceremony, to be held in conjunction with Interop in Las Vegas, March 31 to April 1, 2014. See the full agenda here.

Chris Murphy is editor of InformationWeek and leader of its Strategic CIO community. He has been covering technology leadership and strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in Hungary; ... View Full Bio

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Lorna Garey
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Lorna Garey,
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2/14/2014 | 1:04:27 PM
Careful what you wish for?
Tata is thinking big here, but given the woes plaguing established software providers lately, this seems like a case of "be careful what you wish for." Building secure, stable code is difficult, and unless you can command licensing margins like Oracle, not easy to make profit on.

On the other hand, it must be nice to not have a legacy code base to deal with and be able to build new, with digital in mind from the get go. It'll be interesting to see how this works out.
RobPreston
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RobPreston,
User Rank: Author
2/14/2014 | 1:16:13 PM
Re: Careful what you wish for?
I think Tata's industry-specific approach is the way to go. It's an opportunity to bring in its vertically oriented consultants.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
2/14/2014 | 5:17:35 PM
Re: Careful what you wish for?
There's a tension these days over where the next enterprise software innovation will come from -- established software vendors, or Valley-backed startups. TCS is threading between those. Does its reputation and history in IT services help it in trying to break into software?
Laurianne McLaughlin
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Laurianne McLaughlin,
User Rank: Apprentice
2/15/2014 | 8:50:56 AM
Rivals
Aren't they competing with the likes of Salesforce on the customer insights front? One tough rival.
simplythink
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simplythink,
User Rank: Apprentice
8/25/2014 | 10:40:00 AM
Be careful of Old wine in New Bottle
I congratulate TCS for their digital business intiative as DSS divison. I have been tracking TCS from two persepective.

1. investor - TCS being blue ship software services company with global presence so investing in TCS is preudent. They have been giving great returns for last decade or more.


2. Industry Analyst and Banking technology Expert ( Also Ex Customer): Building team of 300 for largest employer in India and other contient is not rocket science but,  starting business sure needs strategy check.

Let us look at TCS history - Largest software and services provider (Their own home baked as well as alliance and partners solution in more than 20 to 25 verticals) developing and managing largest IT setup for e.g. In Banking they manage Citi,USA as well as SBI in India.

DSS will focus on Telecom, Banking and Retail where in already TCS has foot print and acquired customers in one r the other engagement format. TCS already does lot of work in analytics, SCM, banking and many more.

With above background in mind, I feel DSS is born to capture some unexplored areas:

1. TCS would have seen some deals going to Niche players which have point solutions or framework (We can find 10,15 or more such innovative solutions guys like Digital Banking - D3, Digital Insight..) loss of revenue for incremental marketing and sales cost to get it.


2. European Banks have gone ahead of other regions with more than 20% on Digital bank architecture ( BBVA and some more such banks leading the way:)) McKinsey recently published interesting article on Digital Banking space and it's growth. DSS makes sense to be Lin eof Business for company like TCS.

3. Amazon, flipkart,Uber and more fuels retailing market on B2B as well as B2C front opens lot of opportunities on SCM, Analytics, Social Media ( For eg. One leading Analystics service outsorucing company (Listed) has all the major retail MNC brands as their customers and their revenue is lost of business already for TCS as most of these brands also take IT services from TCS :)

4. SBI is premium customer of TCS as their entire core banking business runs on TCS platform but SBI's Digital Banking Platform is build by Accenture and already roll out started for it. This is learing and correcting input for TCS build their offering on DSS.

The way I look at TCS DSS offerings will be how they differentiate from niche players as well as build their offerings which does not resemble their existing offerings other wise it will look like Old wind in new bottle for customers.
The Business of Going Digital
The Business of Going Digital
Digital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.
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