Вы находитесь на странице: 1из 30

TITLE

INFOSYS
SUBJECT
BUSINESS POLICY AND STRATEGIC
MANAGEMENT

INDIAN IT INDUSTRY
OVERVIEW
INTRODUCTION
In an increasingly globalised world, significant complexity and
uncertainty is getting attached to the unprecedented economic
crisis. The Indian economy has also been impacted by the
recessionary trends, with a slowdown in GDP growth to seven per
cent. The focus and exponential growth in the domestic market
has partially offset this fall and insulated the country, resulting in
net overall momentum. The IT-BPO industry in India has today
become a growth engine for the economy, contributing
substantially to increases in the GDP, urban employment and
exports, to achieve the vision of a young and resilient India.
During the year, the sector maintained its double digit growth
rate and was a net hirer. This growth has been fueled by
increasing diversification in the geographic base and
industry verticals, and adaptation in the service offerings
portfolio. While the effects of the economic crisis are expected
to linger in the near term future, the Indian IT-BPO industry has
displayed resilience and tenacity in countering the unpredictable
conditions and reiterating the viability of Indias fundamental
value proposition. Consequently, India has retained its leadership
position in the global sourcing market. The Indian IT-BPO industry
is estimated to achieve revenues of USD 71.7 billion in FY2009,

with the IT software and services industry accounting for USD 60


billion of revenues. During this period, direct employment is
expected to reach nearly 2.23 million, an addition of 226,000
employees, while indirect job creation is estimated to touch 8
million. As a proportion of national GDP, the sector revenues have
grown from 1.2 per cent in FY1998 to an estimated 5.8 per cent in
FY2009. Software and services exports (including BPO) are
expected to account for over 99 per cent of total exports,
employing over 1.76 million employees. While the current mood is
that of cautious optimism, the industry is expected to witness
sustainable growth over a two-year horizon, going past its USD 60
billion export target in FY2011. While the industry has significant
headroom for growth, competition is increasing, with a number of
countries creating enabling business environments aimed at
replicating Indias success in the IT-BPO industry. Hence,
Concentrated efforts are required by all stakeholders to address
the current challenges, to ensure that India realizes its potential,
and maintains its leadership position.

INFOSYS
VISION
"To be a globally respected corporation that provides best-ofbreed business solutions, leveraging technology, delivered by
best-in-class people."

MISSION
"To achieve our objectives in an environment of fairness, honesty,
and courtesy towards our clients, employees, vendors and society
at large."

POLICIES OF INFOSYS
INTRODUCTION
This Code of Business Conduct and Ethics helps ensure compliance with legal
requirements and our standards of business conduct. All Company employees and
trainees are expected to read and understand this Code of Business Conduct and Ethics,
uphold these standards in day-to-day activities, comply with all applicable policies and
procedures, and ensure that all agents and contractors are aware of, understand and
adhere to these standards.
Because the principles described in this Code of Business Conduct and Ethics are general
in nature, you should also review all applicable Company policies and procedures and the
Employee Handbook, when adopted for your location for more specific instruction. You
can also contact the Human Resources Department or Legal Department if you have any
questions.
Nothing in this Code of Business Conduct and Ethics, in any company policies and
procedures or in other related communications (verbal or written) shall constitute and
shall not be construed to constitute a contract of employment for a definite term or a
guarantee of confirmed employment.
We are committed to continuously reviewing and updating our policies and procedures.
Therefore, this Code of Business Conduct and Ethics is subject to modification. This
Code of Business Conduct and Ethics supersedes all other such codes, policies,
procedures, instructions, practices, rules or written or verbal representations to the extent
they are inconsistent. The Company may update the code from time to time.
Please sign the acknowledgment form at the end of this Code of Business Conduct and
Ethics and return the form to the Human Resources Department indicating that you have
received, read, understand and agree to comply with the Code of Business Conduct and
Ethics. The signed acknowledgment form will be located in your personnel file. Each
year as part of your annual review you will be asked to sign an acknowledgment
indicating your continued understanding of the Code of Business Conduct and Ethics.

YOUR RESPONSIBILITIES TO THE COMPANY


AND ITS
STOCKHOLDERS
A. General Standards of Conduct
The Company expects all employees, agents and contractors to
exercise good judgment to ensure the safety and welfare of employees,
agents and contractors and to maintain a cooperative, efficient,
positive, harmonious and productive work environment and business
organization. These standards apply while working on our premises, at
offsite locations where our business is being conducted, at Companysponsored business and social events, or at any other place where you
are a representative of the Company. In addition, on client locations,
you may be required to adhere to the Clients code of conduct as well.
Employees, agents or contractors who engage in misconduct or whose
performance is unsatisfactory may be subject to corrective action, up
to and including termination. You should review our employment
handbook (soon to be adopted), and Sparsh our company wide
intranet, for more detailed information.

A1. Workplace free of Harassment


The Company is committed to providing a work environment free
of unlawful harassment. Company policy prohibits sexual harassment
and harassment based on pregnancy, childbirth or related medical
conditions, race, religious creed, color, national origin or ancestry,
physical or mental disability, medical condition, marital status, age,
sexual orientation, or any other basis protected by federal, state, or
local law or ordinance or regulation. All such harassment is unlawful.
The Companys anti-harassment policy applies to all persons involved
in the operation of the Company and prohibits unlawful harassment by
any employee of the Company towards other Infosys employees
including supervisors, outside vendors, clients,. It also prohibits
unlawful harassment based on the perception that anyone has any of
those characteristics, or is associated with a person who has or is

perceived as having any of those characteristics.


If you believe that you have been unlawfully harassed, submit a
complaint to your own or any other company supervisor. In addition, if
you believe you have been sexually harassed, you can submit a
complaint to the Grievance Redress Body of the Company.

A2. Drug and Alcohol Abuse


To meet our responsibilities to employees, customers and investors,
the Company must maintain a healthy and productive work environment.
Misusing controlled substances, or selling, manufacturing, distributing,
possessing, using or being under the influence of illegal drugs and alcohol on
the job is absolutely prohibited.

A3. Safety in Workplace


The safety of people in the Workplace is a primary concern of the
Company. Each of us must comply with all applicable health and safety
policies. We maintain compliance with all local laws to help maintain
secure and healthy work surroundings. Questions about these laws and
guidelines should be directed to the Human Resources Department.

A4. Dress Code and other personal standards


Because each of us is a representative of the Company in the
eyes of the public, we must report to work properly groomed and
wearing appropriate clothing. Employees are expected to dress neatly
and in a manner consistent with the nature of the work performed.

A5. Expense Claims


All business related expense claims must be authorized by the
manager of the employee before the incurrence. The reimbursement of
expense incurred must be claimed within 30 days of incurring the
expenditure. Expense claims post the expiry of 30 days will be deemed
to be unauthorized. Personal expense will not be reimbursed by the
company. To know the individual business expenditure limit employees
should contact the Human Resources Department.

B. Applicable Laws

All Company employees, agents and contractors must comply


with all applicable laws, regulations, rules and regulatory orders. Each
employee, agent and contractor must acquire appropriate knowledge
of the requirements relating to his or her duties sufficient to enable him
or her to recognize potential dangers and to know when to seek advice
from the Legal Department on specific Company policies and
procedures.

C.

Corporate Opportunities

Employees, officers and directors may not exploit for their own
personal gain opportunities that are discovered through the use of corporate
property.

D. Protecting the Company's Confidential Information


The Company's confidential information is a valuable asset.The
Companys confidential information includes product architectures;
source codes; product plans and road maps; names and lists of
customers, dealers, and employees; and financial information. This
information is the property of the Company and may be protected by
patent, trademark, copyright and trade secret laws. All confidential
information must be used for Company business purposes only. Every
employee, agent and contractor must safeguard it. This responsibility
includes not disclosing the Company confidential information such as
information regarding the Company's services or business over the
internet.

RESPONSIBILITIES TO OUR CUSTOMERS AND


OUR SUPPLIERS
A. Customer Relationships
If your job puts you in contact with any Company customers or potential customers, it is
critical for you to remember that you represent the Company to the people with whom you are
dealing. Act in a manner that creates value for our customers and helps to build a relationship
based upon trust. The Company and its employees have provided services for many years and
have built up significant goodwill over that time. This goodwill is one of our most important
assets, and the Company employees, agents and contractors must act to preserve and enhance our
reputation.

B. Payments or Gifts from Others


Gifts given by the Company to suppliers or customers or received from suppliers or
customers should always be appropriate to the circumstances and should never be of a kind that
could create an appearance of impropriety. The nature and cost must always be accurately
recorded in the Company's books and records. Please follow the Companys Gift Policy in this
regard.
C. Publications of Others
The Company subscribes to many publications that help employees do their jobs
better. These include newsletters, reference works, online reference services, magazines,
books, and other digital and printed works. Copyright law generally protects these works,
and their unauthorized copying and distribution constitute copyright infringement. You
must first obtain the consent of the publisher of a publication before copying publications
or significant parts of them. When in doubt about whether you may copy a publication,
consult the Legal Department.

D. Free and Fair Competition


Most countries have well-developed bodies of law designed to encourage and
protect free and fair competition. The Company is committed to obeying both the letter
and spirit of these laws. The consequences of not doing so can be severe for all of us.
These laws often regulate the Company's relationships with its distributors, resellers,
dealers, and customers. Competition laws generally address the following areas: pricing
practices (including price discrimination), discounting, terms of sale, credit terms,
promotional allowances, secret rebates, exclusive dealerships or distributorships, product
bundling, restrictions on carrying competing products, termination, and many other
practices.

SWOT ANALYSIS OF INFOSYS


STRENTGHS
Cost advantage most financially attractive country in a
study by A T Kearney on global IT destinations
Breadth of service offering end to end solutions
including high end services like IT consultancy and KPO
Ease of scalability more than half of Indias population is
less than 25 years old. English speaking IT ITES
professionals growing at a good pace
Quality and maturity of process many players have
quality standards such as CMM to differentiate from other
low cost advantage countries

Global and 24/7 delivery capability excellent internet


backbone and telecommunications facilities enabling
companies to develop 24/7 delivery capabilities from India
itself

WEAKNESSES
Excessive dependence on USA for revenues US
Companies are cutting down IT budget hence revenues to be
hit hard of Indian IT firms
Excessive dependence on BFSI sector for revenues
Banking sector is facing a crisis globally and is going to
spend less on IT
High rates of attrition Although slowdown in global
economy has lowered attrition rate but the industry still
faces high attrition rates as compared to other sectors
Decreasing competitive advantage rising salary
expenses is taking away the cost advantage enjoyed by
India.

OPPORTUNITIES
Greater scope for product innovation
Increased focus on high end work like consulting and KPO
Domestic demand for IT services is to grow at 20 %
Greater scope to service domains other than BFSI such as
Transportation, Infrastructure, etc.
Satyam fiasco Likely to have positive impact on business
considering corporate governance, possibility of shifting of
business, getting higher incremental business from
overlapped clients, and winning new business from new
clients.

THREATS

Global economic slowdown may continue for several years


hence low IT spending globally
US Govt. against outsourcing
Shrinking margins due to rising wage inflation
Rupee-dollar movement affects revenue and hence margins
Increased competition from foreign firms like Accenture, IBM
etc.
Increased competition from low-wage countries like China,
Indonesia etc.

PESTLE ANALYSIS OF INFOSYS


POLITICAL
Political stability: Indian political structure is considered
stable enough expect the fact that there is a fear of hung
parliament (no clear majority).
U.S. government has declared that U.S companies that
outsource IT work to other locations other than U.S. will not
get tax benefit.
Government owned companies and PSUs have decided to
give more IT projects to Indian IT companies.
Terrorist attack or war.

ECONOMIC
Global IT spending (demand)
Domestic IT Spending (Demand):Doemestic market to
grow by 20% and reach approx USD 20 billion in 2008-09 NASSCOM
Currency Fluctuation
Real Estate Prices: Decline in real estate prices has
resulted reducing the rental expenditures.
Attrition: Due to recession, the layoffs and job-cuts have
resulted in low attrition rate.
ECOMONIC ATTRACTIVENESS due to cost advantage and
other factors.

SOCIAL
Language spoken: English is widely spoken language in
India, English medium being the most accepted medium of
education. Thus, India boasts of large English speaking
population.
Education: A number of technical institutes and universities
over the country offer IT education.
Working age population

TECHNOLOGY
Telephony:
India has the worlds lowest call rates (1-2 US cents).
Expected to have total subscriber base of about 500
million by 2010.
ARPU for GSM is USD 6.6 per month.
India has the second largest telephone network after
china.
Teledensity 19.86 %
Enterprise telephone services, 3G, Wi-max and VPN are
poised to grow.

Internet Backbone: Due to IT revolution of 90s, Indian


cities and India is well connected with undersea optical
cables.
New IT technologies: Technologies like SOA, Web 2.0,
High-definition content, grid computing, etc and innovation
in low cost technologies is presenting new challenges and
opportunities for Indian IT industry.

GRAND STRATEGIES
CURRENT

NEW
MARKET

MARKET
MARKET PENETRATION
CURRENT PRODUCT DEVELOPMENT
STRATEGY

MARKET

PRODUCT DEVELOPMENT
DIVERSIFICATION STRATEGY
STRATEGY

NEW PRODUCT

MARKET PENETRATION STRATEGY:


Current Markets: USA and Europe
Current Products: ADM, BPO, KPO, consultancy services (in
BFSI, manufacturing and retail) and software products (financial
products).
Recommendation: As most large clients in US and Europe are
cutting costs, Infosys needs to be more aggressive on cost and
quality front.
Result of strategy: Unlikely to yield good results

MARKET DEVELOPMENT STRATEGY:


New Market: India, Middle-east and Australia
Current Product: ADM, BPO, KPO, consultancy services (in BFSI,
manufacturing and retail) and software products (financial
products).
Recommendation: Since these are fast developing IT market,
Infosys needs a paradigm shift in focus from US and EU markets
to these markets.
Result of strategy: Likely to yield good result.

PRODUCT DEVELOPMENT STRATEGY:


Current Market: USA and Europe

New Product: Consultancy and package implementation services


in relatively growing sectors esp. healthcare, life sciences and
aviation sector, and KPO services.
Recommendation: Concentrate on building expertise in these
domains by strategic acquisitions.
Result of Strategy: Likely to have good result. (better the
company acquired, the better the result).

DIVERSIFICATION:
New Market: India, Middle-east and Australia
New product: Consultancy and package implementation services
in relatively growing sectors esp. healthcare, life sciences and
aviation sector, and KPO services.
Recommendation: Changing Brand image from low value
service provider to high value service provider.
Result of Strategy: Difficult to achieve overnight (possible in
long term)

McKinseys 7 S Model

Let me go through each of these 7 elements


1. Style: Its Organizations Culture. Understanding your corporate
culture in the context of national culture and how that aids or acts as a
barrier for growth have become more important because of
globalization. A whole new field Cultural Intelligence has been
evolving lately to address style in the era of globalization.
2. Skills: These are both institutional and individual skills relevant for
the organizations growth. Globalization has made skill acquisition
strategies and Outsourcing strategies a high priority.
3. System: These are Business Processes (how work is done) within the
organization. Identifying core business processes is more relevant
today as organizations can focus on it while outsourcing contextual
business processes.
4. Structure: This is about authority and relationship between the
executives and the individual contributors. Globalization and rise of
Social Media is challenging the existing structure.

5. Staf: These are people within the organization. The focus lately is
on Diversity and ability to achieve Economies of Scope leveraging
diversity.
6. Strategy: All the activities the organization does to gain competitive
advantage. Due to globalization and hyper competition, strategy is not
static anymore. Now, when the growth in the competitive landscape
has become unpredictable, the trick is to figure out how to evolve an
organization around strategy when strategy itself keeps evolving.
7. Shared Value: This is Social mission or the super ordinate goals the
company is pursuing. Today, no global organization can get away
without addressing sustainability issue. Embedding social mission into
the organizations brand has become vitally important. Marketing
department within the organization is now challenged to create an
enduring brand that cannot be tainted by environmental, social and
human rights.
I think 7-S Framework is more important today. The important aspect of 7-S
framework is its simplicity. These elements allow organizations to step back
and look at its position in the global competitive environment holistically. It
acts as a complement to Porters strategy framework.

LEADERSHIP STYLE:
Infosys believes that leadership is one of the most essential
ingredients of organizational success which is provided by its
Chairman, N R Narayanmurthy. Leadership is based on high
business vision and predominantly supportive styles. There is
emphasis on developing leadership qualities among employees.
For this purpose, it has established Infosys Leadership
Institute. Top management emphasizes on open door policy,
continuous sharing of information, takes inputs from employees in
decision making, and builds personal rapport with employees. As
we have seen over last few years, we have seen smooth
transition from N R Narayanmurthy to Nandan Nilakeni and from
Nandan Nilakeni to Kris Gopalkrishnan without any adverse
effects on the company outlook and each one has proved to be an
able leader taking company forward.
STAFF (HUMAN RESOURCES):
Since Infosys is in knowledge-based industry, it focuses on
the quality of the human resources. Out of total personnel, about
90 per cent are engineers. At the entry level, it emphasizes on
selecting candidates who find the companys meritocratic culture
satisfying, superior academic records, technical skills, and high
level of learn ability. The company emphasizes on training and
development of its employees on continuous basis and spends
about 2.65 per cent of its revenues on up gradation of
employees skills, and around 50% as employee costs. In spite of
thousands of people joining every month, Infosys has been able to
maintain its training standard mostly due to its highly matured
processes capabilities and investment in infrastructure.

STRATEGY:
Infosys has adopted a client-focused strategy to achieve
growth. Rather than focusing on numerous small organizations, it
focuses on limited number of large organizations throughout
world. In order to cater its clients, the company emphasizes on
custom-built softwares. Another differentiating factor for Infosys is
that it commands premium margins. Company does not negotiate
over margins beyond a certain limit and some time prefers to
walk-out rather than compromise on quality for low-cost
contracts. This has helped in building an image for quality driven
model rather than cost-differentiating model.
Increase business from existing and new clients: Infosys
has focused on expanding the nature and scope of engagements
for the existing clients by increasing the size and number of
projects and extending the breadth of its service offerings. For
new clients, it provides value added solutions by leveraging its indepth industry expertise. It increases its recurring business with
clients by providing software re-engineering, maintenance,
infrastructure management and business process management
services which are long-term in nature and require frequent client
contact.

Expand geographically: Infosys plans to establish new sales


and marketing offices, representative offices and global
development centers to expand its geographical reach. It plans to
increase presence in China through Infosys China, in the Czech
Republic and Eastern Europe directly and through Infosys BPO, in
Australia through Infosys Australia and in Latin America, through
Infosys Mexico.
Enhance solution set: Infosys focuses on emerging trends, new
technologies, specific industries and pervasive business issues
that confront our clients.

In recent years, it has added ne w service offerings, such as


consulting, business process management, systems integration
and infrastructure management, which are major contributors to
its growth.
Develop deep industry knowledge: Infosys has specialized
industry expertise in the financial services, manufacturing,
telecommunications, retail,transportation and logistics industries.
Enhance brand visibility: Infosys invests in the development of
its premium brand identity in the marketplace by participating in
media and industry analyst events, sponsorship of and
participation in targeted industry conferences, trade shows,
recruiting efforts, community outreach programs and investor
relations.
Pursue alliances and strategic acquisitions: Infosys is known
for its organic growth (risk averse) strategy though it has
strategic alliance with leading technology providers take
advantage of emerging technologies in a mutually beneficial and
cost-competitive manner.
SHARED VALUES:
Values are important part of Infosyss organizational culture. In
fact its tagline depicts how much emphasis it lays on core values.
The core values are:
Customer Delight: A commitment to surpassing customer
expectations.
Leadership by Example: A commitment to set standards in
business and transactions and be an exemplar for the industry
and teams.
Integrity and Transparency: A commitment to be ethical,
sincere and open in our dealings.
Fairness: A commitment to be objective and transactionoriented, thereby earning trust and respect.
Pursuit of Excellence: A commitment to strive relentlessly, to
constantly improve ourselves, our teams, our services and
products so as to become the best.

ORGANIZATIONAL STRUCTURE:
The company has adopted a free form organization devoid of
hierarchies. Everyone is known as associates irrespective of his
position in the company. Software development is undertaken
through teams and the constitution of teams is based on the
principle of flexibility. A member, who might have been team
leader in one project, may be replaced by another member of the
same team for another project. This system not only helps in
creating the feeling of equality but also helps in developing
project leaders.
SKILLS:
From last year, Infosys has made it mandatory for every
employee 7uto clear a predefined certifications, domain as well as
technical, in order to be eligible for appraisal. This is just one of
the initiatives taken by Infosys which signifies the efforts taken for
building competencies. Apart from internal initiatives like
knowledge management, Infosys has been CMM-Level 5 certified
for its process capabilities. Infosys has entered the Balanced
Scorecard Hall of Fame for executing Strategy for achieving
breakthrough performance results using the Balanced
Scorecard (BSC).

PORTERS FIVE FORCES MODEL (INDIAN IT INDUSTRY)


Threat of Substitutes:
1. Other offshore locations
such as Eastern Europe, the
Philippines and China, are
Bargaining Power of
RIVALRY
Customers:
Bargaining power of emerging and are posing threat
AMONG
to Indian IT industry because of
supplier:
1. Large number of IT
FIRMS: High
their cost-advantage. However,
companies vying for IT
1. Due to slowdown, the
this should
1. have an impact
projects resulting in high
job-cuts, the layoffs and
Commoditized
only in the
medium to long
competition for projects.
bleak IT outlook.
offerings
term.
2. Huge decline in IT

Entry:
2. to
'low-cost,
2. Demand and supply of2.Barriers
Price quoted
for projects is expenditure: Indian IT sector
littleIT professionals is no
is dependent on USA and BFSI
1. Low differentiation'
capital
in particular for majority of its
longer that favorable to
requirements.
positioning.
revenues, and with the recent
employees.
2. Large
value
chain, spacefinancial crisis, the new
3. high
industry
3. Availability of vast
spending from these has
for small
enterprises.
growth
talent pool freshers and
reduced tremendously.
experienced.
4. are
Strong
3. MNCs
ramping up
3. However, for the existing
competitors

capacity
and employee

Strategy Issue of the Infosys


A business strategy in todays fast paced economic environment is a
constantly
shifting process. To remain competitive, an organizations

package enterprise
application infrastructure must provide a level of
adaptability that supports this dynamic course of action. When new business
challenges warrant enhancing existing information systems, mission-critical
package enterprise applications must be upgraded to ensure that these
business processes will remain consistently linked to customer requirements.
Before going ahead on the upgrade path, organizations should analyze:

The business need that leads to considering an upgrade


The need to fully leverage the functionalities of existing enterprise
applications

The impact of upgrading the existing enterprise applications on the


business processes

Whether the upgrade approach is leading to improved business


processes while lowering the operational cost?

Without analyzing the above, organizations run the risks of not only losing
the effectiveness of the upgrades, but also on the opportunity to make the
organization more competitive.
Infosys experience suggests that organizations that plan to upgrade typically
fall under one or more of the following business scenarios:
1. Early Movers: These enterprises view their technology strategy directly
linked to their business performance and competitive advantage. First
Movers focus on the importance ofleveraging the latest available technology
and are often the first to upgrade their applications
2. Organizations with Complex Implementations: These enterprises
have highly Customized versions of off-the-shelf enterprise applications
which may have come intoplace as a result of business scenarios such as
acquisitions, mergers or specialized business needs.
3. Late Adopters: These enterprises continue to operate with obsolete or
outdated versions of
enterprise applications because of issues related to the upgrade process
such as cost justifications, support, concerns over business disruption,
completion timelines, resource limitations, or just a plain fear of its
complexity. Unfortunately, Late Adopters finally get

around to applying upgrades when their existing applications become


unstable, unusable or are de-supported by the product vendor.The upgrade
can impact various facets of your organization. Hence, it is imperative to
assess the impact that the upgrade would have on your Business,
Operations, Finance and IT strategies. The success of any upgrade would
depend upon how well defined and complete the upgrade Strategy is.
Let us analyze how various facets of your business can be impacted by the
enterprise application
upgrade strategy that you deploy in your
organization.

Impact on Business Strategy


When basic business processes are altered as the result of ever
changing market/industry
dynamics, the underlying applications that
support these processes must change as well. Enterprise Application
upgrade is one such enabler for aligning your application landscape to the
changing business needs. For example, if a manufacturing organization shifts
its business focus from core manufacturing to brand building and thus
outsource its manufacturing to a third party, new processes such as
dropshipments from the vendor to the customer location and integration with
supplier systems need tobe enabled. This would require the underlying
enterprise applications to support these functions,which would mean
upgrading these applications to align them to new business requirements.
These kind of innovative and path breaking changes are typically adopted by
Early Mover organizations (described above) who constantly keep looking for
avenues of improving their business performance and competitive edge
against their industry peers. For such organizations, if the upgrade strategy
is not aligned to their overall business strategy, they will not be able to
implement the path breaking business strategies in a timely and costeffective manner.

Impact on Financial Strategy


Very often enterprise application upgrade initiatives are thought to be
one-time / periodic operational expenditure that need to be incurred due to
de-support notices from the product vendors. Although de-support is one of
the drivers for an upgrade initiative, there are many ways in which the same
can be used as opportunity to align it with the organizations Financial
Strategy. Early Mover organizations typically view the upgrade initiative as
an operational capitalexpenditure (cap-ex) that needs to be infused to

improve their business performance andmaintain the competitive edge over


their competitors. They take considerable amount of financial risk in
anticipation of quicker and higher return on investment.

Organizations with Complex Implementations typically analyze the Total Cost


of Ownership(TCO) involved in an upgrade initiative. The focus of these
organizations is to reduce the cost of maintenance of current enterprise
applications and link to the overall financial goal of increasing profitability
and share holder value. For example, a service organization may decide to
replace its home grown Order Entry system with the new Order Management
module offered by the existing enterprise application in anticipation of
improving the productivity and service levels of its call centre operations.

Impact on Operations Strategy


In todays dynamic business environment, organizations need to
frequently change their business structures to align it with the overall
business initiatives. For example, a Sales & Distribution company may have
to merge its operations in smaller countries under a single corporate entity
and at the same time maintain separate legal entities. Organizations with
Complex Implementations which typically have high levels of customizations
face a greater challenge in aligning their enterprise applications to such
changes. The upgrade Strategy of such companies typically anticipates such
operational changes and scale up their enterprise application, which can
address these complex business requirements. In the same scenario Late
Adopters, who are running on a de-supported version of the enterprise
applications or running on a version which is on the verge of being desupported, may need to make higher investments for carrying out large scale
modifications to their enterprise applications needed to align the underlying
enterprise applications. It may also result in missed business opportunities or
loss of business continuity due to higher timelines required to implement
such complex operational changes.

Impact on IT Strategy
Traditionally upgrade initiatives have been looked as periodic
transactional events and are not included as part of the overall IT strategy of
the organization. However with the diminishing budgets and the emphasis on
quantifiable ROI, the CIOs and the IT Managers of the organization need to
align their upgrade strategy with their overall IT strategy. Early Movers and

Organizations with Complex Implementations typically view an upgrade


initiative as an opportunity to Rationalize application portfolio, Minimize
customizations, Evaluate composite application network, Optimize
application integration needs and Deploy compatible technology
environments. They conduct a detailed upgrade Assessment to evaluate
various options and choose the most optimal one. Late Adopters typically try
to leverage on past upgrade initiatives and try to implement the learnings
from the same. They may face challenges in coming up with a business case
to justify the upgrade initiative and also to explain the business benefits of
such an initiative.
Another important aspect of the IT strategy which is common to all types of
organizations is to find a Consulting Partner, who has the capability to
provide a predictable upgrade Roadmap with accurate time and cost
estimates. To derive the maximum value out of your upgrade initiative
investments, the partner should offer advice on areas of application that
have not yet been leveraged and new technology areas that can be
leveraged.

Why Traditional upgrade approaches are not sufficient?

Most existing solutions for Enterprise Applications upgrades do not


incorporate a structured assessment process. There is a lack of
comprehensive upgrade planning. Upgrades are points in time of the
application lifecycle that provide a friendly trigger to enable the organization
to consider the available options. These options emanate from the
consideration of the future state of the business and the opportunities for
realizing the business objectives as well as reducing IT costs both capital
and operational.

If the initial assessments are not adequate or rigorous, organizations


are unable to adopt a long-term focus while planning their upgrade strategy.
This often results in upgrades being mere technical exercises where the
assessment offers little or no focus on the functional aspects of the upgrade.
Organizations are therefore unable to plan for long term decoupling of the
technology and process layers. Such assessments are theoretical exercises

rather than instruments for planning, executing and stabilizing the upgrade
exercise.

Infosys experience suggests that a major reason why enterprises fail to


optimally extract value from their upgrade initiatives is due to the common
misperception that upgrades are not tied to the overall business strategy.
Businesses should adopt a holistic approach for enterprise application
upgrade and ensure a long-term focus on the goals associated with the
functional aspects of the upgrade.

The
Infosys
Vision
Application upgrade

of

the

Enterprise

Based on its strong industry experience, Infosys feels that


organizations should have an integrated upgrade strategy to align it with the
functional and technological value chains in order to derive maximum value
from their incremental investments in Enterprise Applications. To achieve this
goal, Infosys recommends that enterprise businesses incorporate three key
elements into their future upgrade strategies:

1. Change Perceptions: Instead of treating the upgrade as an isolated


event, enterprises should view the upgrade process as an integral and
ongoing activity that is closely aligned to the business. As business
requirements change, the applications tied to those processes will also need
to change and modifications must be made as required to support the
functional value chain. Organizations that are able to overcome this hurdle
can turn the upgrade process into a positive opportunity and achieve a
distinct competitive advantage, improving their business functionality, and
engender greater cost savings

2. Use an upgrade Assessment-Based Approach to Create


a Holistic upgrade Roadmap:

Before conducting a mission-critical application upgrade, enterprises should


conduct a comprehensive assessment that includes the financial, operational
and technical impact existing system landscape. All technical aspects of the
application environment should be considered including Infrastructure
Requirements, Customization Simplification Opportunities, Integration
Requirements, Data Volume, Cut-Over Strategy, and User Training
Requirements, which are necessary to identify and finalize the upgrade
roadmap. This holistic upgrade Assessment should also leverage predictable
and capable tools, personnel and methodologies to compare and assess
various upgrade options, and the completion of an in-depth analysis of each
of these options before arriving at the final recommendation

Solution of the Infosys


A large Belgium-based steel manufacturer had decided to implement a
customized upgrade for its SAP enterprise software environment that would
enhance its existing manufacturing process and provide them with a critical
business advantage in the industry. Customer and value chain relationships
demanded that the upgrade must be completed within six months. The
manufacturer chose to partner with Infosys for its upgrade process. After
careful analysis of the customers existing application infrastructure and their
long term business goals, Infosys applied its multi-phased holistic
assessment approach to determine the clients upgrade requirements.
Infosys used its proprietary planning tool that included a detailed
assessment on how the upgrade would impact the clients overall and dayto-day extended manufacturing and business processes.
The detail assessment uncovered many areas that could help fasten the
upgrade process while minimizing their application downtime. Infosys

developed a list of responsibilities and schedules that leveraged the skills of


various Infosys and customer personnel that would be involved. Infosys
introduced an optimized retrofit methodology that analyzed the entire
system landscape and separated those portions of the application
environment that were not critical to the day-to-day business processes. With
this tool, the not-so-critical application areas could be upgraded first, while
other areas that were central to the business could be upgraded over
weekends where the repercussions of downtime had minimal impact.

As a result of the Infosys upgrade assessment process, the steel


manufacturer achieved the following benefits:
Reduced number of customizations
Go-live with no disruption to the business
Executed with 20% less cost
Over 90% accuracy in delivery
No significant post-upgrade issues

Conclusion
Organizations

have traditionally viewed the enterprise application


upgrade initiatives as transactional events with no or very less strategic
importance. They often do not have an upgrade strategy or if there is one it
is hardly aligned with their Business / Financial / IT / Operational strategies.
Infosys, based on its past experiences in managing end-to-end upgrade
initiatives for various enterprise applications, believes that an Assessment
Based structured approach can help organizations to change this perspective
and establish enterprise application upgrade strategy as a critical component
of their Business / Financial / IT / Operational strategies.