VIJAY SETHI, Vice President and Chief Information Officer, Hero MotoCorp
Exchange rate and falling rupee is a major concern for most CIOs today. When we were doing IT budgeting in February/March, exchange rate was around ` 54 to a U.S. Dollar. Today, the US Dollar has neared ` 66 – which translates into a difference of more than 20 percent. This has led to significant increase in hardware costs (PCs, servers, storage etc) and software license costs over last few months. This has put significant pressure on IT budgets.
While deferring IT purchase decisions may sound like an option, but the fact is that at this time one does not know when and to what extent the situation will improve. Also, considering the business needs and exigencies, one may not be able to defer IT procurement decisions beyond a point and one has to buy at higher rates. This does impact our IT financial planning in a big way. Another possible option one sees is trying to find savings elsewhere (and that is also not easy).
While one may try to be optimistic and think, ‘ This too shall pass’ but the fact remains that planning in uncertain times has become a major part of a CIO’s role today. Some thoughts on what we can do in such times: We need to categorize all our projects and activities into three areas viz. (a) must be done (b) should be done and (c) could be done. Category (c) are not ‘nice to have’ but those which can be possibly deferred in case of budget pressures. While there may be few projects and activities in category (c) — these act as a kind of cushion in case of exigencies. One needs to be flexible and update/revise IT plans much more frequently — may be quarterly rather than annual or half yearly as has been practiced over the years — and also revisit categories (a), (b), (c) as above every quarter. Try to make the expenses variable wherever possible — cloud computing is an option in that direction. One should leverage other technologies like virtualization to reduce physical number of devices and in some cases even enhance the useful life of equipment. Finally, it is not just the IT function, which is getting impacted by the exchange rate but the entire company. So, the CIO should work closely with other functions and look at ways and means in the entire organization where IT can help save more costs. While re-negotiating contracts is a possibility to save costs, in my view that has nothing to do with exchange rates — that is part of role at all times and one should revisit contracts periodically to ensure that costs and service levels are optimum.