© Tata Consultancy Services Ltd.1 1 Innovation in Emerging Markets – The case of Tata Consultancy Services (TCS) D. Prasad Raju Vice President & Head of.

© Tata Consultancy Services Ltd. 1© Tata Consultancy Services Ltd.© Tata Consultancy Services Ltd.

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Innovation in Emerging Markets – The case of Tata Consultancy Services (TCS)

D. Prasad RajuVice President & Head of US Midwest Operations

Indiana University – Kelley School of Business

2© Tata Consultancy Services Ltd.© Tata Consultancy Services Ltd.

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Pioneering Indian Industries since 1868US$ 17.8+ Billion; 250,000 employees,80+ companies, committed to society

Steel

India’s Largest

Vehicles andEngineering

India’sLargest

Energy

India’sLargest

Pvt SectorPlayer

IT Servicesand Consulting

Asia’sLargest

&Global No. 12

Telecom

Top 3in India

Hotels

India’sLargest

Luxury Chain

ConsumerGoods & Retail

World’sNo 1

Tea Producer

The Tata Group


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Business Partners to Fortune 100 Companies

(6 in top 10)

Pioneer of

Onsite /Offshore ModelFirst & Largest:- S/W R&D Center in India- S/W Exporter in India- Indian S/W company to cross the USD 2 Billion mark in revenue

Flag bearer of Indian IT Industry

2005-06 RevenueUSD 2.97 Billion

Chinese Presence since 2002

TCS-Asia’s Largest Global Software & Services Company

Beyond the obviousTM

Over 62000 ConsultantsOver 150 Offices

Across 34 + Countries

Commitment to Community

Strong Domain Focus Strategic Alliances with

leading product Vendors

First Company to get

Integrated CMMi & PCMM

Level 5 Certification

Vision: Global Top 10 by 2010

Established in India in 1968

US Presence since 1976


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“TCS brings deep experience to its offering, since it has been supplying remote operations in India for many years.”AMR Research – November 30, 2004

Developing Solutions & Delivering Value


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• Vision : Establish World Class Solution Delivery

capability – we already have a superb

infrastructure

• Current Strength: 415+ Consultants

• 90% Local Recruits

• First & Only Company in China to have 5

certifications: CMMI & PCMM level 5, ISO, BS7799

& BS15000

Tata Information Technology (Shanghai) Co. Ltd塔塔信息技术（上海）有限公司（中国第一家通过 CMMi 和 PCMM五级的公司）

First Indian IT company to set up its operations – set-up in June 2002

Registered Office at Shanghai Shanghai – SAP & Oracle CoEs Shanghai & Hangzhou – Delivery Centres Beijing – JV Academic Interaction Programs with leading

Universities in China


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Future trends in Global Service Delivery


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The Need for Global Sourcing – point of view

Context Increasing Instability Increasing Competition Acceleration of

Globalization Decreasing

Competitive Advantage Demanding Customers

Potential Benefits Business Flexibility Cost and Process

Efficiency Speed Focus Improved

Competitiveness Stakeholder Value

Outsourcing


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Current Outsourcing Models “Transfer” Deals such as Traditional IT Outsourcing and Business Process

Outsourcing – this, can be of three types Selective – typically a single function is outsourced with objectives of reduced cost and additional

capability Strategic – major process or functions are outsourced with additional objective of implementing a

different management approach: Focus on core competencies, variable cost structure, etc. Value Based – typically large unique Strategic deals that significantly increase the suppliers and

clients market value. Also enables Clients to leverage stranded assets and share in the value created

The Emerging Model – “Transformational” Deals A relationship that is designed to put the client and service provider “in the same boat” to create

value for the client’s business through Outsourcing non-core activities Focusing on strategic capabilities Collaborating across the enterprise

These deals are structured to deliver defined business outcomes, as expressed by clients’ business – the service provider takes some risks associated with delivering against these business outcomes


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Global Sourcing - Collaboration on the rise

‘Coopetition’ gaining acceptance in this space

India based outsourcing companies are building closer ties with Western outsourcing and consulting companies

BTO providers, BPO providers, and ITO providers are also collaborating

Products and Services companies are collaborating

Benefits include Pooling of resources and Joint Go to Market Strategies Enhanced offering portfolio and Brand Equity Increased reach in newer markets


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Growth in Services Outsourcing – Takeaways

The stage is now global Ignore the rest of the world at your own risk!

To grow, outsourcing firms must collaborate The best opportunities demand diverse talents and shared risk

Growth will come from multiple fronts Both organic and inorganic opportunities will play an important role

Managing growth is as difficult as achieving growth We should not lose sight of where we came from, who got us there,

and who we are accountable to for our past accomplishments and future success

Our Customers shall continue to be our most important stakeholders


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Innovation in TCS


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Background and Motivation – Innovation in TCS

1. A Vision for Innovation Initiative2. An Innovation Architecture

across the organization elements

3. A distinction between sustaining and disruptive innovation

4. An Innovation Process5. An Innovation Network across

key stakeholders

We established… 1. Create measurable competitive

advantage and business impact2. Create a Technology Brand that is

visible to our stakeholders3. Leverage the Technology

Ecosystem around us4. Attract, build and Retain great

Technology People5. Position Technology Innovation

with a ‘vertical’ focus

We will..

We need to Institutionalize and Scale up Innovation in TCS

Key learning Stretch Goals


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Scope of Innovation Extends across the Enterprise

Internal IT Systems

People Processes

Knowledge Processes

Supplier / Partner

Processes

Innovation in Our Enabling Processes

Internal IT Systems

People Processes

Knowledge Processes

Supplier / Partner

Processes

Innovation in Our Enabling Processes

Customer and Market models

Strategy Processes

Leadership systems

Innovation in Our Business ModelsBusiness Models

Customer and Market models

Strategy Processes

Leadership systems

Innovation in Our Business ModelsBusiness Models

Delivery Processes

Innovations in our DeliveryDelivery Models

Delivery TechnologyDelivery Infrastructure

Delivery Processes

Innovations in our DeliveryDelivery Models

Delivery TechnologyDelivery Infrastructure

Technology Offerings

Service offerings

Innovations in our Offerings

Domain Offerings

Product / IP Offerings

Technology Offerings

Service offerings

Innovations in our Offerings

Domain Offerings

Product / IP Offerings


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Sample: Establish the Innovation Network

TCS

Corporate Customers

Customer’s Customers

Alliance PartnersPartner’s Partners

Academic Institutions

StudentsIndustry Bodies

Members of bodies

Startup Companies

Venture Capitalists

Research Institutions

Governments

TCS is establishing an Innovation Network – and we believe that this ecosystem will be of great benefit to TCS and to all the participants


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TCS’ Focus on Software Research and Development

Products, tools and assets

Released commercial products

MasterCraft – Model based software development

Assent – Code inspection and standards checker

Consult – Experiential knowledge management

Infrex – Business rules management

Proven tools and assets

Testify – Test automation

Revine – Reverse engineering

KDD Toolkit – Library of data mining / statistical processing

In Design / Pilot Stages

Terese – Intelligent text search

Inx – Information extractor


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Decision Support Systems

Decision Systems Initiative

Knowledge management

Case-based reasoning

Rule based reasoning

Natural language processing

Information extraction

Information retrieval

Business analytics

Analysis

Modeling

Prediction / Forecasting

Knowledge discovery

Decision tree induction

Statistical classifiers

Support vector machines

Sequence mining

Clustering

TCS’ Innovative Research on Decision Support Systems


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Some Applications may not be simple conversion, may require reengineering – new functionalities can be added in the process

TCS’ – Tool Based Methodology for Legacy Reengineering

Legacy System

Current Business and Technology Drivers

System AssessmentSystem

Assessment

ReverseEngineeringReverse

Engineering

TCS’ Reverse Engineering Tools

(CasePac & Revine)

Desired Businessand Technology Requirements

ArchitectureDefinition (Business

and Technical)

ArchitectureDefinition (Business

and Technical)

ImplementationImplementatio

n

ForwardEngineeringForward

Engineering

TCS’ Forward Engineering Tools

(MasterCraft, Infrex, @Test)*

TCS’ Data Migration Tool

(DMT)

Current System Documentation

Stand-alone Projects for Legacy Systems Documentation carried out

Reengineered System


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Reverse engineering using TCS

Tools – CasePac and Revine to

document as is business processes

TCS business experts helped in the

optimization of the business processes.

Joint workshops to define requirements

for target application

Web-based 3 Tier Architecture

adopted. Business components

developed using TCS Modelling and

Code Generation Tool – MasterCraft

Program executed in a phased manner

and solution rolled out in 108 locations.

Technology – Java, DB2, CICS

Reverse engineering using TCS

Tools – CasePac and Revine to

document as is business processes

TCS business experts helped in the

optimization of the business processes.

Joint workshops to define requirements

for target application

Web-based 3 Tier Architecture

adopted. Business components

developed using TCS Modelling and

Code Generation Tool – MasterCraft

Program executed in a phased manner

and solution rolled out in 108 locations.

Technology – Java, DB2, CICS

50% reduction in maintenance

effort – flexible, modular system

with externalization of rules from

application code (INFREX)

About 10% efficiency gain for

service representatives in

completing business transactions,

leading to reduced operational costs

Rated as “Better than the best” in

customer satisfaction by J D

Edwards

Detailed system and operations

documentation delivered to aid

ongoing support

50% reduction in maintenance

effort – flexible, modular system

with externalization of rules from

application code (INFREX)

About 10% efficiency gain for

service representatives in

completing business transactions,

leading to reduced operational costs

Rated as “Better than the best” in

customer satisfaction by J D

Edwards

Detailed system and operations

documentation delivered to aid

ongoing support

6 million lines of legacy code in a 30

year old core system with very little

system documentation and few

subject matter experts with knowledge

of the existing business functionality

System inflexible to introduce new

insurance products and regulatory

changes

High operational cost. Several manual

interventions in overall business

processes leading to complicated

implementations

Non availability of skills to support

legacy systems and several failures to

re-create a new application in-house

6 million lines of legacy code in a 30

year old core system with very little

system documentation and few

subject matter experts with knowledge

of the existing business functionality

System inflexible to introduce new

insurance products and regulatory

changes

High operational cost. Several manual

interventions in overall business

processes leading to complicated

implementations

Non availability of skills to support

legacy systems and several failures to

re-create a new application in-house

Fortune 200 Insurance Company. Multi-site (108) implementation. Phased Rollout. 600 PY effort over multiple releases

Business Issue TCS Solution Customer Benefits

Case: Tool Based Re-engineering of a large system

Legacy Application Size 6 Million LOC, Reengineered Application Size - 120 Use Cases, 17 Business Components, 2.7 MLOC of Master Craft generated Code


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Sample: Organization Models for Sustaining Vs Disruptive Innovation

Sustaining Innovations or ‘Incremental’ innovations

owned and executed by current organization elements

Use standard measures – immediate impact on Balanced Scorecard Parameters

This runs in ‘Horizon 1’ Today's’ business Focus on efficiency, scale, costs Zero or Low tolerance of failure

‘Horizon 2’ is the bridge between disruptive or

longer-term innovation and the core business

Some failure is expected

Disruptive Innovations – targeting markets and concepts which do not exist today. These are ‘Horizon 3’

Define the Current or Anticipated Market Need being addressed

Identify target customers who will ‘mentor’ the innovation

Fund innovation engines inside and outside to fill the gap

High degree of risk and higher failure rates

Execute, measure effectiveness, scale up, cannibalize for the next cycle

Two distinct Organization Models and Structures are needed – and it is hard to overlay one on the other. The Planning and Execution processes need to be different – but running in parallel.


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Sample: Use the Innovation Register as the baseline

1. Improvements to our current offerings and processes

2. Targeted at our current customers3. Across all our current businesses (‘six

bubbles’), executed by Practices

Sustaining Innovation - Derivative 1. Next Generation Development, Maintenance, Product Deployment processes e.g. Model Driven Development, Collaboration and Distributed Development

2. Service Oriented Architectures3. Open Source Computing Models4. Wireless, hand-held, mobile technologies5. Grid Computing, Utility Computing and

Infrastructure Management6. Next Generation Security and Privacy7. Next Generation Reuse - Mighty

1. Radical, breakthrough offerings 2. Targeted at new markets3. Competes against non-consumption4. Could create new businesses5. R&D and the Ecosystem drive this

Disruptive /Breakthrough Innovation

1. Next Generation Internet and Collaboration Technologies including Web 2.0, SaaS models

2. Next Generation Domain Technologies – telecom, life sciences, media / entertainment

3. Next Generation Embedded Technologies4. Next Generation Interfaces including

Voice, Human-Computer Interfaces, Personalization

The Innovation Register is used for resource allocation for innovation. The current business will continue to own the ‘Derivative’ innovation category. The Corporate Technology Office, governs innovation across the ‘platform’ and ‘disruptive’ categories.

1. Next generation offerings and processes2. Targeted at our current markets3. Across all our current businesses (‘six

bubbles’) – Practices and R&D, with the new Ecosystem initiative

Sustaining Innovation - Platform


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Summary We have a a framework for innovation and it can help in creating value for

an organizations' ecosystem including clients, partners, employees and shareholders.

The framework has two distinct aspects relating to an organization's business model, processes and market offerings

Innovation which results in incremental and evolutionary changes - sometimes called 'sustaining innovation',

Innovation which results in potentially radical changes - sometimes called 'disruptive' innovation'

The framework has a lifecycle - enabling innovation, evaluating the early results, scaling up and 'productionizing' and finally retiring and replacing.

Organizational mindsets need to be receptive, and necessary support structures are needed - although innovation and process seem like antitheses, one cannot live without the other


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Thank You

Q&A...

© Tata Consultancy Services Ltd.1 1 Innovation in Emerging Markets – The case of Tata Consultancy Services (TCS) D. Prasad Raju Vice President & Head of.

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