Nandan Nilekani - Interoperability in the flat world

You can't win client loyalty just by giving customer satisfaction, you have to do it through better innovation

Interoperability is a property referring to the ability of diverse systems and organizations to work together (inter-operate).  With respect to software, the term interoperability is used to describe the capability of different programs to exchange data via a common set of business procedures, and to read and write the same file formats and use the same protocols. Infosys Co-Chairman Nandan Nilekani discusses issues, chall-enges and solutions to foster interoperability. Excerpts.....

I think India and Indian companies are in a very good position to contribute to this discussion on interoperability, because over the last twenty five to thirty years we've had tremendous access to global technology trends and what's happening with our customers. I think all of us are working at a very intimate level with our customers and they've given us access to all the technology that they have. We also find that there is a tremendous amount of heterogeneity in our clients. They have been using different technologies developed during the last forty to fifty years, different technologies on different platforms and getting all this to work together  and making it interoperable and deriving business value from that investment is very critical. I think it is very timely for Indian companies to get strategic benefits from interoperability.

This is particularly true in today's  flattening world where everything is changing. There are four forces that are operating here. The first is the rise in emerging markets, of India and China and the fact that over the next twenty years they will become a greater part of the world's economy.

The second is that there's also a huge demographic shift which is happening - it is the rise of young people in these countries and the corresponding ageing happening in the west and in Japan. This demographic shift has a huge impact - whether it is on consumers or on workers. The very fact that India is US$30 billion outsourcing market doubling to US$ 60 billion over the next four to five years is driven by the demographic shift- you have all these young workers in this part of the world.

The third clearly is technology and the rise of high speed computing, rise of software platforms like what Microsoft has developed, the rise of broadband and all the various interconnectivity, video conferencing, all these technologies have really created an ability for us to provide services globally and develop collaborative solutions for the world market. Hence technology is a big part of the flattening world.

Finally, the fact that companies across the world are coming under different kinds of regulations dealing with capital markets, regulations dealing with fund flow, regulations dealing with capital adequacy, we think all these trends have a huge impact in the way companies are run.

What do companies have to do to really prosper and do well in this environment-

Basically there are four things that they can do. One is to win customer loyalty through faster innovation. They have to constantly innovate new products and services and win client loyalty.

The second is a huge strategic shift that companies have to think about. Historically, companies have thought about information as something which is the cost of doing business. But the new paradigm is to think of how to make money from information.

The third is  the very rapidly changing environment for companies. There are new shifts which are happening in terms of technology and business rules. It is the ability of companies to be quick and responsive to this environment, which allows them to take advantage of the ups and downs of the world economy or the industry and make them winners.

Finally we think about how we use costs as a fuel for growth- We feel that the whole trend towards the outsourcing story is not just about saving money, but to leverage the money to drive fundamental business transformation. In other words use the savings to drive a whole new paradigm of growth. We can really drive down operation costs of our clients using good interoperability. We find that 30-40% of our clients budgets are going in to make interoperability work - to make all these connections work. Essentially, if we have an excellent architecture for interoperability, if we have excellent tools for interoperability and if we can use these to tie up the process, the data and the people in organizations, we believe that it can have a huge impact in reducing integration costs and generating fuel for growth.

All these four trends - four fundamental operational shifts have a direct connection to interoperability. First of all, if we really want to drive loyalty through innovation, we have to create an approach of co-creation, where we are able to work with clients and basically bring their knowledge and our knowledge together.  Unless we harmonize their process and our process, their data and our data, we can't really create a culture for innovation. Hence interoperability is very important to bring all these together to drive faster innovation.

Similarly, interoperability is very important for winning in the turns. For winning in the turns you have to have systems where you are quickly able to respond to changes. Here too, interoperability among ourselves and with our business partners is very critical for driving this quick turnaround.

Another important aspect to this is changing the mindset to start thinking how we can make money from information. A business operation has a huge amount of very valuable data and information in its IT systems. All this information is in silos, it is de-segregated, it's not connected and it is very difficult to extract information from that. Here too interoperability will bring about connections of all the silos that exist.

As we step into a much more globalized world of delivery where the manufacturing could be done by a business partner in India, the customer could be in New York or London, the ability of using interoperability to connect all these external business partners to have a seamless flow of data to harmonize the processes will be very important. All the operational shifts that we talk about which we think are critical in this flat world are essentially made possible because of interoperability.

Nandan Nilekani was speaking at the Microsoft Interoperability Conclave organised in Bangalore .

Tarachand Wanvari a consultant correspondent for Business gyan and www.businessgyan.com looks after the South India desk of www.indiantelevision.com. Feedback at tarachand@ businessgyan.com.

Issue BG80 Nov07