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Business and Technology Insights

Focus on Operating Income

 
March 20, 2017

Time For Technology Investments to Deliver Results

The past five years have seen unprecedented levels of technology investment as companies across the spectrum have poured money into cloud technology, digitization, and automation. Boardrooms are becoming impatient to see those investments translate into returns.

Cloud technologies promised to make companies more productive, more innovative, and to reduce their costs. Cloud adopters have undoubtedly accomplished the first two. Many organizations can show how they've focused investments on making business operations swift and lean to improve productivity. Others will have examples of how they're able to speed-up the time it takes to prototype and bring innovations to market.

Cost reduction and its impact on operating income are now under the microscope. Some interesting success stories are coming to light that help substantiate the cost case for technology investments.

Using the Internet of Things (IoT), a manufacturing company has been able to resolve a persistent issue of cutting machine failures. While machine breakdowns are always costly, frequency increases costs and downtime. To counter this, the company adopted the IoT to predict maintenance cycles so that machine repairs can be carried out without disrupting manufacturing operations. Because repairs were tackled in advance the business eliminated downtime, increased productivity, and reduced costs.

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A leading radiopharmaceutical, using a legacy system, struggled with operational inefficiencies. Functioning under a traditional system, it was unable to track orders and payments effectively. The cost impact was amplified by the fact that radiopharmaceuticals production, unlike conventional pharmaceuticals production, is difficult and expensive. The company modernized its operations by employing a real-time pharmacy system to track orders and vendor payments in real time. The cumulative result was reduced production waste that significantly stripped out costs.

Cloud-centered Software as a Service (SaaS) delivered an apt solution for a Saudi petrochemicals company. It revamped its HR processes deploying a system driven performance evaluation process to enforce evaluation cycle timelines. It was able to identify skills requirements, create learning paths, and monitor training compliance online. This halved the annual performance evaluation cycle. By integrating compensation results with payroll processing it reduced the compensation planning cycle time from one month to two weeks. Using cloud-based recruitment, the HR department's manpower costs came down by almost 20 percent.

This year, smart companies are focused less on making new technology investments even though cloud technology with its near- and medium-term cost benefits will continue to rise. Focus will be firmly on financial returns. Where technology investments are on the table, the finance team will have a growing role in assessing their viability. Technology leaders will need to articulate a strong business case and be prepared to answer more 'show me the money' questions. Technological investments will continue only so long as companies enjoy returns.

 

Akhilesh Tiwari is the Global Head of the SAP Practice at Tata Consultancy Services. He is responsible for driving the business growth and strategic direction of the SAP team – a dedicated group of talented consultants who work in close collaboration with SAP and TCS industry experts to design, implement and execute enterprise-wide projects for many Fortune 500 companies. Under his guidance, TCS has strengthened its long-standing relationship with SAP and delivered market-leading results for clients.