Mar 3, 2003

On ISTT my views on:
Core vs Non-Core:

hi folks,

I go with the 'vision and passion of the family member' line of
thinking.

I worked with Satyam Computers earlier. Satyam, for those who are
not aware, was into typically old sectors of having a spinning mill
and a construction company (as an aside, the construction company
still exists, named "Maytas" ...Satyam spelt backwards)

The son of the founder , Ramalinga Raju during the course of his
education in the US was fascinated by computers (he wasn't even an
Engineer!) and brought 9 of them to help in the old family business
around 1987, and to tinker around with...and now his firm is among
the top 5 Indian IT firms...mainly caused by his passion and ability
to spot an opportunity. This percolated down to the rest of the
organization and Satyam's attitude was 'get the opportunity' and
from a pure play IT services it developed competencies in ERP
implementation, e-commerce, CAD/CAM etc

Looking at narrow definitions even something like ITES is not core
to the business of IT firms...but all of them have gone into it..
(Infy with Progeon, Wipro with Spectramind, HCL with e-Serve, Satyam
with Nipuna) , so this question needs to be asked in this respect
too..my answer is that they do not view the IT business as core, but
rather the ability to convert demanding customers, gauging their
needs, and ramping up fast to meet huge requirements them....which
traditional BPO firms like Daksh and Brigade are learning slowly.

I remember Rajeev posted a file on Arie de Gues' work "the living
organization" ...his book says :
"Companies die because their managers focus on the economic activity
of producing goods and services and forget that their organisations'
true nature is that of a community of humans"

Shell (in which Arie worked as head of Strategy) conducted a study
of companies older than Shell (approximately more than 100 years) 27
in detail, of 40.
They asked the question " Why did they survive?" and found the
following points common to these firms:

1. Sensitive to their environment (in harmony with the world around
them - tuned to what was going on).
2. Cohesive, with a strong sense of identity. (People felt part of
them - community - managers chosen from within - "stewards").
3. Tolerant (of activities on the margin - experiments,
eccentricities... - did not exert overly centralised control). This
tolerance usually resulting in these marginal business becoming
growth driving and central businesses of the future !
4. Conservative in financing (frugal, money in land - could pursue
options their competitors could not)

Longevity was NOT linked to…
• Return on investment
• Material assets

Food for thought, as to how we look at organizations... :-)


2 comments:

  1. I am sharing some facts, i repeat facts only to share with you why Satyam still is a fundamentally sound company:

    1. Satyam has Presence across the Globe (20 Industries ,65 Countries) more diverse than Wipro & INFY. This does happen by accident. This spread helps Satyam in tough economic conditions. Did you know outside India in Asia Pac Satyam revenue are more than any of the Top 3 Indian IT services firm. De-risked Geographic revenue distribution 21% Europe, 17% Asia Pac, 62% America’s. Best present to leverage emerging markets.

    2. Satyam has Mature Practices DWBI & ERP. HCL had to spend over 0.5 Bn to get the ERP skills which we already have. they just save $ 0.5 Bn

    3. Revenues & Net Income have Grown Five-fold over last 5 years. This by sheer hard work by 50,000 people. Not by accident

    4. FY08 was the 5th successive year of >35% Growth in Net Income. Show’s how they have got profits year after year.

    5. 32% revenue coming from New & Emerging vertical : Satyam has diversified and expanded is industry depth.

    6. Deepest Fortune 500 client penetration 185, Total 690 clients. Clients continue to support Satyam in spite of the issues that have surfaced in last 10 days. Company has as many clients as Infosys and strong fundamentals then why worry?

    7. Company has the largest cash reserve to revenue ratio in IT industry as a result of company employees under management direction … why question it now?

    8. Client delight index is a 4.5 out of 5, client retention is 98% – clients are an asset – do not loose sight of the fact and do not slight Satyam and management for just one aberration – this is an organization and not just a script on the BSE/ NYSE

    ReplyDelete
  2. All said and done, its the startegy on the way forward the approach its takes now on will help SATYAM to chartt its way forward to rise back to its glory....

    While international watchers keep a close tab on the situation its time for SATYAM to acat all guns loaded...

    ReplyDelete