Episode Description Hemant: Hello, this is Hemant Karandikar welcoming you to the fourth episode of the Kytes podcast. This podcast…

Episode Description

Hemant:

Hello, this is Hemant Karandikar welcoming you to the fourth episode of the Kytes podcast. This podcast is having conversations about leadership, people and technology for Project businesses. Today we are going to talk on the missing piece in the enterprise software landscape for IT services companies. IT services companies provide complex technology solutions, like application implementation, infrastructure management, security and data protection to their clients with multiple projects, deploying hundreds or 1000s of knowledge workers. They are all operations are complex and challenging. They use various enterprise software packages to manage their operations. This industry is several decades old. So one can say that their enterprise software space is quite mature, but is it so today we are going to examine this subject and find if there is any missing piece and what is that? To give us a helicopter view and also below the radar view of the landscape. We have with us Sandeep Kumar, founder and CEO of Kytes, solutions. Sandeep has been an insider in the IT services industry. But as an innovator, and entrepreneur, he has built up an enterprise software product company that serves the industry, Sandeep, this has both perspectives inside out and outside in. I’m excited to have Sandeep with us. Welcome Sandeep to this podcast.

Sandeep:

Thank you. Hey, man, thank you for having me.

Hemant:

Sandeep, can you give us a quick overview of the enterprise software packages that IT companies typically use for their operations?

Sandeep:

Sure. So if you look at a little bit of a history of IT services, right, so before IT services came, the manufacturing industry was there. So they were using ERPs. And all and as IT industry or IT companies, they became, they were scaling up and they were becoming larger. So they needed a software, you know, to do their financial transactions and all those things. So the very first software, or the package, as you are calling it, they use this the ERPs. Now, these ERPs, were not really made for the services industry, they were made for the manufacturing industry, like the SAPs or the oracles of the world. But then they saw an opportunity in the IT industry. So they sort of force feed their ERPs into the IT industry. So that is one side. So the very first software, the smaller ones, use the accounting software’s like tally or QuickBooks of the world. And the larger ones are using the ERP that is on the financial transaction, then on the customer facing side, you know, the sales force and the CRM, software’s have been there for quite some time. And so on the customer facing side, these IT industry has now are using one or the other CRM software’s like Salesforce, HubSpot, or the local ones. So these two, the CRM and the ERP are sort of well established, they know how to use it, they are seeing certain value out of it. Besides that, they have also sort of using HR technology, right to manage their employee master, their performance appraisals or even sort of absence management. So that’s another category of software, the HR piece, which is there. And having said that, now we’re actually their projects where their business gets executed. They really don’t have any very sort of say sophisticated software’s there are well established software’s like CRM and ERP right? So what these software companies have done because they themselves are programmers, and they can they think they can code everything. So they have built some sort of a homegrown utilities to do portion of this in isolation. And then they’re heavily relying on the Excel sheets as well. So today landscape of these IT services company, I would say CRM on the left hand side, ERP and HR on the right hand side, and then this homegrown utilities are the excels where they actually execute their business

Hemant:

or perhaps the project management software,

Sandeep:

okay, good point. So, they the likes of JIRA and also this also has been in use for their, you know, actual execution of their tickets or task and things is like that. So, it is, as I said, these are more team driven rather than organization driven. While you know, there is CRM and the ERP is are at the org level, every buddy uses it for every transaction. But these JIRAs and all, sometimes they are driven by the customer for one team. So they are more not really at the enterprise level, but more at the team’s level. But that is also being used. You are right.

Hemant:

So there are all kinds of let’s say smaller business processes are getting automated, that probably leaves out many end to end kinds of workflows. Is that the kind of situation in IT service companies?

Sandeep:

Absolutely. As I said that they have these islands CRM ERP, and then you know, the JIRA. But if you really start looking at, you know, what are the challenges? Or what is the aspiration or what is the drivers or KPIs of the IT services, this is to improve the top line to improve the resource utilization, improve profitability, and, you know, how do I improve the employee engagement, and all those things and the customer satisfaction. So these sort of KPIs, the current systems, one of the key challenges, that, first of all, there is no single version of truth, the systems itself, they are not really talking to each other in real time basis. And also lot of processes are not digitized yet, it is still, like, manage via email or phone calls, for example, collaboration at the time of estimation, between sales and delivery, it’s a broken process. So that is managed through emails. Now, another process, for example, billing, today, there is a timesheets are filled somewhere else. And then this data is compiled in Excel sheets. And then you know, somebody sits in front of the ERP and comes out with the invoicing and all. So lot of such processes are broken. The reason for that is, while they have, you know, digitize the left and the right in the center where they actually execute their business. As I said, they don’t they have not really implemented the any standard technology platform. They have just used their own homegrown utilities. And this is a real problem, because this is their own baby. And sometimes the thing that they don’t have a problem, and everything is working fine. But they are losing out on a lot of these benefits, which a standard technology can bring.

Hemant:

even day to day so called operational purely operational issue of allocating resources. That also is yes,

Sandeep:

absolutely. That’s a completely Excel driven phenomena today. And you wouldn’t believe we would think that, you know, large organizations in IT services space would have everything automated, and they would be, but the larger the company, the more manual activities you will find. So all like resource utilization, which is actually directly linked to the top line. This is a very manual process. And the outcome of that is that on one hand, they have a billing loss, and the other hand, they have a bench, and they both don’t know each other, and because of which the organization is suffering.

Hemant:

What kind of managerial overload this causes.

Sandeep:

A lot. Actually, there are two issues here. One is the manager is really not empowered to do what he’s supposed to do. In one of our earlier discussions. We talked about manager as the CEO of the project, right? So he’s not empowered, he doesn’t know what are my financial targets. And another challenge here is the manager is working like a data worker, he’s spending almost 70% of his or her time compiling the data, which ideally should be generated on a click of a button. And you can imagine that, you know, the manager takes a week to compile data. And then by the time he or she is done, there is a new data available. So you what you have is a stale data. So this is a big challenge. In fact, there was a survey which said that, today engineers are spending 70% of their time data collection, and this leaves them with only 30%. For the real work they have been hired and all data is within the company. All data is within the company. All data is within the end, forget about the end. side we have not even talking about that, but it’s a big problem.

Hemant:

And then if I go by whatever I hear from my contacts, friends acquaintances, who is normally one person, one Manager brings data and other people contest it,

Sandeep:

absolutely, absolutely. So, this is a you know, it’s such a real thing you are talking about, when a meeting starts, somebody pops up their Excel, which shows some number, and within 30 seconds, another person stands up and say, I think there is a problem in this data, because what I have on my Excel is very different. And then the whole meeting, you know, takes a very different direction. They are now contesting whose data is more correct, both of them may be having the wrong data, but they are contesting who is more correct. So, so

Hemant:

simple, I say simple, because they’re very obvious to a third person to somebody who is taking a bit distant view of what is it but are there any other issues that let’s say customers expectations, employee expectations, that also our remaining are difficult to fulfill, because of the operational constraints

Sandeep:

many one of the like, from a customer perspective, if you see a customer is always expecting that the right skill people are allocated to their projects. Today, you know, the RMG in the organization, their whole focus is how do I fulfill a position not necessarily with the right skills. So, sometimes this leaves the customer with a low skilled person on a high skilled job and they become dissatisfied second project, our customers also expect their suppliers or service providers to manage the projects in a very meaningful manner with the high governments and this will directly impact the quality of their deliverables, but in the absence of any consolidated systems, this becomes a challenge, it requires really a heroic effort from the Project Manager, which is really not sustainable and it does not. So, that is from a customer side, from a employee side employees also wanting to get meaningful engagement with the projects and everybody companies say that there is a job rotation policy, but today HR, they don’t have data to act on that job rotation policy. So, only when the employee puts in the resignation, he is offered a different project. So I think and also the learning skills development, there is no real data or a very systematic way to do this learning and development of as a individual and also employee, from employee perspective, when employees being appraised, it is more the perception of the manager. Right? And it’s not really data driven, whether I am performing at 120% or 80%. In the end, you know, both these individuals are always given a similar treatment, because of the lack of this data, which should be collected on a daily basis. So, I think a lot is required from customer as well as from employee perspective. So,

Hemant:

you have summarize the challenges. So what are the way out? What is the solution for this?

Sandeep:

I think, the way definitely, you know, it’s a, it’s a little bit of a journey, when we say we want to digitize, we want to put in a I mean and the irony is these are the guys who are actually taking up millions of dollars of project to digitize their customer, but their own house is in a little bit of a mess. So, the first step to the solution is we have to little bit take a step backwards and see what is really required. If you see in a services company, there are three key elements which is you know, in their business, one is the project financials, the other one is the resource management and the third piece is the project delivery. Now, these three are very integrated, the moment you start going deep into the subject, that you know there is a bill rate there is a you know the financial element then financials are dependent on the delivery, how you deliver and all of these are dependent on what resources you have. So they today organizations as I said they have built some thing on their own. And these three things are not talking to each other. And because of which I may be very happy that, you know, I may have a very good contract from the customer. But on the other hand, are the resources being allocated to that? Or is it being delivered on time. So, these things have to be integrated. So the solution in my mind is, they have to step back, really look at their process, and see how do I bring in the capability for managing my delivery financials and resources in an integrated fashion. So, today, you know, there are ways in which you can do that, and like, because we are into similar kind of thing, we work with customers. And once you do that the results are absolutely amazing.

Hemant:

So, is it a new kind of a solution that you’re talking about?

Sandeep:

It’s definitely, you know, as I said, it’s not really new, everybody knows that, you know, these are the things and they probably, they have been working in for a decade or more than a decade. So, they know all these things, but there is a new category of solution called PSA professional services automation. So, what it does is, it combines the project management or the project delivery, Project financials, which is fairly new, because as I said earlier, the financials means what SAP provides or what Oracle provided they were more tailor made for manufacturing industry. So, Project financials and very importantly, this resource management, which will help us to improve our resource utilization, improve project profitability, and improve our governance, delivery and customer satisfaction

Hemant:

Going forward, IT industry serves manufacturing, and lot of other sectors, health care and all that the customer segments themselves are undergoing a big change transformations, and many of them are digitizing many of them are taking to artificial intelligence and all that, does that mean the challenges to it and services industries are also changing?

Sandeep:

Absolutely

Hemant:

in what way?

Sandeep:

Yeah, absolutely. Because, you know, today, what is changing is the business models themselves are changing. So, earlier, you would see a lot of TNM even today it is, but then fixed price product model came into picture today, there are a lot of outcome based models, which are coming into the picture. So it organizations have to sort of reinvent their systems and their way of thinking. And also while, you know, this agile thinking agile action, because today, there could be ramp up ramp down from the customers fairly quickly. So we have to strengthen our processes that we are able to sort of respond to these changes rather than react to it. And so in that sense, yes, the systems which we are building, have to have that flexibility and sort of comprehensiveness that I can change them without much effort and time to respond to the changing customer needs. And the second thing is the emerging tech, you talked of AI, ml, NLP and all those things, I think while the IT services company, I mean, they are they obviously know about it, they are doing it for their customers, it becomes very important to use it for themselves as well today to predict, like, for example that what will be my what is my revenue forecast over the next few months, and how it is getting impacted by the people I’m hiring or attrition. So, the there can be a fair amount of AI which can be used in you know, either it’s a revenue wreck forecast or profitability prediction or you know, what are the risks, which may come up in the next three months, people raise customer risk, financial risk and all those things. So, there is IT industry can certainly, you know, basically use this emerging tech for their own operations,

Hemant:

does it also mean that the speed of making decisions by the managers is going to be more and more important?

Sandeep:

Absolutely. So, the speed and more than the speed, you know, the decision at the right time, right and for them to be able to make right decisions. We have to do two things. One, we Have to free up their time for data analysis, rather than data compilation. Today, I’ll give you an example. And this is a situation in every IT company, every IoT company, regardless of the size, the last 10 days of any month and the first 10 days of the next month, project managers are spending their time in just data compilation for billing purpose, which resource has failed, how many hours and against which bill rate, whether it’s correct or not correct. And this is I’ve seen, and in spite of having the SAPs and the oracles of the world, so they just don’t have time to even figure out that do some what if analysis that if I change this person to this project, or to this people to this project, can they improve the profitability of the project, they just don’t have time, because they are always running on the timelines that you have to give the compiled data.

Hemant:

So so they will have no less time to have a nice chat with their team members,

Sandeep:

absolutely,

Hemant:

To find out if any problem is there, or anything, or requires or anything like that.

Sandeep:

Absolutely, this is their core job, which is their core job. And they have all the data. So if we can give them a platform, which can do all these mundane jobs, or the routine jobs on a click of a button, and then give them nice analytics, the trends in which they can identify that this month, my billing is going to be less, because 20% of my resources are on the Leave or you know, on vacation, and if they can start seeing this information proactively, then they can bring in you know, other resources for that duration, and I can avoid my billing loss. So and we have seen, you know, today, industry talks of a term called DSO DSO, is daily sales outstanding that after you do the billing, how long does it take to get the collection, right? But industry doesn’t talk of effective DSO, the 10 days, which I spent in compiling data, and that to the last, those are lost. And that too, I’ve seen there is so much back and forth between the customer and the company for the incorrect invoices.

Hemant:

Right.

Sandeep:

So I think that there is a lot, and these are not rocket science solutions. These are simple solutions. But the biggest problem I see with the decision makers today is the acknowledgement that we have a problem. They think, you know,

Hemant:

we have grown so much.

Sandeep:

Yeah, so Yeah, that must be fine. Yeah, that’s the attitude that look, I am running a multi million dollar business. I am digitizing the WHO IS WHO of the world. Yeah, you know, obviously my house is in order. I can’t have challenges. So it

Hemant:

is trying to tell the doctor heal thyself. Yeah, absolutely. And VSA is that medicine,

Sandeep:

I believe so it’s a it’s a very logically fitting between the CRM and the ERP and if implemented right, in a phase wise manner, this can really create exponential and sustainable value creation.

Hemant:

This indeed very enlightening talks, and you have given us a overview of the industry, what kind of application software are being used. You also talked about real day to day operational problems that the managers face, that the managers spend more time in data compilation data gathering, than making decisions analyzing and making decisions, and they have probably not enough time to talk to their people, about teamwork, about their mentoring them about improving their work, and about seeing the expectations and PSA is a good solution And and I hope that the IT industry looks at itself like you said take a different view, slightly step back and see what is going on. Because a lot lights on IT services industry, the end customers of IT industry like manufacturing, health care, insurance, banking and finance and all this they depend on IT services to improve their operations. So economy, in general has a lot to gain or lose fit companies do not, you know, pick up pick up the slack so to speak.

Sandeep:

Absolutely. We have to keep them healthy.

Hemant:

Yes. So thank you, Sandy for throwing, shedding important light and giving insights on this complex subject. And thank you, listeners for joining in today and I hope you’d like to do a discussion do write to us at [email protected]

See you again goodbye.