During my recent interaction with R. Venkatakrishnan , a Chennai-based chartered accountant who is also director of Value Added Corporate Services P Ltd ( >http://bit.ly/F4TVenkatCA ), what I found to be a continuing theme was quality.
We had discussed cost of quality that does not show in financial statements, quality awareness in manufacturing, and the importance of quality in healthcare. And, over lunch, I listened to him describe a quality implementation project at an IT services enterprise, a theme that we decided to pursue through a subsequent email exchange.
Excerpts from the interview, in which Venkatakrishnan answers a few questions from Business Line on the relevance of quality in IT services.
How relevant is quality in the IT services industry?
Quality is relevant in any industry and IT service is no exception. Its relevance gets a little more accentuated when internal pressures build and external competition keeps growing faster.
Internationally, business tends to move towards locations that give companies a cost advantage, and that has been one of the reasons why India has been in the forefront of all the developments in the IT services industry over the last two decades. It is to the credit of the industry that it has migrated from pure body-shopping to one that has been providing high-end knowledge-based services.
Availability of human resources is key to the success of the industry, and it is paradoxical that in India we have shortages in the midst of plenty! Employability of resources has been one of the greatest challenges for the sector and it is here that the relevance of quality is very high. Since the specifications of the end product services are sometimes subjective it becomes critical for companies to manage the processes to ensure that the end product quality is achieved.
Do IT enterprises measure and manage quality costs?
The bigger and more quality-conscious organisations have started measuring quality costs while many others have not really got into it as a process. Many companies in the industry have obtained certifications to various quality standards ranging from plain quality management systems, ISO 9001:2008, CMMi, to information security management systems, IT service management and the like.
Companies are using measures and monitoring mechanisms in the processes to meet the requirements of the certification standards; for example, some companies use the 1:10:100 rule wherein costs of fixing defects are estimated at 1 in the coding stage, 10 at testing stage, and 100 at the integration stage. But then these measures are limited to the process rather than take a holistic view of the “quality costs”. It is the measurement of the cost of quality in its entirety that can make the systems more effective.
What are the areas where you see potential to reduce costs of quality in IT services? What are the challenges?
From an operational perspective, cost of human resources would be the largest line of cost that warrants continuous monitoring. A well-defined system should start the process right from the stage the organisation structure is defined.
That in turn would define the roles and responsibilities that drive the recruitment and training processes. The training processes aligned to the business requirements can also have bearing on the testing costs which are essentially a non-value added cost.
The biggest challenge in the exercise is with regard to internalising the processes. The internalisation challenge gets compounded by problems associated with attrition that is a bane of the industry.
Another issue that many organisations tend to face is the lack of adherence to policies in the pursuit of numbers. For instance, many a time, in an attempt to fast-track recruitment of employees, fit and soft issues are overlooked; this, in turn, invariably leads to quick mortality, i.e., employees resigning within a very short period, sometimes even within 12 months. This pushes up the recruitment costs and training costs. The pressure on companies to make the resources billable has seen capability-building taking the backseat, with negative repercussions in the long-run.
Can you describe a typical implementation that led to successful results?
As in the case with any situation, it is critical to know the current status of the organisation and the gaps that exist in its systems and performance both from a customer perspective as well as financial perspective. A key component of the exercise would be to understand what the standard times are for work units. That is critical to understand the extent of deviation. Once we understand that it would easier to set the goals with specific milestones.
The monitoring and review mechanism is extremely important using the classical Deming PDCA cycle of Plan, Do, Check and Act. That would definitely help do course corrections at an appropriate point of time.
Would you like to list the top 3 or 4 things that SMEs in IT services should immediately look at?
Start with establishing a good dashboard of metrics to monitor all the critical components of the organisation’s value chain. We must recognise that it would be possible to manage only such of those activities that are being measured. Most of companies manage to measure a number of areas, but very few actually end up analysing the data that the system throws up. The absence of meaningful analysis renders the whole measurement and data collection redundant. Again, post analysis, root cause analysis that trigger action plans is critical.
The next thing would be to constantly monitor the staff utilisation levels with specific references to efficiencies. There is bound to be diffidence, more often in the knowledge areas. This is critical considering that there is acute shortage of employable manpower and it would be good to optimise the utilisation of the available resources. Increases in manpower come with attendant requirements for space and IT resources all of which put pressure on the financial resources, always a challenge in the context of SMEs.
Any other points of interest.
Companies need to avoid pursuing implementation of systems only from a perspective of certifications. This is bound to become counterproductive at some point of time. In addition, when professional certification bodies raise the requirements in terms of evidences for implementation, companies find themselves unable to meet the expectation, and that leads to a fair degree of frustration.
Inadequate appreciation of systems would tantamount to throwing good resources that are scarce. The objective should be to continuously internalise systems that add value internally and facilitate customer satisfaction. These also become relevant for companies that propose to raise funds in the market.
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