{"id":1583,"date":"2010-12-04T06:48:00","date_gmt":"2010-12-04T06:48:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/vineet-nayar-hfs-120310\/"},"modified":"2010-12-04T06:48:00","modified_gmt":"2010-12-04T06:48:00","slug":"vineet-nayar-hfs-120310","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/vineet-nayar-hfs-120310\/","title":{"rendered":"“Cloud is bullsh*t” – HCL’s CEO, Vineet Nayar, explains why he said just that"},"content":{"rendered":"

<\/strong><\/p>\n

Vineet Nayar, CEO at HCL Technologies, has firmly cemented himself as one of today’s outspoken visionaries in the world of IT services. \u00a0Never afraid to offer an opinion that may rub a few folks the wrong way, the self-styled CEO booked his ticket to notoriety at HCL’s analyst conference in Boston this past week, where he described Cloud, well, as bullshit<\/em>.<\/strong><\/p>\n

Unfortunately for Vineet, some of the HfS Research team had also made their way to the sessions, and we weren’t going to let Vineet off lightly, without getting him to share some of his views with our readers. \u00a0So Phil Fersht and Esteban Herrera were only too pleased to grab some time with him on Thursday after his flamboyant keynote to get him to elaborate a little further…<\/p>\n

<\/span><\/strong><\/p>\n

\"Vineet<\/a><\/p>\n

Vineet Nayar, Chief Executive Officer, HCL Technologies<\/p>\n<\/div>\n

HfS Research<\/strong>: Thank you for joining us today, Vineet. Can you elaborate on your statement this morning that \u201cCloud is Bullshit?\u201d<\/span><\/p>\n

Vineet Nayar:<\/strong> My view on Cloud is that I always look for disruptive technologies that redefine the way the business gets run. If there is a disruptive technology out there that redefines business I am for it. If there is no underlying technology there, and it is just repackaging of a commercial solution, then I do not call it a business trend. I call it hype.<\/p>\n

So, whatever we have seen on the Cloud \u2013 whether it is virtualization, if it\u2019s available to\u2026 now before I go there, and the reason I believe what I\u2019m saying is right, is because you have now a new vocabulary which has come in Cloud, which is called Private Cloud. So now it is very difficult, so what everybody is saying is \u201cyes, it is private Cloud and public Cloud\u201d So, in my vocabulary Private Cloiud is typically data center and when I say Cloud it is about Public Cloud. So let\u2019s be very clear about it.<\/p>\n

All the technologies that have come in so far\u2014whether it is VMware on virtualization, which is the driving force in cloud, or Azure or Spring\u2014are available for the enterprise customers to implement in their data center and to create a robust infrastructure which is a shared platform for their applications to deliver to their consumer. So the question I ask is: \u201cWhy should they step out from their data center and go into somebody else\u2019s data center which is shared?\u201d Why would they do that?<\/p>\n

They would do it because they believe that with shared infrastructure, assumption one, they will get a better return on investment. Now, that did not happen with grid computing with IBM and IBM On Demand has been a very big campaign.<\/p>\n

Is there something I see out there that tells me it will happen now? Yes, it is happening where your usage requirement is time bound\u2014that means you need it for three months for SAP testing, you need it for one month a year for tax consolidation. But, am I going to put my IP on the Cloud, am I going to put my financial accounts on the Cloud, and I going to put my HR applications on the cloud? I have not seen any technical reasons for that to happen.<\/p>\n

Then the second reason you can do that is there is commercial benefit that somebody is offering you, which is flexibility of you being able to use the infrastructure at a higher or lower on a significant level\u2014that means you can go up 50% or down 50%. When you look at the pricing available for those kinds of flexibilities, they are commercially unattractive. Which leads me to believe that whoever is selling services of variable infrastructure as Cloud is selling them as leasing connections, rather than selling them as true variable connections. I don\u2019t have a problem with that because there is no underlying technology which makes sharing more productive rather than not sharing. So if there\u2019s no underlying technology, obviously it has to be leasing connections.<\/p>\n

And then we go to applications like leasing of Azure, which creates a bus so you have to create more efficient applications rather than inefficient applications. I believe Azure will be a standard tool for creating applications inside the organization so that people, whenever they use those features and services, will use them inside the organization.<\/p>\n

So, do I need to I need to go out on the Cloud to use azure or Spring? The answer is no. \u00a0the only reason I would go out on the Cloud is for shared services\u2014for applications which are not available for me to buy. Salesforce.com now you can buy as an enterprise license. So the purity of the Cloud is also going away. And you will see a lot of Salesforce.com being inside the enterprise because they will reuse their existing infrastructure.<\/p>\n

Now, public citizen services is an area which would lend itself to application sharing. And the same is true with communities coming together\u2014export communities, auto component manufacturing communities\u2014whose owners on a standalone basis are not big enough to buy an ERP system but can come together and buy a shared ERP system.<\/p>\n

Now, you can force me to call it Cloud. Or you can force me to say that they will an entrepreneur out there who will see an opportunity to construct a data center, construct and ERP, charge everybody a fee and say that my business is to serve you\u2014and you create a shared services platform.<\/p>\n

So my view is that I have not seen anything from a technology point of view which is not available for the enterprise for usage for me to get very excited and saying, \u201cHey all of this is going to move to the Cloud.\u201d And that\u2019s the reason I\u2019m not as bullish about the Cloud as somebody else is.<\/p>\n

HfS Research: <\/span><\/strong>You mention about shared services and I think that\u2019s interesting. Do you see the growth of these “shared services” happening more with the small to mid-market businesses? And it\u2019s those companies, as they get bigger, where everything they\u2019re getting, is being provisioned as a shared service in the Cloud. Whereas it\u2019s the large enterprises\u2014the global 2000\u2014where there’s a lot of legacy IT apps and infrastructure, and the business case for Cloud isn\u2019t quite there yet.<\/span><\/p>\n

Vineet:<\/strong> I think if you take it two-by-two\u2014if you take small and medium enterprises and large enterprises, short term and long term: The small and medium enterprises for long term, and the large organizations for long term is where the Cloud or shared services will be used. That means, if I want to do testing for three months, large organizations will use it. A small organization testing for three months\u2014no one will give them the shared services. So the small guy will have to commit long term and the larger guy will find usage in short term. Those two quadrants will be where the opportunity should be.<\/p>\n

I\u2019m glad you\u2019re using the word shared services. Shared services will be there. So what happens is I can create my enterprise data center and allow people to share it. And you can, if you like, force me to call it Cloud.<\/p>\n

I don\u2019t call it Cloud.<\/p>\n

HfS Research:<\/span><\/strong> You mentioned about the Private Cloud, one of the things I\u2019ve said sometimes\u2014and it\u2019s not been well received\u2014but I wonder if you\u2019d agree, is that Private Cloud is nothing more than a re-architecture of your existing apps and infrastructure. There\u2019s nothing terribly innovative or different about it, except that some of the technical architecture behind it may have changed<\/span>.<\/p>\n

Vineet: <\/strong>I think there is one difference. And that difference is that everybody asks the CIO, \u201cHave you implemented Cloud?\u201d And the CIO gets away by saying, \u201cYes,\u201d when you call what you\u2019re rightly saying is an enterprise re-architecture of your internal data center as Private Cloud.<\/p>\n

So the Private Cloud vocabulary is a convenient way of shutting down any conversations around Cloud. So that\u2019s the reason I support Private Cloud in my CIO conversations, otherwise it is exactly what you\u2019ve said. Otherwise you are saying, \u201cHow come you have no strategy for Cloud?\u201d Every board is asking for a Cloud strategy. So you might as well have a Private Cloud strategy and call it a Cloud strategy and get it over with and put a tick in the box and get on with life.<\/p>\n

HfS:<\/span><\/strong> Let me switch to some perceptions that the analyst community and certainly your competitors have, and that is that on both sides of the Atlantic you\u2019re winning a lot of sole source deals. So that the growth is clearly there. There\u2019s a perception and I\u2019m not sure you\u2019ve been too public about it as a deliberate strategy. And I wonder if you can comment on whether it\u2019s deliberate\u2014and whether it is or isn\u2019t, why are you winning those? What\u2019s the difference?<\/span><\/p>\n

Vineet: <\/strong>I want to be careful in answering that one. (Laughs) So, the answer is, yes we are winning a lot of sole source deals. And it is deliberate to keep quiet about it. And the reason for that is that we are increasingly finding that our whole business benefit-based approach starts very early in the cycle. And if we are able to convince our customer on the business benefit, then sourcing becomes an irrelevant issue. Where the amount of IT spend irrelevant compared to the business benefit, we are able to do sole source. And that is what our focus is.<\/p>\n

HfS:<\/span><\/strong> Now everybody\u2019s jealous of you because you are getting many sole source deals, which is clearly a more cost-efficient way to sell. What is it that you, as HCL, are doing differently that allows you to do it and your competitors not so much?<\/span><\/p>\n

Vineet:<\/strong> I would just say that we have figured out a few things, which lends itself to business benefits. We have figured out a lot of things that don\u2019t. And we are in the business of focusing on the few and ignoring the many. Sharp targeting.<\/p>\n

HfS: <\/span><\/strong>That\u2019s actually one of my other questions, but I\u2019m going to skip to the most rumor and innuendo-fueled of my questions. \u00a0The extraordinary success of HCL in terms of growth is really driven by your personality and you getting personally involved in the sales cycle with senior clients. You\u2019re nodding your head so that may or may not be true. What happens to the organization as it continues to grow? Can you stretch yourself that thin?<\/span><\/p>\n

Vineet:<\/strong> First, it is more a fear in the mind of a losing sales guy. It\u2019s very easy to justify why you lost is because Vineet was personally there. So the rumor as you rightly said is forming in the excuse of why you lost the deal and that my CEO was never there. And you can\u2019t dispute that logic. However, I can assure you that not a single CIO will buy complex transformation transactions based on my limited knowledge of his business and my limited knowledge of the solution we\u2019re offering. My knowledge in both cases is very limited. He will buy only because on the ground he sees people with higher energy, higher passion, innovative solutions, aggressive pricing, more business case, more aligned. So my role in HCL is around strategy, as you saw, making sure that what I presented to you is delivered inside the organization. Today, I am in the US meeting you. The next five days I am only spending with employees. I am going to Seattle, then I\u2019m going to San Francisco, then I\u2019m going to Dallas, then I\u2019m going to London, then I\u2019m going to Paris, then I head home. I have three customer meetings during this trip. I truly believe in what I say\u2014that if I can get my people fired up they will do the magic. So that\u2019s one.<\/p>\n

Number two, what happens when I\u2019m no longer there? That\u2019s a very interesting conversation. I truly believe, you must understand that I was the CEO and promoter of HCL Comnet. When I left HCL Comnet it was $70 million. Then I was replaced by another guy\u2014Anant Gupta\u2014who is not as much an extravert as I am. He has a different personality. He has taken that company from $70 million to $550 million\u2014far faster than I did in bringing the company to $70 million. Why? Because you must understand at HCL it is not personality and charisma, and presentation which makes a difference. If you remove all of that and look at the thought in the presentation\u2014the thought in the presentation could not have come from me. It\u2019s not one person who can think through that because the subjects we cover are cultural, technology, customer relationship, employee management are a culmination of thought. Now when the organization is moving toward a strategy that is unique, and starts thinking in that fashion, the leader doesn\u2019t matter. And, therefore, Comnet as an example from 2005-2010, if I\u2019m not in HCL Technology, I can assure you it will grow faster.<\/p>\n

HfS:<\/span><\/strong> Some would have their doubts. But let me go to one of the cornerstones of your strategy which is very catchy. I think it\u2019s very powerful with customers. I think it\u2019s a great marketing tool, which is the Employee First culture and you back that up with action. However, I still think from our interaction with buyers, many know that HCL is employee first, but if I ask them what does that mean, they can\u2019t answer that. So I think HCL has a gap there that still needs to be addressed, because while it\u2019s catchy and compelling I don\u2019t know that people know the difference between being an employee at HCL and doing the same role at one of your competitors. Can you talk a little about that?<\/span><\/p>\n

Vineet: <\/strong>I think that that\u2019s true\u2014that one of the failures at HCL is the fact we\u2019ve not been effective at communicating what it is. But let me flip the coin on the other side. The other side is that every single one of our customers knows what Employee First is\u2014every single customer knows. Every single one of my 70,000 employees knows what Employee First, Customer Second is. Every one of my competitors know what EFCS is. And it\u2019s just a matter of time. In my mind, a great idea is going to catch on. Whether it still does a good job or not a good job, if the idea it will reach over the years; if the idea is bad, irrespective of my marketing it, it is not going to reach over the years.<\/p>\n

One of the reasons I have held back on glitz around Employee First is because what you rightly said in the beginning is it\u2019s a great marketing tool. I don\u2019t believe so and I do not want it to be seen that way, I don\u2019t want it to be projected that way, I don\u2019t be used that way.<\/p>\n

I think it\u2019s a great idea. It\u2019s a great journey of experiment that started in HCL. Let it take 10 years to reach its end destination. Any management guru you talk about they know about Blue Ocean; everybody knows what Blue Ocean is all about. In the first three years nobody knew anything about that book or the concept. After three years, everybody knows it. So, with Employee First, we\u2019re not in a hurry. You must understand, my company thinks five years at a time. I don\u2019t think one year at a time. In 2015, if you can show me any CIO who does not know about what Employee First is, I think that is going to be an interesting conversation.<\/p>\n

HfS: <\/span><\/strong>The part I\u2019m still curious about is the employee experience. How does an HCL employee, or someone who\u2019s considering becoming an HCL employee, know the difference?<\/span><\/p>\n

Vineet: <\/strong>Let me explain what Employee First, Customer Second is, then let me explain how an employee experiences it, how a customer experiences it, how a potential employee experiences it.<\/p>\n

What is your core business? To create value for your customer\u2014differentiated value. Where does value get created? In the interface of our employees and customers. Who creates the value? The employees create it. What should the business of manager and management be? Enthusing and encouraging employees to create value for your customers so that you can grow faster. That\u2019s the concept in a box.<\/p>\n

OK. How does an employee feel it? There is a 360-degree appraisal system happening right now\u2014including my appraisal. If you come into the company, you see CEO, my manager, my manager\u2019s manager and you\u2019re being asked to rate them. There was another analyst in before you, and I asked him what do you think is different between HCL and anybody else, because they\u2019d done this customer support feedback and HCL was number one in an independent assessment of customer satisfaction\u2014ahead of IBM, Accenture, and everybody else. So I asked, \u201cWhat is it that you heard?\u201d And he told me that \u201cHCL knows how to say no.\u201d And I said that, where did HCL learn how to say no? Well, if you\u2019re doing your boss\u2019s appraisal you get a different degree of confidence. So that\u2019s the first experience that happens.<\/p>\n

Number two, your boss suddenly is very nice to you. What can I do for you, what value can I create for you? <\/em>So at least he\u2019s nice three months before the 360 and three months after the 360. So you six months out of one year I have made your boss in your service. And in each passing year it becomes better and better. You feel empowered. You feel encouraged.<\/p>\n

Third, the energy level in the organization is very high. Why? Because of the collaborative culture. Because of open appraisal systems, politics is not there. Everybody knows if you\u2019re playing politics, your employees are going to screw you up. The whole company is going to know about it. You can\u2019t play that. It\u2019s not just your team. Your 360 is done by his team, his team, his team because if you are negatively influencing his team performance you\u2019re going to see it in 360. So an employee feels energized, motivated, collaborative, and he has all the tools he knows the company has aligned towards him.<\/p>\n

Is it perfect? No.<\/p>\n

How does the customer experience it? If you ask them the energy, the enthusiasm, the passion in the eyes of the employees\u2014they have not seen before. And that\u2019s what the customer cares about. He gets a motivated employee rather than a demotivated employee.<\/p>\n

A potential employee is sick and tired of the blue book and that a****** who\u2019s his manager. And he says, there must be a better company. That\u2019s a reason 33,000 employees, can you believe it, 33,000 employees in the last six months crossed the border. So there must be something very attractive. And they would not cross after reading a book. They\u2019ll pick up a phone and talk to a friend and say, \u201cThis is what happens in my company. What happens?\u201d And the conversation is like this: \u201cThat guy is not giving me approval.\u201d \u201cWhy do you go to him for approvals?\u201d So when those kinds of conversations happen, you must understand that 77,000 mouths is a lot of mouths\u2014and a lot of Tweets and a lot of blogs.<\/p>\n

And that\u2019s one reason I don\u2019t call it marketing. You can\u2019t keep it in a box. Because all of them are talking about it. And when I wrote the first book, I know, Krishna and everybody said, \u201cVineet don\u2019t do it because there\u2019ll be a lot of people who\u2019ll talk about it.\u201d And that\u2019s exactly what I want. I want my employees to say, \u201cThis is not true.\u201d<\/p>\n

Go and say it if it is not true.<\/p>\n

So that\u2019s what a potential employee sees. Nobody\u2019s challenging it\u2014everybody\u2019s loving it, because all the dirt is in you and I.<\/p>\n

HfS:<\/span><\/strong> When you look at the next year, and after what we\u2019ve been through in the past two or three years, where are you going to be investing in the next 12 months in terms of your own business.<\/span><\/p>\n

Vineet:<\/strong> I will be investing, number one, in creating new services around business services\u2014business services and ecosystem business incubation around Cloud, mobility and other stuff. That\u2019s the first investment in service lines. Second, I have to make a huge investment in new generation organization architecture for Gen Y and gender parity. That\u2019s the second area of significant investment. Third, in new geographies: Continental Europe, South Africa, Asia are significant investments for us from a geography point of view. The fourth area is we need have to redefine what our competitive position is going to be with a new competitor. We are creating a new competitor who doesn\u2019t exist today.<\/p>\n

I have some assumptions of how technology companies may snuff out competition by suffocating it, by making billions of dollars worth of purchases so that those technologies are not available to us as service providers for our provision to customers. So if you are my competition, that\u2019s the thing you should do. So how are we going to react to that? That\u2019s going to be very important.<\/p>\n

And the last is innovation. What is it that HCL needs to do to drive innovation? Because innovation is happening at a very high speed, we don\u2019t understand it to the extent we need to understand it. What is that big idea so that we can transfer momentum behind innovation, so that we can deliver, so that we can be the most innovative company in the IT services landscape by 2015? What is it that we need to do today to get us to that position in 2015? These are the five areas in which we are making investments.<\/p>\n

HfS: <\/span><\/strong>Thank you so much for your time this afternoon- and for sharing your views with the HfS readers.<\/span><\/p>\n

Vineet Nayar (pictured above) is Vice Chairman and CEO at HCL Technologies. \u00a0You can read his full bio<\/a> here.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Vineet Nayar, CEO at HCL Technologies, has firmly cemented himself as one of today’s outspoken visionaries in the world of…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,50,51,81,87,88,91,832],"tags":[303],"organization":[],"ppma_author":[19],"class_list":["post-1583","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-captives-and-shared-services-strategies","category-cloud-computing","category-it-outsourcing-it-services","category-outsourcing-events","category-outsourcing-heros","category-saas","category-sourcing-best-practises","tag-enterprise-irregulars"],"yoast_head":"\n"Cloud is bullsh*t" - HCL's CEO, Vineet Nayar, explains why he said just that - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/vineet-nayar-hfs-120310\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\""Cloud is bullsh*t" - 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