Solectron is a contract manufacturing company that essentially relies on highly efficient business processes to execute projects for its many OEM customers. These processes are how Solectron differentiates itself, as they are highly proprietary strategic initiatives developed by the management of the company.

Birla’s job is to execute these complex business processes. For example, allowing customers to interact with Solectron and their suppliers seamlessly on a Web interface to know the status of a project, inventory, orders or shipments. That, in Birla’s book, is a business process to be kept in-house. What Birla is happy — and even compelled — to outsource is the technology required to make that happen.

The piece of Solectron that Birla manages IT for is primarily SMART Modular Technologies and Force Computers, which design, develop and manufacture a wide variety of memory and embedded products for OEMs. As a contract manufacturer, he is, in essence, in the supply chain business — making sure various suppliers are in sync with the manufacturing process, and allowing customers to know where things stand.

“In the supply chain arena we deal with OEMs and their suppliers; and there are times when customers need visibility across the entire supply chain. In order to provide that visibility, there are a lot of technologies.”

Making sure the right chips and components are available, and arriving in the most efficient manner, involves integrating a lot of back-end enterprise systems. Birla cites integration as one of his most significant pain points, given that, like any other CIO, he runs a variety of systems within his enterprise.

“I will outsource with someone who can manage the technology aspect of it — the middle layer and my user interfaces,” he says. “You have to say [to outsourcers], ‘Alright, you manage my integration layer. You manage enabling the supplier or the customer for me on my hub or on my portal.’”

Keeping Up

Though Birla wants to keep core processes in-house, he is also quick to acknowledge that one of the reasons he outsources some of his most important technology functions is that the technology is extremely complex —indeed too complex to do in-house.

“It’s pretty leading-edge, and there is no proven leader that will say, ‘Okay, I’ve done it,’” says Birla, referring to the capabilities of IT services firms. “You will find a lot of people who boast, ‘We have done this or done that for Fortune 100 companies.’ But if you really peel the onion, you find out what a struggle they went through to try to make it happen, and they are still learning the processes and the technology”

In other words, integrating the data in Solectron’s back-end systems to provide visibility into the supply chain isn’t just a matter of signing up a few programmers to do some commodity work. The ability to adapt to his needs and execute his plans is where outsourcers differentiate themselves in Birla’s mind.

Marital Bliss

“It’s hard, to begin with. But outsourcing is like a marriage — it’s a relationship that you have to manage. If you can’t manage the relationship outsourcing is doomed to fail.I am a value player,” he says, meaning that he keeps an open mind in terms of what vendors can best provide for his needs.

“As you work and get into the relationship, you start managing the relationship. You start to understand them and they understand you. That’s when outsourcing is at its best,” hesays. He adds that he won’t do business with a vendor unless Solectron is an important customer for that vendor, and consequently, the vendor listens to him.

Currently, Birla works with only two or three vendors because he doesn’t want to manage them all day. He has worked with giants like HP and IBM, as well as small and large vendors from India.

For him, the key is building a relationship through which a vendor truly understands his business. “Sometimes small and nimble makes sense, depending on what you are trying to do. Sometimes you don’t want to deal with small, because it’s complex or you need people to take ownership.”

Asked his view of big five consulting firms, he doesn’t mince words. “I don’t believe in the big five at all. You have to manage them too much, and it’s not in their best interests to complete projects in time and under budget.”

Dictatorship

If Birla emphasizes the intangible “relationship” as key to successful outsourcing, he is also pragmatic and almost Draconian when it comes to implementing projects. He believes that CIOs increasingly need to be in touch with senior management to understand key business objectives. In this sense, technology should never be implemented for its own sake — as was the case often during the tech-spending boom of the late 1990s.

“You’ve got to know exactly what you’re trying to get by involving users and getting their buyoff on the project scope. Then, you want to avoid the candy-store effect (allow scope-creep),” says Birla. Once the project is well defined, he sticks to it absolutely. “It’s basically a dictatorship project. You just dictate and nothing changes — period, end of discussion.”

For Birla, outsourcing means getting technology problems solved. He even concedes that “there is no perfect implementation. If you go into it saying that you will achieve a perfect implementation, that’s when things get out of hand. My approach is always 80/20. I want to achieve 80 percent of my project and then move on. I just want to know what that 20 percent will be and then deal with it.”

Birla started his career writing enterprise software, and even helped write the original Oracle manufacturing system. Today, he has to balance extreme complexity with very simple and clear-cut business objectives. He could clearly spend hours describing the incredibly complicated nature of his supply chain integration problems.

“We start getting orders,” he says. “We build the parts, and we ship the product out. Now we have to match customer forecasts with the pattern of orders we are getting. And at some point in time, if they are way off, you can come back and say, ‘Why even bother sending the forecast because we’re so off?’ You have to deal with the supplier info, the inventory, the vendor managed inventory, the consigned inventory, your own inventory, along with backlog — and forecast inventory management, production planning and order management. So, with all of these internal and external business processes and business models, you need someone to put it together — to pull information from the customer system, your system and the supplier system, and present it in a meaningful manner of what it all means to a customer.”

Sound complicated? It is. If a vendor wants Birla’s business, that vendor has to key into these kinds of problems, work with Birla to understand them, then solve them directly and pragmatically. Forget about trying to tell Birla what he needs out of technology. First you have to understand the business problem; the technology decisions are made later on.