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December 11, 1999


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'Technology is moving faster than policy': Ashok Soota

For 15 years, Ashok Soota was Wipro Infotech, and Wipro Infotech was Ashok Soota. His sudden announcement of his decision to quit Wipro and launch his own start-up rocked the infotech industry in Bangalore.

Email this story to a friend. Mindtree Consulting, the start-up he launched in August as founder chairman, with eight other co-founders of varying seniority, was in the limelight from day one, to his amusement and mild dismay.

"We have been getting too much publicity at such an early stage," he said now, when asked him to talk about what the new company has been up to for the past few weeks since its launch.

"I think its time we remained low profile for a while."

Soota is an electrical engineer with an MBA. He began his career with the Shriram Group of Industries in 1965, and worked with the group for almost two decades, eventually becoming chief executive of Shriram Refrigeration, a company he helped to turned around.

In 1984, he became president of the Rs 70 million Wipro Infotech of Bangalore. Under his leadership, the company's IT group began generating over Rs 10,000 million, making Wipro the largest publicly listed IT company in India. He led the company into important business alliances like the joint venture with Acer of Taiwan.

Over the years, he was also chairman of CII for South India, Chairman of CII's national committees for electronics and IT and even president of the Manufacturers' Association for Information Technology. He is now on the prime minister's task force for the development of IT in India.

M D Riti quizzes this infotech industry legend about e-commerce and the millennium mantra of the Indian IT industry:

How would you define e-commerce?

There are so many definitions. Rather than attempt a narrow one, I would rather see what all the term could embrace. Let's first divide it broadly into business to business and business to consumer.

Within business to business, it could be anything from the simplest stage to something that either has web-enabled their processes or has undertaken actions whereby, let us say, we have integrates seamlessly both upstream and downstream processes which are beyond the confines of the organisation. Anything that does that can also be called e-commerce.

On the other hand, it could also encompass the ultimate stage where you can virtually create a new dot com business. Or someone completely revamps their business model so that you are now taking into account the possibilities of electronic commerce.

Do you think it is necessary to look at e-commerce from the two different perspectives of being on the web or off the web? Wouldn't things be much less confusing if a unified approach were taken?

E-commerce is certainly not new. One can even call credit card transactions e-commerce. And then, of course, there is EDI. I think the difference with e-commerce as we think of it today is due to the whole explosion in demand because of the Internet. Before that, under the EDI environment, only large organisations that could afford the infrastructure that had to get created for EDI, were able to get on to this.

It was being driven by a few government applications like Customs or by large organisations that actually lay down the law: they tell their suppliers to do transactions in an electronic form corresponding to the protocols that they design, so that these are all proprietary protocols.

The beauty of the situation today is that nobody has to bother about infrastructure. Its all there on Internet. It enables the smallest individual to say, 'I can get into electronic commerce'. And, of course, it enables a situation where every computing device across the world will be interconnected. Therefore, the possibilities are endless. When we think of e-commerce today, we are really referring to Internet commerce: the two have become interchangeable phrases, and this is where the explosion is really taking place.

What are the prominent competing standards for e-commerce security and protocols today? What are the advantages and disadvantages they have over each other, and which organisations are backing them?

Like in any technology, there will always be competition. But this is a very international and global platform, largely because of the openness of the Internet. I think there are efforts to work out certain standards. But on the other hand, it is also important to have, for the sake of security, certain things that are not visible, like encryption technology.

One of the concerns was that security protocols and the encryption standards are being, in a way restrictions in the export of encryption technology including 64-bit encryption technology. There is a very strong thinking in Washington today that these areas should be liberalised and I would not be surprised if the restrictions on some of these technologies get removed shortly.

But there are no universally applicable protocols today. In the absence of this, how can global e-commerce really take off, with different systems recognising or requiring different protocols?

I am not sure what exactly you have in mind here. Perhaps you are referring to the platforms of Microsoft, Netscape and IBM. There are a large number of independent software developers who enhance the solutions offered by these major companies. The one thing I would say about the major developers is that almost all of them will come up with solutions that will work on all these three major platforms.

It is also not that you cannot co-exist on some of these platforms. That is where the work of some of these technical architects come in. Today, in any software development, you will find different types of software being used. Whereas we want to have as much as possible of any single standardised type, where this is not possible, it is the work of the technical architects, the people who, in effect, customise solutions, to say, we will build bridges between one part of the organisation and the other.

It is really like saying, today if you have one company, which ran on SAP, and that company acquired another company which ran on Oracle, since they are two disparate systems, some other company will work on a bridge to connect them.

If solutions have to be customised on a case by case basis to make various e-commerce protocols and systems compatible, then global e-commerce will remain a distant dream.

It's not going to be case by case. Building blocks conforming to certain standards will have to be designed.

Is this what Mindtree is essentially going to do? Play the role of technical architect devoted to building bridges?

Our role is to help people implement their own e-com solutions. As we do more and more of these, obviously we will develop our own tools, libraries and components, which should grow into good building blocks.

So you are essentially hoping to be popular technical architects?

Obviously, we are hoping to do that for our customers, because when we implement an e-com solution, the first and most important step is to create the technical architecture.

How will global standards of e-commerce finally be established? Will a global authority decide that or will market forces? And do you think the e-commerce standards that evolve in India will be different from those that get established in the West? Or will the standards be compelled to be the same globally?

By definition, I think e-commerce is going to be the implementation of global solutions. Everyone need not be a global player. But the solutions must be implemented globally. Therefore, it does require a lot of international bodies having a say in many things, right from the issue of how do you allocate an domain name. Now, every country would like to have a say in this, but how much of a say can everyone have?

Fortunately, there are a few international bodies who are playing a very important role in bringing some understanding, systems and standards into what could otherwise have been chaos. I can mention the World Intellectual Property Organisation that has done excellent work in terms of approach towards domain name standards.

You have the I-Cam, which has been created for the whole issue of privatising the whole issue of giving out domain names. There are other aspects that are being looked after by organisations like the World Trade Organisation. So there are bodies which are trying to lay down a methodology which will allow the unimpeded flow of electronic commerce. As for India, the standards will have to be the same for India and the West.

As of now, we have laid down no standards for e-commerce transactions in India...

There will be globally available international standards. We may contribute our share to them in terms of some of the building blocks. We may also want to have a larger and larger say as we go along. But the fact of the matter is that those countries where e-com is a large part of the economy will have a larger say.

What if our own commerce policies impede this process?

In India, the first thing is that everybody is underestimating the way in which the world is webbifying, and therefore e-commerce is going to grow even faster than all those optimistic projections which are going around. Where India is going to differ from the West for a while is that business to business constitutes approximately 80 per cent of total e-commerce. Projections predict that this will continue.

However, I personally believe that, in the West, there is going to be a huge explosion in the business-to-consumer segment. Time is much scarcer there. People do not have the help to take care of certain things there, that we have here.

In India, the business-to-consumer will be even slower because we are not adequately networked, there is not enough of a population of PCs. People have not changed their methodologies or ways of thinking. It's a question of developing habits, and that is a slow process. Contrary to published projections, in five years or so, I predict that business-to-consumer will have almost caught up with business-to-business.

In the West, business-to-consumer has almost caught up with business-to-business, just as you saw that PC sales suddenly became a very large segment of computer sales in the West. In India, business-to-business will really take off because Indian businesses are going to want to be global and competitive, and this is an opportunity for us to do so. Therefore, we will find that this 80-20 ratio of business-to-business as against business-to-consumer e-com might even become 85-15, because the infrastructure still does not exist.

In the business-to-consumer area in India, you will see a lot of initiative being displayed, wonderful niche businesses coming up, like lottery dot com, or bottles-for-children, such specialised things. A lot of creativity will emerge: Like someone saying that they would like to export folklore and literature to the rest of the world.

Perhaps our museums will start going online. These could all be very interesting e-com applications. But all this will still be slow until infrastructure develops, there are some changes in the legal situation, and, finally, till the ownership and population of PCs is much larger, as well as the availability of the new wireless technologies, which will again further drive the business-to-consumer model.

So how will the legal situation change? Do you think a forum of companies like Mindtree who are affected by these problems that will have to push for a reassessment of the existing laws?

I think the government is already seized of the issue. They are already aware that this is an important area, and we should not be left behind.

There is already an IT bill, which has also been described as a new cyber law, that talks of recognising electronic signatures, electronic cash, and many other such features. Now that the new government is in, this bill, which has already been prepared and drafted earlier, will come up for early consideration and get passed. A lot of the enabling issues will get out of the way once that is done.

One of the big stumbling blocks for the implementation and growth of e-com in India, and even in many other countries other than the US, is that the subject does not belong to any civil department.

In India, for example, it will have to cut across multiple ministries. If you assign it to DOE, then someone else will complain about it. If you assign it to commerce, someone will have 150 objections to it. If you give it to finance, then finance has a control and a budgetary responsibility, as well as a developmental function.

I think we now need a wonderful vision and a document. But how do you convert that into reality? You need a structural approach, plus a top level support, that says, 'This is critical or imperative, it must get done and so let's sanction it'. Its like in a company -- a chief executive must drive a given new initiative that's going to transform a new government. In the same way, if this is going to transform an economy and a whole country, then it should be done.

It is different in the US. The moment they identified that the digital economy is going to be very important, a powerful body came up under the vice-president, and it had the power to cut across all sorts of barriers. This does not exist in India even today. I hope that one or the other of our departments will now pick up the initiative for all this in India now.

Alternatively, just like the prime minister set up a task force for IT last year which has achieved a great deal in terms of examining different sectors like software, hardware and businessware, and the infrastructure they need, I think we must now take a national look at a task force directed at the highest level, maybe by the PM. This will look at how the country should go about the business of e-commerce.

What are the particular issues that you think the e-com policy should address?

The basic issues will be things like do you recognise digital signatures. This whole issue of making payments through credit card mechanisms is available today, but again in the absence of infrastructures and security mechanisms, there is a very small flow of such cards. I think what is important in policy issues is that in the business-to-business segment, there are a lot of complex legal and taxation issues, like where has a given transaction arisen, in which country, and to what extent is it taxable.

If a given service is taxable when done in a physical form, for example, if you are to import music, obviously that music is taxable if it is comes in in the form of CDS. But if the same music comes in on the Internet is it taxable or not?

These are complex issues. They are not new to India. The world itself is trying to grapple with it. They are being discussed in various international fora. I myself have the privilege of being on the advisory council of the World Intellectual Property Organisation, and we have sat there and seen these issues being debated on by people from Japan, Europe and everywhere. I think some common frameworks will have to evolve.

It is certainly not just an Indian problem. Technology is moving faster than policy and legal issues are able to grapple with today. Very complex cases have come up before us that we would never have been able to visualise. The business barely takes off before legal hurdles come in its way. They lead to the evolution of case laws, practices evolve and the government will have to issue ordinances and pass legislations to cover them.

Companies working in e-com will have to increasingly productise their services. Previously, the distinction between products and services in infotech was clear. Now we have companies putting together e-com or network solutions which are 80 per cent standardised or productised and only 20 per cent customised to suit individual customers.

This is a very interesting question that you have raised. One area in which e-com differs from almost all other IT solutions is that in the first case, it affects the business model. It may affect in many ways an understanding of the various legal and taxation issues I have talked about.

If you don't understand those, your company will trip up. That element of it -- maybe a part of the digital strategy, a part of the business model or a part of the technical architecture -- may be difficult to productise. Even those parts that are productised will have to be largely customised. There will be a learning experience built into it. If you have done something for three people, the solution for the first one will come faster and better. The next phase of it is like implementing an IT solution which involves the same software development process methodology and process issues, the use of components, building blocks and objects and it is this part that will lend itself to being productised.

So a company like Mindtree will aim at productising solutions and selling them?

Yes, much of them would be productised over time. But some parts, which are very close to individual business areas, can never be productised.

What kind of business model is Mindtree looking at?

Our objective is to help companies implement e-com solutions. To this extent, with e-com having such a wide definition, the range of solutions for the customer would also have to be wide ranging.

One company might say we just want to do a linkage between our entire supply chain. Another company is looking to improve its efficiency and reduce its cost throughthe use of e-com. A third company says, 'We need to take a part of our business and dot com it'. A new entity may be saying we need to create a new business -- a business which never existed before, and, by definition, we want that business to be a dot com business. It does not rely on bricks and mortar. It is looking solely to the future.

Mindtree would try to address the needs of all the four segments, and, by definition, these would range from new start-ups to mid-cap companies to large companies.

How fast is e-com growing in India? And globally?

We have some projections available globally, but these should be viewed with caution as they are only projections and in the realm of conjecture. The overall global market is expected to be approximately 400 billion dollars by the year 2002, of which 70-80 per cent is projected to be business-to-business.

The projections for the Indian market are really much hazier because it's a very nascent market and so the range is much wider, say, between 6-12 million dollars. Again, the projection of the business-to-business segment is about 80 per cent of this.

My own guess is that in the US market, the business-to-consumer percentage will become higher than these projections predict. In India, the business-to-business side will remain higher until the infrastructure comes up, affordability improves and so on.

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