CENTRAL PROJECTS ORGANISATION

(CPO)

By: Deeksha Chugh 1411220 Issac Jojy 1411236 Naseef KPO 1411246 Sakshi 1411261 Thiyagarajan G 1411274

A STUDY ON THE

ORGANISATIONAL

STRUCTURE OF

CENTRAL PROJECTS

ORGANISATION,

ITC Ltd.

Course: Managing Organizations

Group 10, Section D

1

Table of Contents DECLARATION ............................................................................................................................................................... 2

ACKNOWLEDGEMENT .............................................................................................................................................. 2

EXECUTIVE SUMMARY .............................................................................................................................................. 3

ITC Ltd. ................................................................................................................................................................................ 4

Introduction .................................................................................................................................................................... 4

Organizational Structure ............................................................................................................................................... 5

Management hierarchy .................................................................................................................................................. 6

Strategic need for a centralized projects function ..................................................................................................... 7

Central Projects Organisation (CPO) .............................................................................................................................. 8

Introduction .................................................................................................................................................................... 8

Advantages & Value addition of CPO ........................................................................................................................ 8

CPOs position in ITCs Structure............................................................................................................................... 8

CPOs Business Model ................................................................................................................................................ 10

CPOs Structure ............................................................................................................................................................ 10

Typical Project team .................................................................................................................................................... 11

Change Management ................................................................................................................................................... 12

More on the structure & practices of CPO .................................................................................................................. 13

Structural Dimensions ................................................................................................................................................. 13

Environmental factors & Uncertainty ...................................................................................................................... 14

Impact of Technology - Analyzability-Variety Matrix: ........................................................................................... 14

Control Systems ............................................................................................................................................................ 15

Organizational culture ................................................................................................................................................. 15

Knowledge Management ............................................................................................................................................ 15

Inter-Organizational Relationships ............................................................................................................................ 16

Recommendations ........................................................................................................................................................ 16

Key Learnings .................................................................................................................................................................... 17

References .......................................................................................................................................................................... 17

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DECLARATION

We hereby declare that this project A study on the organizational structure of Central Projects

Organisation, ITC Ltd. submitted by our group to Mr. Sourav Mukherjee, Associate Professor, IIM

Bangalore, as a part of Managerial Organization course is an original work done by us.

ACKNOWLEDGEMENT

This study on the organizational structure of Central Projects Organisation (CPO), ITC Ltd. gave us a golden

opportunity to understand the evolution and functioning of an organization in tandem with its structure.

We would like to thank so many people who have helped us in successful completion of this project.

In particular, we would like to thank Mr.Sayak Ghosh, HR Manager of Central Projects Organisation,

ITC Ltd., Bangalore, who despite his busy schedule has been extremely kind in guiding us and answering all

our queries.

We wish to extend our gratitude to Mr. Sourav Mukherjee, Associate Professor, IIM Bangalore, for giving us

this opportunity and guiding us throughout the project.

Finally, we express our gratitude to all the people directly and indirectly involved in completion of the project.

Place: Bangalore Date: 31/8/2014

Group no. 10

Name

Roll No:

Deeksha Chugh

1411220

Issac Jojy

1411236

Naseef KPO

1411246

Sakshi

1411261

Thiyagarajan G

1411274

3

EXECUTIVE SUMMARY

ITC Ltd. is an Indian conglomerate with diversified businesses in 5 segments: Fast Moving Consumer Goods

(FMCG), Hotels, Paperboards & Packaging, Agri Business & Information Technology. Being a more than 100

year old company, ITC Ltd.s organizational structure has undergone changes multiple times to better manage

the business requirements arising out of internal as well as external stimuli.

With a growing demand in the FMCG sector as well as the other sectors in which the company operates, ITC

Ltd. understood the need to create manufacturing capacity to meet this demand. This meant that each of the

divisions of the company needed to go on an expansion drive. With manufacturing being the core competency

of the various product divisions of the company, the company realized the need for a separate internal division

which acts as a service provider to all other divisions to take up expansion projects. The economies of scale

that the company would realize as a result of demand aggregation by this potential internal service providing

unit was additional reason for ITC Ltd. to invest in such a division. In 2007, Central Projects Organisation

(CPO) was formed to cater to the above requirements and the operational efficiency as a result of this strategic

intervention has been realized over the past few years. CPO headquarters is in Bangalore, India and has several

project teams working in greenfield and brownfield projects across India reporting to the Bangalore office.

With the Cigarettes division of ITC being the biggest and most profitable division, CPO was initially positioned

as a functional department of the cigarettes division. Later, due to the demand from other product divisions,

CPO was made a common central corporate function. As of now, CPO with a strength of 200+ serves 10

product divisions of ITC by making factories, marketing offices, residential campuses, data centres etc.

With CPO being headed by ITCs most experienced projects engineer, CPO adopted a product structure with

each product department of CPO being headed by a divisional manager catering to a set of similar product

divisions of ITC. With this, the responsiveness of having a functional unit was augmented. There were other

functional departments for CPO, making CPOs structure hybrid. Each of these functions in turn had a weak

matrix reporting to the respective central corporate functions. And at the ground level, there were engineers

forming project teams reporting to project managers, who in turn reported to the product divisional managers.

Various environmental factors affect CPOs functioning and in turn CPOs structure. The major obstruction

for CPO to operate efficiently, ie deliver its projects is statutory clearances from authorities. Being under the

threat of a ban on cigarettes can affect CPO since it is part of ITC by having its resources being prone to idling.

Any minor construction accident leading to ITCs name being risked has to be avoided and even here, the

organizational structure is amended to take care of this need. The above factors are a few which are taken care

while constantly evaluating and modifying the structure.

With CPO being part of ITC, its structural dimensions are defined similar to the bureaucratic way ITC itself

functions. Formalization and centralization is extremely high as a result of CPO having to follow ITCs central

corporate policies. Specialization is also high since it has several departments within catering to delivering

projects. Control systems are also very rigid with both output and process based controls in terms of appraisal

monitoring/corporate internal audits etc. being used as tools for facilitating the same. With the core technology

being construction and project management, the technology identified is similar to Engineering and structural

dimensions of CPO did match with the idealistic dimensions of Engineering. Several other factors like

organizational culture, knowledge management tools, change management issues etc. are also in line with the

strategic objective of CPO.

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ITC Ltd. Introduction

ITC Ltd. (referred to as ITC henceforth) is an Indian conglomerate with diversified businesses in 5 segments:

Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Packaging, Agri Business & Information

Technology.1 Figure 1 shows all the range of products/services ITC is into.

Figure 1 ITCs Business Portfolio 2

A brief description of the businesses are as follows:

1. FMCG

a. Cigarettes:

i. Cigarettes is ITCs largest selling FMCG product. It is ITCs oldest and biggest division. Some of the

other businesses ITC is into is a result of backward integration and developing each of the supply chain

units for the Cigarettes division. For example, the Printing division (discussed later) used to be a supplier

to ITC initially as a separate company. This printing company used to supply the cigarette boxes.

However, later ITC acquired this company and started supplying to other businesses as well.

ii. Similarly, few other business divisions that ITC has were either supplier companies acquired and

developed or internal units converted into separate business units and developed.

b. Lifestyle Retailing

i. Cigarettes cannot be officially advertised. One of the branding strategies in late 90s was to create a

separate clothing division with a brand Wills Lifestyle to assist in cigarettes branding.

ii. This is an example of a branding strategy induced out of an external environmental influence

creating a change in the organizational structure of the company.

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iii. Other Businesses: A growing consumer market has made ITC enter the FMCG market in various

categories like food and personal care products, stationary products etc.

c. Hotels Division: ITC is a major player in the Hotels industry in India. ITC has owned as well managed

hotel units with its organizational structure being designed to incorporate separate treatment for both forms

d. Paperboards/Packaging : The business divisions operate in a B to B environment. The business supplies

material to ITCs education & stationary products division (Classmate notebooks is an example),

Cigarettes division (as already mentioned above) as well as other companies within and outside India.

e. Agri Business: The agri-businesses primarily sources tobacco for the cigarettes division. The ITC leaf

tobacco unit was converted into a separate division and clubbed with its separate agri- business which deals

with agricultural produce like spices since the nature of businesses are similar. A huge source of revenue

for these divisions is also from exports.

f. IT Solutions: Initially, this division used to cater only to the internal IT support services for ITC and was

a functional division. Later, when the business opportunity was identified, this division was converted from

an internal functional division to a product division and is an active player in the Indian IT services industry.

Organizational Structure As mentioned above, ITC has 5 product lines. Each of these product lines have individual product divisions

operating under them. These product divisions have been grouped together because of similarity in the nature

of their business and this brings in overall efficiency. There are also centralized functional divisions like Finance,

Accounts etc. Figure 2 shows ITCs organizational structure prior to 2007, with all the product and functional

divisions. Post 2007, the structure changed due to strategic reasons and will be discussed later.

Figure 2 ITC Ltd. Organizational Structure prior to 2007

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In the above structure, a few of the abbreviations might not be standard usages and hence, are explained below

Department Function

TM&D (Trade, Marketing and Distribution)

The sales and marketing division of ITC is called TM&D.

This is a central functional division having separate marketing offices across the country & together catering to all of ITCs products.

EHS Environment,

Health and safety

Working in an extremely sensitive line of business like cigarettes poses risks of public outcry if accidents happen during the daily operations of the company. This can affect the company in a bad way and such incidents have occurred in the past.

To better take care of this external factor, a separate cost center division called EHS was formed to create awareness and facilitate safety training amongst the staff and employees. There is a dedicated team of experienced manager/engineers taking care of this.

In Figure 2, it shows that all product division and functional divisions report to ITC at the top of the

hierarchy. This basically represents the top management and board of directors headed by ITCs chairman. The

same is explained further in the next section

Management hierarchy Figure 3 shows the hierarchy of authority at ITC at different levels. The 3 levels shown are

Figure 3 ITC Management hierarchy 3

1. Board of Directors (BOD) This committee is headed by ITCs chairman. The board reports to ITCs

shareholders. The board is in charge of the strategic supervision of the companys proceedings managed

by the Corporate management committee.

2. Corporate Management Committee (CMC) Again, the CMC is also headed by ITCs chairman. This

body is responsible for the daily strategic management. It comprises of the heads of the 5 product lines as

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well as the heads of the various functional divisions like R&D, Finance, Sales and marketing etc. These

heads monitor their respective product/functional portfolios.

3. Divisional Management Committee (DMC) Comprises of the CEO/CFO/COO and other

nominated members of each of ITCs product and functional divisions. They report to their respective

group heads in the CMC. The DMCs are in charge of the executive management.

For example, the CEO/CFO along with other nominated members within the division constitute the DMC

for the Cigarettes division in charge of executive management of the cigarettes division. The Cigarettes division

and other FMCG division DMCs report to their Product line director who is a member of the CMC. The CMC,

in charge of strategic management reports to the BOD headed by the Chairman, reporting to the shareholders.

Strategic need for a centralized projects function

ITCs structure clearly shows the wide range of products it is into. All the sectors that ITC is into, especially

the FMCG was estimated to grow at a high rate due to growing consumer demand. The CMC realized the

need to augment ITCs current manufacturing capacity to cater to this demand. This meant that more

production facilities need to be set up, which also naturally meant more residential townships for managers

who work in these factories, more office spaces to cater to marketing of products etc. The investment

estimated was huge.

Prior to 2007, except for ITCs Hotels and Paperboards division, all the other product divisions used to

take care of such investment projects on their own. The above 2 divisions required projects more so on a

daily basis and hence, they had their respective project teams from their inception.

For the other divisions, the current model meant deployment of their engineers and managers from their

operations/production roles to cater to expansion projects. All expansion project work was outsourced to

vendors and consultants. There were few major disadvantages with this model of operation. Some of them

are the following

o Core competency of the product divisions is disturbed

The engineers/managers comfortable with their production profiles were not experts in handling large

scale investment/infrastructure projects.

The model of operation before 2007 forced the divisions to allocate their good resources into expansion

projects and in turn, their daily production related demands not responded to in an effective manner.

o Vendors taking advantage of the product divisions

As a continuation of the previous point, the vendors who were selected by the product division for

carrying out the projects had the opportunity to take advantage of their clients since the client

representatives are not experts in projects.

Out of the 3 parameters that define project deliverables within time, cost and quality both time and

cost were regulated with the vendors in terms of the agreements made. However, the product divisions

could not gauge the quality of work done by the vendors, which lead to long term maintenance cost being

realized in the facilities being operated using this model.

o Individual divisions have lesser bargaining power

With ITC having multiple product divisions and each of these divisions taking up projects separately, this

model prevented ITC from realizing economies of scale leading to higher purchase cost from the market.

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For example, the steel demand for multiple projects cannot be aggregated in this model. This prevents the

unit rate per ton of steel bought to be lesser than a case where the demand would have been aggregated.

o Losses incurred as a result of delay in project delivery on account of resource allocation issues

Major project delays started creeping as a result of inefficient resource allocation from the various product

divisions. This lead to loss of production to the tune of crores of rupees.

Due to the above reasons, ITC decided to invest in a separate functional division which will only take up

projects for each of the product divisions. The intent was to create a group of experts within ITC itself wholl

be committed solely to delivering projects to ITCs product divisions. The strategic decision to include such a

unit would naturally alter ITCs structure. In 2007, this division was made and was called Central Projects

Organisation As the name suggests, it would be central function taking care of ITCs project requirements. The

subsequent sections discuss about the structure as well as various characteristics of this division.

Central Projects Organisation (CPO) Introduction

Central Projects Organisation (referred to as CPO henceforth) works on a Business to Business model

supplying its services to the other divisions of ITC. The projects undertaken by CPO are ones beyond a

specified budget threshold. If CPO undertakes every small project each division has, CPO efficiency cannot

be realized. Hence, small projects are undertaken by the engineering teams of the product divisions.

With CPO being brought into ITCs structure, a major change was incorporated and it was headed by ITCs

most experienced projects engineer, who had worked across projects for multiple divisions. This ensured

that the change brought in by including a projects centric unit in a manufacturing company still aligned the

way CPO functions in line with ITCs systems.

Advantages & Value addition of CPO As described in the previous section, CPO being brought in removed a lot of inefficiencies.

Manufacturing divisions can focus on their core expertise and not be affected as they used to be.

Operational efficiency was brought in when a team of experts in project management pooled their

knowledge together in 1 center. The additional cost savings as a result of the economies of scale this division

brought is being realized day by day in ITCs bottom line.

CPOs position in ITCs Structure

The large number of projects under ITCs cigarettes division as well as the cost of overheads of bearing a

division like CPO pushed the management to place CPO under ITCs cigarettes division.

However, due to the demand from the other product divisions with their increasing number of projects,

CPO was gradually shifted as a central corporate function.

Figures 4 and 5 below show the position of CPO when it was formed and the current position of CPO

respectively. The 2 divisions that have been highlighted in yellow Hotels and Paperboards/Specialty

papers division are not catered to by CPO as mentioned earlier. These 2 divisions have had their respective

project teams since their inception. CPO caters to all other product divisions.

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Figure 4 ITCs structure with CPO after it was formed. CPO was under ITCs cigarettes division.

Figure 5 ITCs current structure showing CPO. CPO is currently a central common function

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CPOs Business Model

CPO acts as an interface between ITCs product divisions to coordinate between multiple

consultants/architects and vendors to deliver projects within time cost and quality.

CPO is effectively a project management organization. Figure 6 shows CPOs business model. CPO started

off with a pure outsourcing model, although the business requirements forced it to change it later on. (This

will be discussed in brief later under the section Change Management )

Figure 6 CPO's business model

CPOs Structure

The head of CPO Vice President Projects reports to the head of CPO, R&D and EHS and is a

member of ITCs CMC.

Under the VP-Projects, there are various Divisional Project Managers (DM-Projects). Each DM caters to

a specific set of product divisions of ITC. A few DMs were recruited from outside ITC and together, the

portfolio of ITC product divisions given to each of the DMs mapped with their expertise and experience.

This enabled better responsiveness to the clients from CPO, which is a functional unit.

In addition to the product DMs, there were also common functions like Finance, Contracts and Purchases,

Accounts, HR etc. Each of these functions had a weak matrix reporting. Administratively, these

departments report to the VP-Projects and functionally, they report to ITCs corporate central functional

heads (shown earlier in Figure 5). The policies laid out by each of the central functions are adhered to by

these functional departments in their day to day functioning at CPO.

Together, the DM-Projects (enabling the product structure) and the functional department DMs make

CPOs structure a hybrid structure.

Figure 7 shows CPOs organizational structure showing all the above departments. The dotted line

reporting shown represents the weak matrix reporting of 3 of the functional units of CPO. All the

departments shown are at the same level even though the figure shows them at different levels.

Under each of the DM-Projects, there are project managers taking care of the individual projects positioned

across the country at different project locations. The below was the structure followed by CPO till around

2010, when certain operational requirements forced CPO to amend the structure. The next sub-sections

will cover details of a typical project team. Further, one of the key changes in CPOs structure will be

discussed.

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Figure 7 CPO's structure when it was formed till 2010

Typical Project team

At the ground level, each project is taken care by Asst. managers and engineers for the various project

modules. They report to the Project Manager (PM), who reports to the respective Divisional manager.

Each project also has a Project Finance manager (PFM), with a dedicated Asst. Finance manager. The

Project finance manager might handle more number of projects in case the scale of the project is limited.

Figure 8 shows the structure of a typical project team. The role of the Safety Manager shown in the

structure will be discussed later in the section Environmental factors & Uncertainity

Figure 8 Organisational structure of a typical project team

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The PFM reports to the DM-Finance. The PM and the PFM are responsible at the ground level for the

day to day activities in the respective projects. The vendors and consultants as part of the project are

decided by the project team and they effectively report to the PM.

Change Management

CPO has made changes in its structure over the years. One of the major changes is being discussed here.

CPOs objective is to deliver projects within time, cost and quality. From the clients perspective, the short

term requirement is time and cost so that the client can capitalize the project at the most optimal cost and

start operations as soon as possible.

The quality aspect of the project is important from a long term perspective. A poor quality project will lead

to long term maintenance costs. For example, it is possible to construct a factory that looks good but at a

later date, it can start leaking water or the concrete in the beams can break off etc. The clients expect CPO

to deliver the projects within the best quality requirements, but primarily, they look at time and cost. This

lead to the project teams being relatively less focused on the quality aspects, which got highlighted through

the internal audits from the center. This problem across projects needed to be addressed.

Additionally, there were instances where the consultants/designers that CPO dealt with was either

overdesigning or underdesigning structures. Overdesign leads to extra costs and underdesign leads to an

unsafe structure. These were flagged in various internal audits. This problem also needed to be addressed.

CPOs structure was changed to respond to these above 2 needs. A separate department Design and

Quality assurance was created with a dedicated team to set benchmarks, control the design and quality of

projects and effectively address these issues. For incorporating this change, CPO consulted the senior

management and instead of bringing in an expert from outside, one of ITCs senior corporate internal

auditors, who is an expert in this field was transferred. A dedicated team with engineers and managers

functions in this department.

Effectively, this functional department has brought in better efficiency in the CPO structure and the quality

of delivery has improved. Figure 9 shows CPOs current structure.

Figure 9 CPO's current structure

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More on the structure & practices of CPO Having set the context in terms of why is CPO required and how CPO has been structured to meet ITCs

strategic objective, this section discusses the various dimensions and practices of CPO mapped to more

concepts learnt in the course. This section details out how each of the following aspects were observed to

be in line with CPOs objective and how the same is aligned to the way ITC functions as a whole.

Structural Dimensions CPO was formed in 2007 and hence, is a relatively new member in the ITC family. However, the way CPO is

structured has a tremendous influence from the way ITC operates. The following dimensions capture the same

Formalization

o There is high level of formalization in the CPO division. The documentation and process oriented

bureaucratic structure of ITC is entirely replicated in CPOs day to day functioning. The robust

processes have been part of ITC since its inception and the same is followed in CPO.

o For example, the kind of documentation involved in getting a travel allowance claim approved for a

manager is relatively high. This approach extends to all facets of CPOs functioning.

o Even though the processes are cumbersome, the system has been designed in such a way that it affects

the daily functioning relatively less. In the above example, all such claims can be done online, thereby

saving on time which employees can invest in better productive work.

Centralization

o A high level of centralization was observed. Decision making is in the hands of the senior managers.

The magnitude of the cost and time involved in the decisions decide the level to which each decision

gets escalated for approval.

o For example, if a purchase order of Rs 4 lacs value requires to be approved, it goes to the DM-Projects

level for the final approval, where as an order worth Rs 4 crores goes even beyond the VP-Projects to

the head of CPO, who is a CMC member. The necessary hierarchy to be followed for the approvals

are all documented and circulated amongst the project teams.

Specialization

o Specialization and complexity in the structure is also high. The same can be seen in CPOs structure

(Figure 9). The nature of CPOs functioning was already discussed earlier. Each managers role is

tailored to the requirements of the specially designed function they have.

Professionalism

o The roles for the managers require extensive subject knowledge, people management and negotiation

skills. Only employees who can do these efficiently can effectively add value and contribute to the

objective of CPO in reducing ITCs capex costs.

o Accordingly, a high level of professionalism was observed. The managers and engineers recruited have

tremendous relevant experience. Freshers who are hired are from top engineering colleges across the

country. The recruitment is done in tandem with ITCs corporate team, which has its own mandates

in this regard.

Span of Control and Personnel ratios

o Each DM-Projects has a span based on the projects under them. The DM-Purchases has just 3

reporting managers. The HR, Accounts and Finance DMs have larger teams under them. The

personnel ratio is highest for the Projects department with around 85% of the employees being part

of the same.

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Figure 11 CPO falls in the Engineering category in the sssssssssssAnalysability vs Variety matrix

Environmental factors & Uncertainty

As discussed, CPO primarily does project management. As characteristic to this function, the number of

elements encountered is extremely high. However, the rate of change of these factors with time is relatively

less. For example, the client requirements do not keep changing every day. Another example is that once

contracts are awarded to vendors and the agreement is signed, the uncertainty involved is relatively less.

Figure 10 shows that CPO lies in the Complex + Stable quadrant of the Complexity vs Change matrix.

Figure 10 CPO's position in the Environmental Complexity vs Change Matrix

From an external environmental perspective, various factors affect CPOs structure. For example, it was

observed that the role of a safety manager (Figure 8) incorporated in a typical project teams structure is to

safeguard ITC from any potential public exposure in case an accident happens at a construction site. It is

indeed required from a safety perspective but having a dedicated safety manager will reduce, if not eliminate

the risks involved in the project.

Various PESTEL factors affect ITC as a whole, in turn affecting CPO to adapt its structure if required.

Impact of Technology - Analyzability-Variety Matrix:

Being a project management center, the role that CPO does is

a well defined role. For example, construction of a building or

a factory is a more or less standard process. Hence, the nature

of work is highly analyzable and CPO has standard operating

procedures (SOPs) for all its activities.

However, the number of elements encountered as part of deli-

vering projects is very high. Multiple client representatives, 5 to

even 50 consultants/vendors/suppliers as part of executing

projects, government and statutory clearances and associated

issues etc. are just a few examples of the kind of varied

elements that CPO encounters in its functioning.

Accordingly, CPOs technology can be classified under

Engineering as shown in Figure 11. The structural

dimensions, already discussed before are in line with the

ideal characteristics required for this category.

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Figure 12 CPO primarily practices both Process and Output ddddddddmode of control

Control Systems

From the previous section, it has been identified

that CPOs technology associated is Engineering.

This means that outputs are relatively easy to

to measure. The outputs are tracked on the basis

of delivery from the employee in time, cost and

quality.

Additionally, CPO is audited by ITCs internal

audit team. This ensures that all the processes

laid out in executing projects are adhered to by

the managers/engineers.

Appraisals for the employees are based on their

output as well as adherence to the processes.

Eventhough culture control is practiced through conservative recruitment and regular intra-ITC events

aimed at creating a Unity in Diversity mentality, the major form of control is indeed Process/Output

as shown above in Figure 12

Organizational culture

CPO consists of the corporate office and the various project teams across the country. The nature of work

is different in both of the above. Still, the culture that is observed is more or less similar across both and

the same is driven into the employees right from the VP-Projects.

While working timings at the corporate office go from 9.00 am to 7.00 pm, the project sites have timings

dependent on the work. It can vary from 7-8 hours a day to 15-16 hours a day.

With bureaucratic controls, there is low tolerance for failure. The focus on business objective is paramount

and there is a demarcation between private and professional life. On the other hand, there are informal

gatherings once in a while at the project level as well as combined gatherings at the corporate office and

various outbound learning sessions, sports, games etc. organized as part of the same. Although both these

points are contradicting in terms, CPO has been able to maintain a balance between both which indicates

their cultural orientation to be lying between the Networked and the Fragmented quadrants constantly

striving to reach the Communal quadrant of the Organisational culture matrix.

Another observation here is that when the VP-Projects, who spearheaded CPOs growth from the

beginning had retired, the replacement VP was hired from outside and trained by the retiring VP for a

period of 8 months so that in addition to the technical knowhow being transferred, the ITC culture that

the ex-VP, who was with ITC for 40 years, is inculcated so that CPO still fits with the ITC culture.

Knowledge Management

CPO is a repository of technical experts. The knowledge available is rich and diverse. Every project and

every problem that an engineer faces at the ground level would have been solved by a colleague or senior

manager sometime in his/her career. A few are standard problems for which the solutions can be

documented. But most of the problems are situational, the solutions of which can be known through one-

to-one interaction with the expert who would have solved the same before.

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CPOs knowledge management is done at the central level keeping this in mind. The knowledge

management online portal has documents written by subject experts organized in a user-friendly interface,

which enables the employees to use the same regularly. Additionally, each employee is made aware of the

tacit knowledge available at the center while joining. A great emphasis is given to the same. This prompts

regular one-to-one interaction with peers, which helps solves the problem.

There are also knowledge sharing and training sessions that are conducted regularly by subject experts,

which additionally equip the managers with necessary tools to solve problems.

Since the KM initiative in CPO has started only recently, it is still in the process of being developed into a robust exhaustive system

Inter-Organizational Relationships

As discussed earlier, CPO works primarily on an outsourcing model, being dependent on vendors and

external consultants. However, the robust systems CPO has in place ensures that top quality suppliers are

part of the team, which effectively gives control to CPO. Every decision made is based on a cost-benefit

analysis analyzing the trade-off between the market costs and organizational costs of delivering the service.

CPO has around 200 suppliers for various products and services across the country. This requires the

managers to be extremely good negotiators in addition to utilizing their techno-managerial skills on a day

to day basis. This leads to CPO having regular Negotiation workshops to assist managers in vendor

management and effectively get the best out of CPOs interorganisational relations.

Recommendations

Any recommendation in this regard should add value to CPOs strategic objective, which is delivering

projects within time, cost and quality. The current systems in place are helping in getting projects executed

within the budget limits and in superior quality. However, the timely delivery of projects is an issue CPO

faces. The bottleneck here is the huge delay associated with various statutory approvals required as part of

project execution. This is a major external environmental factor which needs to be addressed. Otherwise,

CPOs structure is adding tremendous value to ITC and is helping in realizing short term and long term

cost savings.

The current mode of dealing with government authorities is through external liasoning consultants. They

are used to buffer this uncertainty. However, the same does not seem to be working. A separate liasoning

manager from ITC can be incorporated and a team under the manager across each of the metros assisting

the project teams with this issue can help. As of now, considerable time is spent by the project teams behind

the liasoning consultants and authorities. This proposed change can buffer the project team from this issue.

This manager should have good contacts across the country, should have worked extensively across the

projects industry and most importantly, his appraisal should be linked to his deliverable, which is ensuring

timely receipt of approvals. External liasoning consultants may still have to be hired in remote locations.

A good background in statutory legal affairs will assist in the same.

The same was suggested to the representative from ITC, with whom we interacted. We were informed that

the management has already been considering the same and is on the lookout for a suitable candidate.

If this is added as a function into CPOs structure, the most critical bottleneck CPO would be addressed,

leading to a better functioning overall unit, adding much more value to ITCs product divisions, leading to

earlier project delivery, which in turn results in improved cost savings.

17

Key Learnings

This project has enabled us to relate and appreciate a majority of the concepts learnt in the course

Managing Organisations with the strategy and structure of CPO.

The various dimensions of an organization were seen in action in the way CPO has been structured.

The internal and external environmental factors affecting ITCs as well as CPOs structure, leading to them

adapting to respond to these stimuli by bringing about change at different levels was seen.

The technology, control systems, culture, knowledge management tools, interorganisational relations etc.

were other areas where observations were made and correspondingly mapped to the theoretical concepts

learnt leading to a solid foundation of the theory backed by practical inputs from CPOs structure.

References

The following references have been used in preparing this report.

1http://en.wikipedia.org/wiki/ITC_Limited

2 & 3

http://www.itcportal.com/about-itc/shareholder-value/ITC-Corporate-Presentation.pdf