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Issue of June 2003 
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Enterprise Wide Applications
Greasing the Business Mechanism

The focus is shifting from just streamlining backend operations to acquiring new customers and retaining existing ones. The move is towards CRM

Many respondents to this survey said the top three business priorities are 'Provide better quality of service', 'Increase profits', and 'Decrease cost'. But to ensure this, one needs to begin with the customer. Today, companies are focused on improving customer service. That means improving the delivery of products and services, and offering these at lower prices. When you get down to doing this, it means streamlining business processes, collecting and analyzing business data (then acting on it immediately), and improving coordination between departments. Enterprise-wide applications can automate and facilitate these activities.

It's no wonder then that almost half the respondents (45 percent) have invested in Enterprise-wide applications (EWA) in the past. The number of companies investing in EWA will increase this year, albeit modestly. In the past one year, 31 percent invested in EWA; this year 35 percent plan to do so. More medium and large enterprises will invest in EWA.

Streamlining processes, improving the bottom line

The applications that are helping companies improve the bottom line are ERP, e-business solutions, data warehousing/data mining, CRM and SCM.

ERP is the most popular enterprise-wide application and 63 percent companies have already implemented an ERP application. Using an ERP solution, companies can automate core processes to cut costs in terms of faster production cycles, reduced inventory, and better information flow between various departments.

ERP has always been associated with Manufacturing/Engi-neering—in fact 88 percent of respondents within this vertical use ERP solutions. Other process and production-related verticals like Auto & Auto components, Chemical & Pharmaceuticals, FMCG/Consumer durables, and Telecom/IT/ITES have substantial ERP implementations. Health care is one sector which has substantial investments in ERP (above 80 percent). This is in the form of Hospital Automation Software. The benefits of ERP are now being acknowledged in other non-process/production-oriented verticals too. For instance, 69 percent of Govt./PSU companies plan to invest in some sort of ERP this year.

SCM solutions bring together various entities in the chain through which a product passes, as it goes from manufacturer to customer. This includes manufacturer, raw materials suppliers, warehouse, distributors, retailers, and finally the customer. It helps in planning and scheduling to ensure that products are delivered in time, at the right quantities, to the right people, at optimal cost. These solutions are used mainly by companies in verticals like Auto & Auto components, FMCG/Consumer durables, and Tele-com/IT/ITES. This year 55 percent of Auto & Auto components companies plan to invest in SCM.

Serving customers better

CRM is one area that is getting all the attention these days. As we said in the beginning, businesses have moved away from being product-centric and have become more customer-focused. That's where a CRM solution comes in. CRM helps you understand your customers better, and tells you what they expect from your organization. To leverage on this tool, one should use both analytical and operational CRM.

25 percent went in for CRM in the past and 32 percent plan to invest in CRM this year. Fast growing, customer driven businesses (like banks, telecos, ITES companies) will benefit the most from CRM. This year 56 percent of BFSI companies will invest in CRM.

A missing link in the ERP-CRM chain is data warehousing and data mining tools. Given the amount of transactional or customer data generated by an ERP or a CRM, it makes perfect sense to analyze hidden patterns in data to define future growth strategies. That's why enterprises are increasingly using data warehousing and data mining solutions. With data warehousing tools, one can extract specific data from operational data, and reformat this data so that it can be easily interpreted and analyzed. Specialized data mining tools help you identify patterns or trends in this extracted data, so you can leverage on this to improve business.

While 31 percent have invested in data warehousing/data mining tools, the same number plan to invest in these tools this year. It's mainly companies in the BFSI segment who use such tools—50 percent of companies are already using them while 61 percent say they plan to invest this year.

What about B2B?

E-business (B2B) seems to be under a cloud after the dotcom bust. All the supposedly thriving online exchanges now are bereft of transactions. Ditto with B2C e-commerce. This explains why the number of companies investing in e-business solutions is low. In 2003-04, less than 30 percent companies plan to go in for e-business solutions.

Research Snapshots
  • More medium and large enterprises will invest in enterprise-wide applications. These are mainly manufacturing oriented or service driven companies.
  • The use of ERP is widespread, and 63 percent of the companies already have some ERP in place.
  • This year 42 percent companies plan to invest in ERP, a major chunk of this will be from Govt./PSUs.
  • 55 percent of Auto & Auto components companies plan to invest in SCM.
  • Over 50 percent companies in the BFSI vertical plan to invest in some sort of CRM solution.
  • The BFSI vertical is also in the forefront of data warehousing/mining applications.
  • After the dot-com bust, e-business initiatives are clearly on the decline.
NM Suggests
  • Process- or production-oriented companies should implement ERP to improve the integration between departments, thereby streamlining operations and cutting costs.
  • Fast growing, customer driven businesses (like banks, telecos, ITES companies) will benefit the most from CRM.
  • Focus more on analytical CRM rather than just operational CRM. A combination of both, depending on business needs, is required.
  • Remember that a CRM solution is not an end in itself. It should be supplemented by training and monitoring of customer service executives.
  • Companies can derive more value from transactional or operational data by using analytical data warehousing/ data mining solutions.
  • SCM is recommended for industries that deal with movement of goods (between warehouse and retail, factory and warehouse, etc).
  • Companies should give e-business a second look. E-business will help companies cut further costs by creating a seamless web between its suppliers, distributors, and customers.
SCB automates customer relations

Standard Chartered Bank (SCB) uses SAS Customizable CRM Solution to analyze huge volumes of data captured by its OLTP systems. The solution aids the bank in performing numerous business critical activities and in providing excellent customer service.

Analyze transactional data
Standard Chartered Bank uses OnLine Transaction Processing (OLTP) system to facilitate and manage transaction-oriented applications. The bank realized that it needed to go a step further and deploy a solution that can be used to analyze the huge volumes of data captured by the OLTP systems. Says Sedjwick John Joseph, Head-Business Intelligence Unit, SCB, "Any bank today cannot ignore the risk:reward equation. It is the process of applying a variety of scoring techniques across product lines to arrive at the probable risk associated with each product sale and the possible rewards. We wanted the solution to leverage information on customer profiles and segments and enable us to spread our risks based on empirical data analysis." After evaluating number of solutions, SCB chose SAS as the solution partner across Asia for its customer analytics.

Customer-centered approach
The solution has helped the bank effectively manage and optimize profitability of all the products that constitute its retail portfolio. The implementation has resulted in focused marketing campaigns, reduced costs, and improved customer acquisition and/or satisfaction. The bank can now exploit changing and widening markets; implement a customer-centric approach; concentrate on financial budgeting, cost control, and risk management. SCB plans to embark on SAS' data mining technologies for various predictive modeling and advanced scoring initiatives to strengthen its risk management framework in the area of retail lending.

Hero Honda consolidates with SAP

Hero Honda Motors has implemented SAP R/3 Release 4.6B to consolidate disparate applications that ran on different departmental servers. It used modules like production planning, materials management, quality management, and sales & distribution. It implemented plant maintenance, human resources and payroll modules, and upgraded SAP R/3 from 4.6B to 4.6.

Consolidate operations
Pre-ERP, the company had diverse operations running in different locations. To get a hold over this diverse operations it needed to consolidate various departmental applications in areas like accounting, inventory management and so on under the same roof.

After implementing SAP, it is now possible to integrate data and enable common master sheets that can be used across various functions like transaction, validation, accounting, and reporting.

Better cost control
Using SAP, Hero Honda was able to implement better cost control measures. Says S.R. Balasubramanium, CIO, Hero Honda, "The ERP made it possible to calculate cost of consumables, tool inventory cost, power & fuel costs, and plant overheads. There were improvements in the quality, access, and usage of transactional data."

There was emphasis on carrying business process improvement by removing several non-value processes on regular basis, adopt best business practices and carry out BPRs (Business process re-engineering) to derive best business value. Few BPRs implemented: Quality check removal of components (self certification of supplied goods by vendors); Migration of discrete to repetitive manufacturing strategy; and Bar coding at entry gate. Post implementation the company also experienced improvement in operational processes at various stages. It also readied the organization for future SCM (Supply Chain Management) and CRM (Customer Relationship Management) implementation.

Additional modules
The company plans to implement ESS (Employee Self Service) module. It also plans to implement SCM applications to seamlessly connect and manage its dealers and vendors.

 
     
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