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Issue of June 2005 

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Enterprise Wide Applications

From deployment to usage

In addition to investments in ERP, this year has seen a sudden increase in spending on network administration. RFID has begun causing a stir.
By Deepali Gupta

Scaling up our CRM and SRM systems enables us to bring in additional vendors on to the network and give them easy access to the latest information

On an average, companies are likely to spend Rs 80 lakh on Enterprise Wide Applications (EWAs) in 2005-06, according to Infrastructure Strategies 2005.

In the upcoming year, companies in pharmaceuticals & chemicals and manufacturing will spend the most on ERP. The BFSI players are investing in Business Intelligence. Finally, despite the lack of established RFID standards, the first stirrings of interest in this technology have manifested.

ERP Dominates

Executive Summary
From deployment to usage

A major part of the spending on ERP will be on maintenance and additional functions. Investment in network administration tools appears to be rising. While business intelligence is slow to take off, interest is building around RFID.

Power pill

Don't invest in new technology until all users are actively utilising existing EWA applications. Spend on training and resource management.

44 percent of respondents will spend on ERP by adding functionality and optimising existing systems. Kinetic Communications has an in-house system. The IT team ensured that internal functions were being catered to. Lately, the team's efforts have been focussed on extended modules such as a Dealership Management System that connects Kinetic's core system to its dealers online. It captures dealer issues, such as warrantee claims and places them in a central database. Captured information is analysed and processed to supply replacements and generate invoices. Defect recording and analysis is queued to modify product plan, issue tickets for stocks stored and intimate changes to dealers. "The aim is to address the entire value chain," says Sanjeev Kumar, Chief Operating Officer IT Solutions, Kinetic Communications.

Finishing touches

Mani Mulki, GM Information Systems, Godrej, says, "IT is all about improving quality of service. The IT environment and culture has to be developed for business initiatives that will benefit the business and its partners." Over the last year, we have seen a number of companies invest in modules such as e-business, CRM/SRM and SCM. 25 percent of respondents will invest in e-business solutions, 26 percent in CRM and 16 percent in SCM.

Research snapshots
  • Approximately 10 percent of an organisation's IT budget will be spent on EWAs.
  • 62 percent have spent and another 40 percent will be spending on infrastructure management tools
  • 25 percent of the organisations are exploring RFID as a business solution

CRM and SRM systems have worked well for many. Take the case of Hero Honda, which rolled out a CRM system to 100 dealers, and an SRM application to over 80 vendors. According to S R Balasubramanian, VP Information Systems, Hero Honda Motors, it intends to scale that up to 550 dealers and 125 vendors by the end of this financial year. "It gives them easy access to the latest information and carrying out transactions is easier," he adds.

First time around

A number of medium enterprises are going in for fresh deployments of ERP.

The choice of ERP here is governed by client requirements. SMEs that have dispersed branches have seen advantages in centralisation. However, for many the lack of connectivity is a roadblock to a complete implementation.

Network management

S R Balasubramanian
VP Information Systems,
Hero Honda Motors

62 percent of respondents have already spent and another 40 percent will spend on infrastructure management tools during this fiscal.

Some ERP applications come with management tools that report on the performance and capacity planning of systems.

At Hero Honda, S R Balasubramanian and his team use Tivoli NetView to monitor and manage 27 critical links and 200 network devices. "We also use "Live-Reorg" enterprise tool (from Quest) for the online re-organisation of our database elements on SAP R/3 and SAP's Solution Manager for generating online reports from the SAP system for performance management and capacity planning," says Balasubramanian.

Radio Frequency Identification

61 companies intend to implement RFID. Ironically, the popularity of the technology is not in the manufacturing or the FMCG segment as you would expect. It is the services sector that's bitten. 7 percent of those who intend to invest in RFID this fiscal already have fully operational implementations.

RFID as a technology has existed for over 30 years. The technology can address tracking requirements of companies, and the mandate to put RFID tags on products that get exported to giants such as Walmart is spurring interest in this technology.

An RFID standard is conspicuous by its absence and completed projects are proprietary deployments in closed surroundings to track objects in storage. "EAN has been pushing the government to delicence the UHF band on which RFID works globally," says Ravi Mathur, CEO, EAN India.

An important factor that will contribute to exporters taking to RFID according to Mathur is that RFID tags can be used to communicate information about a product to anyone in the world over the Net. Mathur expects RFID usage to touch a trillion tags globally by 2015. He admits that Proof of Concept deployments are as far as we have got in India.

RFID pilots

The RFID pilot is a learning experience, we will be ready when RFID becomes a valuable technology

Pantaloons, one of India's largest retail chains has been experimenting with RFID. "This is not a mission critical version, we are trying it on a small section of our value products," says Chinar Deshpande, CIO, Pantaloons. He continues, "The project is a learning experience, we will be ready when RFID becomes a valuable technology." A total of 1,000 shirts and trousers are tagged at the factory, and at the various stages the product goes through in the warehouse. The solution has cost Pantaloons approximately Rs 30 lakh according to Deshpande. Eventually the company wants to extend the solution to the shelf level. As of now it is infeasible.

Chinar Deshpande,
CIO, Pantaloons
NM recommends
  • Implement modules that open relevant parts of the system to partners, who will be more prompt and the organisation will have a certain level of automated communications
  • RFID is a handy technology for asset tracking
  • Appropriate RFID tags for the pharma industry are still being developed. Wait a while before deciding to invest extensively, but you may want to initiate a pilot so you are familiar with the technology and ready for an eventual roll out

The first challenge the team faced was that since no one has a full-scale deployment there was no prior learning or guidelines for the team. There were conflicts with data reconciliation at the backend. "That was the objective of the exercise," says Deshpande, "we wanted to learn and sort out the problem that could occur if we were to deploy RFID." An important realisation that Deshpande pointed out was that the business process needs to be re-engineered if RFID was to be functional. The team will have to establish what data to put on the available 5 KB of memory on the tag.

Other applications

37 percent of respondents have indicated that they will invest in data warehousing and business intelligence.

The fast movers and large IT investors such as private banks, telecom companies, a handful of FMCG companies and retail chains have invested in BI in the past. These companies will continue to invest in the technology. For the rest, adoption promises to be slow.

The penetration of GIS is low with only 10 percent using it according to IS 2005. The technology is useful only for companies with widespread coverage. This typically includes logistics and transport services. GIS is most used in the oil and power segment.


The big picture

Technology is not static

Bhaskar Ghose, MD, IndusInd Bank, talks to Deepali Gupta about IT's contribution to the bank's ability to cope with changing times

You started using IT in 1994 (with Internet banking) at a time when it was not on the agenda of most Indian banks. How did you deal with teething problems?

The new private-sector banks that were given licences in the 'liberalised' era were expected to operate in an automated environment right from beginning. After starting on a standalone basis at our couple of branches, IndusInd put all its operations on a centralised core-banking platform.

As for Internet banking, the Internet itself was a new concept at the time. Its usage ten years ago cannot be compared with its present form, anyway. You may recall that only a handful of institutions-primarily educational entities such as the IITs and the NCST-were regularly using e-mail and the Web during that period (1994-97).

With the help of such institutions and with IndiaWorld, we targeted NRI customers through a Content Management initiative using our bank's portal. Initially, information on product offerings was disseminated over the Internet. Later, customer requests for chequebooks and ATM cards were collected online.

Through core banking, the identity of each customer across the bank's branches was uniquely maintained, regardless of the nature of facilities used by the said customer. Details of all customers, along with their transactional data, were available at a central location. This facilitated improved levels of MIS and DSS (Decision Support Systems). Inter-branch reconciliation was automatically effected.

During that time, Internet connectivity did not update the core banking system in real-time. Customers could make balance enquiries only through a secondary server. Connectivity with our branches was done through VSATs, and we experienced periodic difficulties with response time. However, at no stage was there any gap between transactions and their updation in the centralised database, as our centralised End of Day process could not be initialised unless all our branches were connected to the central system.

Did technology make the merger with Ashok Leyland Finance easier?

With both organisations extensively using technology before the merger, technology helped smoothen the merger. A related advantage was that the product lines of the two institutions did not overlap. Instead, they complemented each other.

Issues such as business process-related changes for some of the products had to be addressed.

Has the CRM module that came with your core banking system affected cross-selling policies?

CRM is not a full-fledged module available with all core banking solutions. Our own core banking software facilitates a 'single view' of a customer across products and channels. It also generates customer-wise business volume statistics.

For CRM, we use add-on products. Since the product lines of the erstwhile Ashok Leyland Finance and those of the erstwhile IndusInd Bank complemented each other, the merger has offered cross-selling opportunities for the combined entity. We have started with deposit products and the sale of third-party products, and will soon begin the process of selling the finance company's asset products to the Bank's customers and vice versa.

We get trend analyses from our core banking application, by being able to analyse historical data across our transaction channels. Our decision to enter ATM-sharing arrangements with peer banks such as UTI Bank and Corporation Bank was based on trend analysis. Several other products such as speed remittance are also based on trend data.

Choosing locations for off-site ATMs and implementing loan products such as Doctor Plus and personal loans are examples of products created because our core analytical system showed popular trends.

Do you plan on investing further in technology? What are the expectations you have from IT in the future for the bank?

Yes, we do plan to continue investing in IT. Technology remains an integral part of our business. And as technology itself is not static, we need to upgrade technology in line with the constant changes that occur in this area. Our business aspirations invariably necessitate investments in technology. Our customer demands and business growth have invariably been serviced with periodic technology upgrades.

We are confident that technology will continue to help us ramp up business volumes while keeping operational costs low.

Executive Summary
Technology is not static

Technology helped smoothen the merger of Ashok Leyland Finance and IndusInd Bank. The combined entity is taking advantage of the complementary product lines of the former entities to cross-sell deposit and third-party products.

Power Pill

Technology is not static. Customer demands and business growth are invariably serviced with periodic technology upgrades.

Deepali Gupta can be reached at

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Indian Express - Business Publications Division

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