Global transformation powered by IT

Crompton Greaves has used IT to propel its growth on a global scale. The company has overcome the limitations of its earlier systems and surged ahead by revamping its technology infrastructure for better business benefits. Kumar Dawada and Soutiman Das Gupta report

At electrical engineering major Crompton Greaves Ltd (CGL), IT is a part of business strategy. It has overcome the limitations of its earlier IT infrastructure and uses its ERP, product lifecycle management (PLM) and business intelligence (BI) tools in tandem to help it grow as a future global leader in the electrical manufacturing sector.

Business At CGL

70 percent of CGL’s business comes from the sale of products such as transformers and switchgears. The rest of its business comes from consumer products such as fans, lights and pumps.

Says Debanjan Datta, the company’s General Manager for IT, “CGL was very IT-savvy from the beginning. It was one of the first five companies in India in 1998 to implement SAP. We had a VSAT network with 50-odd nationwide locations, including 16 factories, 16 branch offices, regional offices and service centres.”

However, despite the company’s strong push in the area of business development and growth, the focus on IT implementation was not very strong. This led to a situation where the ERP system and other IT assets were under-utilised, and the business did not receive the optimal value from IT.

ERP Challenges

Tweaking the ERP system for improved performance took some doing. SAP had been implemented on multiple servers at various CGL locations. For instance, the switchgear manufacturing and distribution unit in Nashik had a dedicated SAP server, and the transformer division had a dedicated and separate SAP server as well, so the company had to work with distributed systems for its different business groups. “As a result, each business division or group had its own version of the truth. It was difficult to establish the credibility of any report or bit of information, whether it was related to total purchases or total sales collection,” recalls Datta.

The main requirement from the IT infrastructure at CGL was to get the right information, not necessarily in real-time but within a reasonable time-frame. The information also had to be credible so that it would be accepted by different business users. It was necessary for the company to develop a robust data warehouse system having stringent data quality and data integrity guidelines. The idea was to collate business information during the non-working hours so that credible business information could be extracted and presented within 24 hours.

Practical & Tactical

In 2003, CGL revamped its IT strategy to focus on making the infrastructure more simple, practical and tactical. Its earlier Web site was not integrated with SAP, so care was taken to ensure that the revamped one could exchange information with the ERP system. The front-end user interface was developed using Java.

CGL also discovered that its nationwide dealers spent more time dealing with the company rather than focussing on customers. This prompted it to create a dealer portal to enable them to place orders at night or whenever convenient. The portal gave dealers access to order status. “Currently, around 1,000 dealers are using the portal, and CGL gets business of around Rs 15 crore on average per month from this interface,” reveals Datta.

Spicing Up The Site

Instead of choosing a technology-based company to create its Web site, CGL hired advertising agency Mudra for the job. The idea was not only to make the site look more attractive but give it a professional and business touch as well. CGL felt that Mudra would have its finger on the public pulse, and know what the public wanted to see on a Web site. The main requirement from the site was to ensure a good first contact with a prospective customer. Keeping this in mind, the Web site was designed to include a limited set of services and products. If a customer has any technical or commercial query, he can contact the company by phone or send an e-mail; the concerned business head then responds. “Instead of a push model we have implemented a pull model. Our Web site provides the bare minimum of necessary information. When the customer feels the need for more information he can always contact us,” explains Datta.

A Wish-List

The top management at CGL made a wish-list which called for a PLM solution that had to be implemented and integrated with the ERP in the transformer division.

The company manufactures two types of transformers. The first is a small distribution transformer which is available off-the-shelf or can be manufactured within 10 days. The second is the high-end power transformer which takes between 6 to 12 months to manufacture.

There are also processes which involve lengthy negotiation, tendering, bidding and technical presentations since the power sector, both in India and abroad, is regulated by governments. Design-related queries that are raised during the manufacture of high-end power transformers are complex and unique for each product.

The company therefore decided to deploy a PLM solution from Teamcenter to keep track of every stage of the product lifecycle from initial customer interaction to stages such as tendering, bidding, technical design and confirmation of purchase order. It is integrated with the ERP so that the company can procure and deliver the product on time.

The PLM solution has reduced the product lifecycle. It has also cut the time taken to create technical designs—what used to take a month or more earlier now takes seven to ten days.

Moving To BI

The management also felt the need to implement a BI solution. After reviewing many BI products and solutions, it found that Cognos’ solution had more merit than any other. Being an engineering company it was necessary that the BI solution should be easy to use and have queries and commands in plain English; Datta was aware that if people were not comfortable using the BI solution its utility would be lost.

In order to use BI, it is necessary to ensure the integrity and reliability of the data warehouse. Only then can accurate and real-time analysis be done and questions such as ‘Who is our most profitable customer?’ be answered.

Server Infrastructure

CGL had previously implemented SAP on six servers, but now runs the application on a single central server. This server handles the information needs of all its business divisions. The main data centre will be hosted in Mumbai. A backup data centre will be built outside Maharashtra to ensure that its data is not affected by environmental or political upheavals.

The company had two major hurdles to overcome. The first was handling change management issues, the second was ensuring that SAP and other implementations were acceptable to users. Since the use of IT brings in new processes and workflows which have an impact on the discretionary and decision-making powers of many users, the IT team involved the business heads of various departments in the planning and implementation stages in order to avoid discontent.

An Acquisition Later

The company recently acquired the Belgium-based Pauwels Group, another transformer company. By doing so, CGL has added assets worth Rs 1,800 crore to its existing 2,200 crore. After the acquisition, the company’s transformer manufacturing activities account for more that 50 percent of its revenue.

The aim now is to integrate the company’s businesses in India and Belgium and consolidate the IT infrastructures of the two entities. “We are also looking at global VPN connectivity and will start implementing SAP in Pauwels by early 2006,” says Datta.

With its PLM and BI solutions in place, and the acquisition of Pauwels, Crompton Greaves hopes to evolve into a global player in the transformer business.

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