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Issue of June 2006 
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Infrastructure Strategies '06

Empowering business

Enterprise wide applications help organisations cope up with hyper-growth and stay competitive. by Vinita Gupta

About half the survey respondents consider ERP as a priority area. Among the verticals chemicals and pharma and manufacturing are top spenders.

Enterprise wide applications include ERP, application servers, CRM, SCM and SFA. The use of applications also signifies that organisations have some basic IT infrastructure in place and are now ready to move on to applications that assimilate and analyse data.

According to last year’s survey, 45 percent of respondents invested in EWA. However, almost an equal amount of respondents (41 percent) plan to invest this year. Among the verticals, services (57 percent) and manufacturing (46 percent) plan to invest the most.

Survey Findings
  • Among various enterprise wide applications, ERP remains the most popular
  • Applications such as data warehousing, CRM and SCM are yet to become pervasive
  • CRM has highest adoption in IT/ITeS, FMCG and BFSI verticals
  • 21 percent of the BFSI segment plans to invest in data warehousing/BI in the current year.

ERP helps predict business Scenarios

Ishwar Jha
VP, Business Technology Essel Group
ERP is a must

Organisations are growing horizontally and vertically. Businesses are expanding in the global market space. ERP helps to control the business and provides a robust platform to run the business smoothly. It helps to analyse the past, control the present and plan the future course of your business.

For instance, with the help of ERP, the finance department knows about business requirements, viz., cash required to grow the business in the future. So they can plan and if the cash required in the future is more than what is available, they can apply for loans. If you need to be in business, you need an ERP system.

CRM: Capturing and keeping customers

Manufacturers have multiple clients at different locations, hence it helps the sales force to plan their order, schedule and manage their inventory. It controls and captures business operations.

CRM is highest in IT/ITeS companies as they have a direct relationship with enterprise customers. For instance, Zee Telefilms needs to communicate with its customers on a regular basis. This generally is over the telephone. Any downtime in connectivity therefore affects our business. CRM helps control, capture and monitor the customers. It tracks down the customer’s requirement. For instance, I can find out how many unhappy customers I have.

BI in FMCG

Again the usage of BI among the FMCG being high is quite obvious. In FMCG, the customer base is fragmented and volatile. These companies require BI software to understand the consumption pattern of the customers and to track usage patterns.

For instance a soap company will find out why a particular customer is using this soap.

SFA for networking

SFA would be most viable for pharma companies. With mobile phones, sales representatives can easily be contacted. Earlier it used to take months for sales people to deliver the reports to the organisations or a few days to get in touch with the HO.

In a pharmaceutical company, SFA helps the representative convey the feedback on a particular medicine from a doctor to the HO. Besides, it also helps him in taking orders and reporting the same to the HO within a few minutes.

Zee Network too has SFA in place. Our marketing teams are continuously trying to find out what time is best suited for a particular advertisement. For instance, women prefer to watch serials in the afternoon, hence we try and have related products being aired at that time.

ERP dominates

Enterprise resource planning (ERP) has the highest number of users, point out the survey. The findings are in line with expectations, as ERP is the foundation for applications such as SCM and CRM.

According to the survey, manufacturing and chemical/ pharma lead in the adoption of ERP with 83 percent having already invested in it and 25 and 27 percent, respectively planning to invest in the current year. They’re followed by IT/ITeS (73 percent) and FMCG/Consumer durables (71 percent).

Most companies need to have an ERP in place to integrate their distributed data. Chemicals and pharmaceuticals companies need to integrate this data with their sales force automation (SFA) initiatives.

Superior business intelligence is key

Vinod Sadavarte,
CIO- Patni
On ERP being favoured

With optimised operational efficiencies and agility being a must have for survival in today’s competitive world it is not surprising that the bulk of the investments has been in ERP systems. Besides organisations look to save costs and automate and optimise their processes, which is possible with a good ERP system.

Applications like CRM and data warehousing depend on the need of the companies and hence in some cases these might not be a priority. For instance, a manufacturer of aircraft engines with a limited number of customers, might stress more on achieving operational efficiencies, lowering costs and getting higher quality, which is possible with a good ERP systems rather than CRM packages.

Besides, ERP has been around for more years than tools such as CRM so it is to be expected that the adoption of ERP is consequently higher.

Patni has been using Peoplesoft for Finance and HR for more than five years now and similarly, we have been using Siebel CRM for four years. These applications have helped in increasing the efficiency and efficacy of our operations. Today, our Human Resource Management (HRM) and finance and accounts are managed through the ERP system. Sales force automation helped us capture relevant information in a sales cycle from the lead to the final deal. We are able to more effectively track our sales process.

Role of CRM

CRM is becoming important for most companies, especially banks. Customised campaigns targeting niche customer segments are becoming the norm as the concern is to retain customers. Today, when you approach a bank to open an account or for any other purpose they ask for information including things like the age of your children. This information is then used to offer services like an educational loan. The idea is to lock the customer for life and utilise information for cross selling whenever the opportunity arises. That is where CRM comes in and helps to give you a complete picture of your customer and understand him in detail. The idea is to customise campaigns for your customers and give him the offer from which he derives maximum value.

BI in FMCG

Implementation of data warehousing and BI may be low because companies are often unsure whether the information obtained from such sources is going to be actionable. The high cost of some data warehousing packages also deter organisations from implementing these packages.

With strong competition in the FMCG space and a level playing field having been attained on parametres such as operational efficiencies and distribution strengths, superior business intelligence may prove to be the deciding factor. The current retail boom in India and the emergence of a consumer class necessitates that companies have a understanding of customer needs and preferences and target the right product at the right customer segment. Tools such as market basket analysis coupled with BI techniques could help organisations find out about the buying habits of customers.

Middleware going strong

The survey points out that interest in application server software continues to run high. FMCG/Consumer durables (74 percent), BFSI (73 percent), manufacturing (72 percent) and government (64 percent) are big users of this technology. However, barring services (60 percent), no other vertical plans to invest much on applications servers this fiscal.

The popularity of this category could be on account of the fact that many CIOs prefer to have applications developed in-house. For instance, in a number of manufacturing and pharma companies, ERP systems are developed in-house rather than taken from the market.

Dealing with customers

If ERP is the back office system, then CRM is the front end that deals directly with customers. The acceptance of CRM is low but verticals like IT/ITeS (53 percent), FMCG/consumer durables (35 percent) and BFSI (27 percent) have already invested in it.

Companies in the services vertical have neither invested in CRM nor do they plan to do so in the current fiscal.

Companies that are investing in CRM are doing so because they have a fairly integrated database of customer requirements and are hard pressed to retain customers in the face of intense competition. Also, these firms want an insight into their own business, to learn more about customers, and improve the way departments interact with each other and with customers.

ERP has multiple benefits

Vikas Gadre
CIO, Rallis India
ERP and its impact

Rallis implemented SAP in 2003. We have implemented 4.7 version of SAP. The SAP implementation covers financial accounting, sales and distribution, material management, quality management, plant maintenance, production planning, project management and costing modules. Currently we do not use any standard customer relationship management software but we have plans to implement the same.

ERP implementation has given us many benefits. The primary benefit is that it provides us with a unique version of the truth across the organisation. Time spent on reconciliation and disagreements between functions over the correctness of information has practically come to zero. It saves managerial time and unnecessary frustration. It has brought in transparency and uniformity in rules and regulations.

The total cycle time for information retrieval has reduced significantly. This is evident by the fact that during the current year, our annual accounts were completed, audited and the board meeting was held within 17 days after the close of financial year. This was a major change from pre-ERP days. (During those days the accounts closing could happen anywhere between four to four-and-half months after the close of the previous financial year).

ERP is the foundation for other applications that are integrated into it. In case of Rallies the investment in ERP was quite high as the entire infrastructure had to be built up from ground up. As a result; we had to invest in connectivity for all the depots, regional offices, factories and the head office. Having built up this infrastructure; developing a superstructure in terms of the CRM, SFA and such other activities are relatively easy because they will ride over the connectivity infrastructure already developed.

On the need for applications like CRM

I realise that major investments are happening on infrastructure development in retail, insurance and banking. India is also developing as a manufacturing hub for many things. This puts pressure on many Indian companies (other than IT/ITeS) to gain insights into the buying behaviour and patterns of their customers and consumers. Besides global competition is also a factor. Therefore manufacturing companies are spending more money on understanding customer behaviour by investing in CRM and other such packages.

We are in the process of implementing around 17 helpdesk call centres at various regional offices and important marketing centres. These helpdesks will provide farmers with information on agrochemical inputs. They will also be used for the purpose of collecting information from the field, which will be collated and analysed at the head office. Web-based helpdesk software linked with SMS will enable the compilation of nationwide information in knowledge nuggets which can be used by the senior management team in understanding activity at the farmer’s level. We will also have a better grasp of competitor’s activity and the weather.

SFA in FMCG

Many FMCG and pharmaceutical companies provide products which have a large market in A, B and C category cities as well as in rural India. The distribution channels are set up in terms of stockiest, dealers, retailers and, finally, consumers. It is essential for these companies to have control over the entire chain and therefore contact with sales persons at every level in the supply chain is essential. Due to this, many FMCG companies have a good sales force automation module which helps them to collect, collate, co-relate and analyse information from the market in real-time. I foresee a convergence between laptops and mobile phone applications.

Currently we do not have a formal sales force automation module. However, we are in the process of developing the same. Our approach has been to create infrastructure first and then demand information from the sales force. In this regard we provided more than 200 laptops to our sales force with VO data cards last year. Now that the infrastructure has been developed; we will be demanding information from the sales force in terms of the reports from the market; their activities through a Web-based portal.

Recommendations
  • Once you have an ERP system in place, move on to data warehousing or BI.
  • CRM can help but only if the company implementing it ensures that employees using the system have the right attitude vis-à-vis customer service. The technology is prone to misuse.

The best of the rest

Although organisations are becoming increasingly aware of the value of data, and how it can be used more extensively to take decisions and achieve business objectives, penetration of tools such as data warehousing (DW) and business intelligence (BI) remains low.

Of those that have already invested in a DW or a BI, the percentage is highest in FMCG (27 percent) with a further 19 percent planning to invest this year. Along with FMCG, companies in manufacturing (30 percent) and chemical/pharma (29 percent) have also invested in DW/BI.

With large supply chains and retail networks, manufacturing and FMCG sectors would feel the need to invest in DW/BI to aid them in centralised access of information for improving the decision making process.

Among those that realise the need for DW/BI is the BFSI segment, with 21 percent already having invested in it and a further 21 percent planning to do so this year.

Supply chains exist in manufacturing, FMCG, and chemical/pharma industries. The survey indicates that in the manufacturing sector 22 percent of the respondents have already invested and 20 percent are planning to invest. Similarly in FMCG, 16 percent plan to invest during this financial year.

The reason for this could be the stiff competition that manufacturers are facing from global and local competitors in the marketplace. In order to survive, manufacturers must take into consideration market dynamics and satisfy their customers better than their competitors. One way of doing this is to have a strong supply chain management system in place.

The survey indicates that Sales force automation (SFA) is favoured by the IT/ITeS (27 percent) and FMCG (13 percent) sectors. In the FMCG segment, 16 percent plan to invest in SFA for the current year. That investment in SFA is increasing among the FMCG companies is quite apt as the technology speeds up the process of ensuring replenishments on time.

Competition is forcing SFA adoption

Zoeb Adenwala,
Chief, IT,
Pidilite Industries
ERP application

Pidilite has been using applications such as ERP, SCM and CRM for quite some time now. We are using ERP since 1997, and an in-house developed SCM along with Web-based applications. That ERP is the most common application across verticals is due to that fact that companies are faced with a problem of transaction volumes and size of data plus a need to integrate various applications. This is why investment in ERP and application servers is relatively higher than that in other business applications such as data-warehousing, CRM and SCM.

The reason for data warehousing and BI to have fewer adopters is because a DW/BI system needs clean and consistent data from various data sources. It takes an effort to clean-up the database, consolidate, and standardise it according to the system, which prevents many companies from treading this path.

That the FMCG sector has the highest no of users is not surprising. One is due to the retail boom and two they need such tools to beat competition by properly positioning their products within a given time frame.

SFA

With competition increasing, the need to automate the sales force is also increasing. Initially, we did try to provide PDAs to our sales team but somehow it was not accepted. Now we have developed a Web-based application wherein the sales force files reports through cyber cafes.

We have also developed an SMS system to exchange important information on a regular basis. We are also planning to invest in SCM as business volumes have increased and our in-house SCM system is not giving the desired results with expanding business.

 
     
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