Infrastructure Strategies '06
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 years 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.
- 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
- 21 percent of the BFSI segment plans to invest
in data warehousing/BI in the current year.
ERP is a must
VP, Business Technology Essel Group
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 customers 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.
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. Theyre 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.
On ERP being favoured
With optimised operational efficiencies and agility being
a must have for survival in todays 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
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
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
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 and its impact
CIO, Rallis India
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
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
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 farmers
level. We will also have a better grasp of competitors 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
- 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
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.
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
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
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.