alt="Please wait for pix" align="left" hspace="0" width="250" height="241">Ramco
Systems was the first Indian company to get into product development, and an ERP package
at that! Two more players from Chennai, Pambban Software Systems and Maars Software
International Ltd, follow suit. Let''s find out what''s cooking down south.
Circa 1993. The time the country was
getting into the digital revolution. The time when computerization had just started
picking up. The time when buzzwords were beginning to be understood. During this time, one
Indian company had the forethought and the confidence to get into a specialized area of
software and compete in the global market. Thanks to the vision of PR Venkatrama Raja, MD,
Ramco Systems-the youngest in the family line, and the grandson of PAC Ramasamy Raja who
founded the Ramco Group of Companies.
As S Ramachandran, CEO of Ramco Systems,
put it, "With young blood comes new managerial and operational changes and new
styles." And so it was. Raja''s inclination toward IT, saw the genesis of another
company-Ramco Systems, in addition to the existing chain of manufacturing companies such
as Madras Cements Ltd, Rajapalayam Mills Ltd, Rajapalayam Spintext, Ramco Industries Ltd,
The Ramaraju Surgical Cotton Mills Ltd, and Sri Ramco Spinners.
Companies with manufacturing strengths have
undergone the cyclic change from MRP to CLMRP to MRP II, before hitting upon ERP. Ramco
Marshal is an example of such a chain, wherein it took Ramco 1400 man-years to develop the
product, which is today hailed by Bill Gates as a "role model for the Indian software
industry."
A Natural Evolution
Today, there are two more Chennai-based companies who are on the same threshold, of
breaking out of the manufacturing shell. The same courage and conviction is propelling the
duo to develop an ERP package for the international market. And for both Pambban and
Maars, the idea of getting into ERP is a natural evolution from their manufacturing
industry background.
Pambban, for instance, is in the business
of textile and hosiery for the last five years with two companies in the Group-Pambban
Apparel and Maneka Textiles. With the coming up of a huge factory in Madurai for hosiery
manufacturing, the three directors of the company-G Madhan, M Balasubramaniam, and Senthil
Kumar-decided to have the factory scheduling automated and integrate the operations. The
company looked at several options, took consultation, and realized that the entire process
was costly. Besides, huge investments had already been made in the setting up of the
factory. Moreover, during the same time the company was also looking at diversifying into
IT and undertaking projects for companies like Hindustan Lever and Malar Hospital.
"That''s when we hit upon ERP. It was part of the diversification itself. Better
still, it fitted in with our own requirements to have an ERP package for our internal
use," explains Balasubramaniam.
T Varadharajan, MD of Maars Software, also
has almost a similar experience. He started the company in 1995, after getting a hang of
the various aspects of the manufacturing industry in his previous employment that of
managing a consultancy and software development house offering total solutions to the
manufacturing industry. Evolving from various aspects of manufacturing industry, the
company succeeded in developing Maarsman-an integrated manufacturing solution (MRP) for
small and medium-scale manufacturing industries.
Maars is in the business of providing
integrated solutions to manufacturing industries. The company has just completed its first
full year of operations, since it went public, with over Rs 70 million of revenue. It
currently employs about 100 professionals, some of them based in the US and Middle-East to
support overseas projects.
Taking A New Route
However, with more and more ERP products coming up, is the Indian market ready for the
boom? "Given the fact, that India is indeed a high-potential market in the long term,
we have in the recent past seen a few major players in the ERP market making forays into
this market," says Ramachandran. Industry sources put the figures for potential of
the ERP market in India between Rs 240 and Rs 500 crore (for the year 1997-98). And
presently, only about 15.06 percent of the total market has been utilized by Indian
companies. According to IDC India''s Directions''98 report, the total number of
installations in the country in the year 1996-97 is valued at Rs 75.3 crore-an indicator
that the market is not big enough for many companies to get into the ERP segment in the
country.
Therefore, all these companies are looking
at the global market in a big way, which is estimated at a phenomenal $ 6 billion,
translating to Rs 21,000 crore. Here again, the Indian companies are not competing in an
open market. "The market is not ripe for everyone to open shop here. But to start
developing the product here and implement it abroad, makes sense," says
Balasubramaniam.
Clearly, the late entrants like Pambban and
Maars have realized that in order to succeed, they have to be more focused and concentrate
on a particular industry segment. "Since we have a clear understanding of the working
and the requirements of the textile industry, which is our background, we decided to
develop an ERP package for the textile and hosiery industry," says Balasubramaniam.
The company''s preliminary survey also indicated that there was no ERP product catering to
the textile industry. The realization that the world majors such as SAP did not have a
solution for this industry, also encouraged Pambban to go ahead with its plans.
With an investment of about Rs 2.5 crore
plowed in from the Pambban Group of companies, more than 15 professionals started
developing an ERP software in 1994. In two years, the company came out with TABS (Textiles
Apparel Business Solution), an ERP package specifically for the textile industry. After
the final testing and value additions the product was launched in Mauritius with its
parent company DCDM in 1997. Recently, the company bagged five orders for the software
implementation in the Mauritius market.
Looking Globally
Unlike Ramco, which has by now established its brand equity in the Malaysian and European
markets, in addition to being a market leader in India, Pambban and Maars still have a
long way to go. The low awareness about ERP in the domestic market, the cut-throat
competition, and the price-sensitivity factor have forced these companies to look at the
global market at large.
Pambban, as part of its market strategy,
has its eyes set on the North Carolina market in the US, the hub of textile and hosiery
manufacturers. The company''s survey in this market has indicated that there are about 500
small-scale manufacturing units in this belt and it is targeting a strike rate of 10 to 15
percent in the first year of operations. Pambban has also signed up with the National
Association of Hosiery Manufacturers to give the product a push in the international
market. Maars, on the other hand, is looking at the low-and mid-end of the market segment
for manufacturing industries.
Ramco also agrees with the stratification
of the market for doing business. The company is giving a major push to promoting Marshal
in the US this year. Strategic tie-ups with players in the US market and building
awareness about Marshal, are some of the plans on the anvil.
Balasubramaniam says, "What is
essentially required today is right-sizing." According to him, ERP should befit the
size and nature of the organization. He further elaborates that core competency is the
order of the day, and therefore, ERP will also become increasingly industry-specific and
tailor-made. Price structure too will differ in the Indian and the international markets.
Pambban has priced TABS at anywhere between $ 75,000 to $ 100,000 for the international
market, and at $ 50,000 for the Indian market.
However, Ramachandran of Ramco does not
agree on ''right-sizing'' or industry-specific ERP solutions. He substantiates it by saying
that the trend emerging internationally is ''open architecture and active component-based
ERP solution''. "One company cannot give the entire solutions for all industries.
Companies with core competency in each industry can join hands with large vendors and get
into specific-component development, which in turn can be plugged into open architecture
to make the software compatible to every industry," explains Ramachandran.
As things stand today, most of the
installations in India are driven by MNCs with offices or development centers here. The
parent MNCs which have implemented and realized benefits of ERP in their offices
worldwide, have pushed their subsidiaries in India to go for the same. Most of these
companies also insist on having the same ERP vendor and implementor, who has understood
the particular requirements of their business worldwide. This also ensures uniformity
across geographical locations.
"We had not opened an office here in
India till recently. But our global clients have forced us to open office here, as they
want us to be the implementors for their offices here as well," admits Amrit Chopra,
MD, Tetra Software, Middle-East India liaison office. Tetra is a part of UK-based Tetra
Ltd, which has about 3,000 installations worldwide of its flagship product Tetra CS/3.
Even before setting up the company, Tetra has got contracts for its Indian company from
its global clients such as Motorola and Nestle.
As if these were not enough, the market is
also getting crowded with Indian companies who are tying up with global ERP players to tap
the Indian market. One such company is Complete Business Solutions India Pvt Ltd (CBSI)-a
wholly-owned subsidiary of CBS Inc., which plans to enter the domestic ERP market by
January 1998. According to VV Sundaram, CEO of CBSI, "This decision to enter the
niche segment of ERP is the result of the parent company, CBS Inc.''s expertise in the ERP
market worldwide." CBSI, in turn, is targeting the companies with revenues in the
range of Rs 300 and Rs 1000 crore, in the human resource, manufacturing, and finance
sectors.
There are also some Indian companies who
are exploring other possibilities to tap the market. Pentafour Software & Exports Ltd,
a DQ Top 20 company, has tied up with Software Systems Associates India (SSA) for
marketing, consultancy, and technology exchange of the company''s flagship product BPCS
(Business Planning and Control System). The alliance will look into key areas like
providing and implementing ERP solutions, training and education on BPCS, and setting up a
BPCS Competency Center for ERP-the first of its kind in the world. And this also means big
money. According to V Chandrasekar, MD, Pentafour, "This synergy will bring in about
$ 20 million in the next three years through implementation, services, and maintenance of
ERP, while the training program will add on about Rs 5 crore by the year 2000."
Innovating To Succeed
In such tough competition, the key word is ''innovation'' and Chennai-based Polaris Software
Labs Ltd is trying to bank on this. At a time, when ERP as a software is seen only for
manufacturing industries, Polaris has developed a new ERP package for the delivery
industry. "We have been very cautious in entering this ERP segment. There are more
than four or five world-renowned ERP products and it makes no sense to fight in the
existing markets. Besides, there is no such product for the software industry," says
Arun Jain, CEO, Polaris. This product, which is yet to be named, is a combination of
Polaris'' existing products-Super Store 2000, Entity, and Parsley.
However, ERP market is not confined to a
singular product. Implementation and support services form a separate market segment.
There are some players in the market who are trying to grab a portion of this market by
acting as implementors here. Polaris has signed up with Oracle as its implementation
partner and NIIT recently acquired a contract from SAP for product implementation and
support services. SRA Systems, on the other hand, has signed up with Ramco for
implementation and support solutions for Marshal.
If implementation and support form a major
part of the ERP segment, so does training. Maars Software offers SAP training as part of a
candidate''s induction program. Comp-U-Learn offers training in Oracle Applications.
Training contributed between 2-10 percent of the company''s total revenue in its first year
of operations.
While ERP has evolved from product
improvement to process engineering to logistics worldwide, the Chennai companies have
gained in terms of being able to technologically leap frog. Though the ERP market is still
in the nascent stage in the city, the country is trying to catch up with BPR (Business
Process Reengineering) and SCM (Supply Chain Management)-the next two stages in the
process. "We are trying to catch up with the past and the latest simultaneously. And
till this balance is achieved, and if it is achieved, will the players be able to survive
in the marketplace?" feels Varadharajan.
Even as the Indian market, especially
Chennai, is hotting up, ERP worldwide is heading for the next explosion. In the second
phase, ERP is becoming a configurable business process. As Balasubramaniam says, ERP is
moving to a phase where it is going to be hardware-software-and networking-independent and
more web enabled. These Indian companies stand to gain from the experience of other
nations and can soon adapt to the new changes happening in the field. And in case this
happens, will Indian companies succeed globally? The answer lies with Chennai.
AKILA S
in Chennai.