Innovation for Manufacturing SME Clusters

The IT and IT Enabled Services Committee of CII has taken up a rich agenda
for the current financial year, as it usually stays away from the over discussed
areas of software exports and IT deployment in the top corporations of the
country. It also treads the road less traveledhow can IT develop a more
inclusive India and transform the government processes, healthcare, agriculture,
education and the capability of small and medium enterprises that abound in the
manufacturing sector of our country.

Traditionally, IT enablement in these sectors in India has been low. In a
country which aspires to compete with China in the manufacturing sector, lack of
awareness in the industry which comprises tens of thousands of manufacturing
SMEs is really a matter of concern. More than 80% of SMEs are either not ICT
enabled or most of the operations are manual, using low-end custom built
solutions, which are traditionally difficult to maintain and scale. Penetration
of top-end ERPs, with integrated supply chain solution and web enabled
architecture is mostly absent and hence, ICT is not really an enabler in any
sense of the term.

Global case studies have shown that even SMEs can demonstrate tangible
benefits of effective ICT deployment and improvements as high as 32 % in
inventory carrying cost, 20% in order management cycle time and 12% in
procurement, resulting in double digit percentage improvements in on-time
delivery revenue and profit.

A CII study has shown that the present need for lowering the cost of
ownership and initial investment, by creation of a clusterwhere MSMEs can use
the resources as per requirement, pay-as-per-use of subscription and spend as
they growis increasing. The more the members of the clusters, the better the
chance to break even on the initial investments ! In CIIs discussions with the
government, the SaaS model, which is usually centrally hosted and accessed as
per requirement has been advocated as the best solution to serve the needs of
this large and important sector of the Indian economy.

The CII has already done significant work in many regions to develop the
concept of cluster and certain common services including sharing of best
practices in areas ranging from procurement and distribution processes to
quality assurance have already been put in place for some homogeneous clusters.

The approach that has been advocated is to IT enable hundred clusters in two
phases with the first part including implementation of four clusters in
identified zones and industries. This will require almost complete sponsorship
by the government to ensure there is a successful rollout of clusters and a
demonstration of its success in focused areas. The second part will entail
implementation of the next ninety-six clusters, which will have similar
stakeholders but with distributed ownership of implementation and deployment.

The stakeholders in this cluster approach to IT deployment for SMEs are
manythe Government of India through the Ministry of Micro, Small and Medium
Enterprises as principal sponsors; the CII as mentor of this cluster
implementation across the country; the system integrators (SIs) who will be the
consulting organizations, providing technology service bringing in the necessary
expertise, experience, and consulting; the software and hardware and
communication equipment providers who should have the capability and the
willingness to adapt their approach from a single client sell and install method
to a cluster service center host and support model; and finally the MSMEs who as
users will avail the benefits of the clusters by making their own share of
investment.

What is needed is a commitment of all the partners to make at least a hundred
clusters come alive with the vibrancy that ICT can bring.

Ganesh Natarajan

The author is Vice Chairman & MD of Zensar Technologies. He can be reached at
maildqindia@cybermedia.co.in