IT’s Heavyweight Adopter



The
Indian engineering industry, including the transport equipment segment, is
estimated at around Rs 1.2 tn. The share of heavy engineering is about 80% of
the value, while rest was contributed by light engineering sector. The Heavy
Engineering Industry comprises capital goods/machinery and equipment and can be
broadly classified into electrical machinery and equipment and non-electrical
machinery and equipment segments.

Majority
of players in the heavy engineering industry have well defined markets catering
to specific sector(s) and are technology driven. Turnkey engineering capacity is
also limited to a few domestic entities such as BHEL, ABB, L&T, Alsthom, and
competition in this segment is also expected to be limited. The heavy
engineering sector is driven primarily by technology. This, coupled with the
fact that the initial investment required for heavy engineering/capital goods
manufacturing facilities is relatively high, creates a relatively high entry
barrier.

Best Practices for 2006
  • Online procurement, partial or
    complete. This facilitates transparency and makes the procurement
    process shorter, simpler and more cost effective.

  • Manufacturing units have
    independent IT deployments and DR policies but are covered under a
    single IT policy

  • Independent sites are connected
    via satellites

  • Enterprises are considering
    networking technologies like MPLS-based WAN for centralized operations

  • Purchase of hardware through
    leased agreement that takes care of updation every three to four years
    and also maintenance and replacement

  • Technologies like MPLS will help
    usher in applications like VoIP and video conferencing at reduced cost

  • Certification of IT processes

  • Storage of data on tertiary sites
    in different geographic regions

Heavy
engineering companies have therefore been one of the earliest adopters of
technology among traditional industries in India.

One of
the most important business parameters for heavy engineering companies is
competitive delivery time. Today most of the leaders in the space have cut down
delivery time by significant margins, thanks to huge deployment of IT in core
business processes.

Most
implementations in Heavy Enginnering happen in a discrete fashion in the
different manufacturing units. All companies have gone for ERP deployments
today. Incidentally, many of them have deployed SAP predominantly.
Interestingly, L&T is running multiple ERP systems depending on the
requirement of the unit while BHEL deployed SAP in four units, while the other
units have ERP systems based on Oracle’s RDBMS. Today, companies in this
industry are also looking at upgrading their ERP policies. Primavera is widely
used in large houses like BHEL and L&T for project management.

In
areas like design and engineering, most of the programming and application
development work is done in-house. Interestingly, companies have chosen to adopt
a decentralized approach towards application development and deployment. BHEL
has gone ahead with a decentralized DR policy as well. The company has made its
DR system resistant to fire and flood only and not earthquake, as it does not
have a warehouse setup. This is also reflective of the trend in the sector.

Consulting Panel

C Subba Rao, general
manager, IT, BHEL

S Gune, CIO, Heavy
Engineering Division, L&T

Heavy
engineering powerhouses have also gone in for e-procurement. While some of the
players carry out their entire procurement operation online, some like BHEL have
made its procurement partially online and partially offline. Companies are also
looking at technologies like MPLS to help centralize their networks.

IT has
played a dominant role in the growth of the heavy engineering sector from its
early days and would continue to do so as IT departments gear up to move newer
technologies to fuel growth and take on competition.

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