By: Lalit Sawhney, Founder, Lalit Sawhney & Associates
When Dataquest started publication in 1982, IT was called Data Processing, there was no Information System Departments and only a handful of Management Service Departments; of course, there were no CIOs either. ERP systems were unheard of, and even MRP systems were not in use in India. All IT was based on custom development and packages were still not the norm.
GETTING IT, RIGHT
We were part of a large group which had different companies, different businesses with separate management. Each of the business and profit centers had its own sales and distribution models, planning cycles, and different systems for selling, invoicing and planning. The group had 100 factories, 120 sales depots, 13 sales branches, multiple Buying Units, 2 Research Centres, 2 Corporate Offices and 90 third-party manufacturing units.
These were spread all over the country, with many of the depots and manufacturing units outside city limits, with poor communications infrastructure – typical for the 1980s. IT was the back-office, mainly to support monthly accounting of Financials, Payroll, Sales, and Stocks at the Head Office. Real-time, or even daily processing at sales locations, stocking points and factories, did not exist. Costs of computerization were so high that manpower savings and faith alone – could not justify these investments.
On the other hand, we knew that huge benefits lay untapped. Massive reductions in stocks with consequent savings in working capital, streamlining distribution to ensure that sales were appropriately serviced, and reducing wastage in stock – all were possible. We had to convince the business – and ourselves – that we could climb this mountain, and reach a new operating level.
Our usual approach of benefit justification, and of rolling out IT projects and change – typically unit by unit, business by business and one company at a time – was simply not going to work.
So, we decided to convince the management of the group, to adopt a Big Bang approach, a major transformation project: not just for systems but also processes – with business integration of selling systems, distribution facilities across businesses and companies, and with a common IT approach across companies and businesses, with a few pilots – followed by a standard approach and large-scale rollouts in parallel. This was the only way to rapidly get benefits and ROI. This major effort covered three big initiatives – Distribution, Manufacturing, and Communications (corresponding to Supply Chain, Sales, and Infrastructure, in today’s terms).
ALIGNING IT WITH BUSINESS
Aligning IT with business, especially a distributed business – began with communications. Today, we take technical communication capability across the country for granted. In the 1980s and 1990s, email was still in its infancy; calling another city required trunk calls, and some of our depots did not even have a phone! We decided to go in for a Satellite-based network. This needed us to find our own solutions: to get X.25 communications protocols written for V-SATs, and provide separate radios on each of our V-SAT dishes to take care of rain attenuation. Over the years, the communications progressed to over 100 leased lines, and finally to an MPLS network.
Understanding the environment, the business challenges and identifying solutions was the main theme even for the choice of applications. The global solutions used by our MNC parent for Sales and Stock planning were based on Material Requirement Planning systems, which only ran on imported mainframes or minicomputers. These could not be adopted here, because of the local challenges: our large number of small locations, geographic spread, and poor communications.
To keep business costs low and speed up implementation, we chose UNIX hardware and an MRP software which could run on small systems for our Depots and small manufacturing units and medium-sized systems for our Sales Offices, factories, and company Head Offices. In both these choices, and for our networking, we were the first in the country.
We also had to find the balance between the application package approach and our local requirements. We did pilots with minimal customization, followed by a common multi-company, multi-business project to identify the real changes. Each project had a mix of business and IT teams working jointly to ensure business involvement to adapt the software solution to our business requirements, with senior management support in the areas of Distribution, Manufacturing, Operations, and Finance.
To handle the massive task across a large number of locations, across all the major functional areas, we decided to go in for a new approach – outsourcing of implementation and invent the new concept of an Application Help Desk. While this seems commonplace today, it was not so at that time.
While all this was happening on the IT front, business was not standing still. There was a strategic need to help the company grow in the era of de-regulation. We had mergers and acquisitions going on, which required integration of the businesses, selling teams, manufacturing units and the corresponding systems. And there were Joint Ventures being undertaken to develop new businesses too. And, our IT efforts had to be dealing with all these changes, side by side.
Now, as we look back, we can see that we reached a new level of operations, achieving the business goals of saving working capital, and helping the business improving the processes across the company. It required major investments and convincing all of us that we could deliver such an audacious project covering the length and the breadth of the country and spread over an extended period of a few years, not months or a year. Before we realized, IT had moved from being a month-end back-office shop to becoming an integral part of business operations.