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Raja Simhan T.E.

This seasoned player in the book publishing space has opted for technology to outgrow competition. It's all about reading the future right.

NEW economy companies looking at information technology do not attract attention. But, when a 100-year-old firm decides to invest in IT for growth, it sure catches the eye. Macmillan India has invested Rs 1.5 crore in SAP R3, a software application of the German major SAP. The investment will have a significant impact on the company's operations in the next three to four years and in the way it approaches the market and fights competition, says a senior Macmillan official.Think of book publishing in India, and Macmillan comes to mind right away. Established in 1893, the old powerhouse, with over 1,500 employees, is into publishing, information processing and e-business. All these were done through old legacy systems (FoxPro) in the last couple of decades. It could have continued in business with the same systems. But rapid changes in the book publishing industry and within the company have forced it to adopt the latest technology for growth.

Book publishing in India is highly fragmented, competitive and seasonal. Though there is no report or survey on the industry, experts estimate that there are over 7,000 players, including a large number of small and regional firms. They are all vying to grab a piece of the Rs 6,000-crore-a-year market. Over 57,000 new titles are published annually in India, half of which are in English.

According to M. Visweswaran, Macmillan's Chief Information Officer, the company recorded a 20 per cent growth in sales to Rs 35.08 crore and a 45 per cent in net profit to Rs 13.91 crore for the first quarter ended March 31, 2004, compared to the previous year. The growth is projected to be much higher in the coming quarters, he says. But to ensure growth, the company has to understand the market environment. As the legacy system, which was in place earlier, comprised islands of information without standardisation, data control within the organisation was minimal. The system could not keep pace with the organisation's growth. There was duplication of data, and inventories piled up at various places.

Now, the implementation of SAP software has helped the company to integrate its network in over 20 cities that were serviced by a central printing press in Chennai, he says.

According to Visweswaran, every year the company had to focus on the school season — April to July — and deliver books to schools on time. "If we miss the season, we cannot get back. The school syllabus is revised once in three years and the company should forecast the market requirement, which we could not do precisely. Our employees spent much time collecting information from schools, but they could not use it properly. As a result, inventory used to be very high," he says. The SAP tool has now integrated sales and distribution, production planning, financial accounting, controlling and payroll. Data is now available across centres and that helps avoid duplication of information. The IT project, implemented in four-and-a-half months, has also increased efficiency in meeting orders and employee productivity. The improvement is visible, but it is too early to provide numbers, he says.

Every year, Macmillan publishes about 100 new titles and the success rate (books' success in the market) will be 30-40 per cent. The IT implementation could help the company achieve over 50 per cent to 60 per cent in the next three to four years by helping to assess market trends. The IT investment could also help Macmillan forecast in advance about the market requirements and avoid inventory build-up. However, the ultimate aim is that the IT investment should bring in an additional 15 per cent to 25 per cent in the bottom line every year, he says.

Macmillan India, in which the German firm Varlagsgruppe Georg von Holtzbrinck owns 61 per cent, is known for its school and higher education textbooks, reference books and general non-fiction titles. It has tie-ups with over 20,000 schools in India, and publishes a wide range of technical and knowledge development books, encyclopaedias and dictionaries.

Globally, the Macmillan group is the original publisher of works by Rabindranath Tagore, H.G. Wells, W.B. Yeats, Thomas Hardy, Lewis Carroll, Rudyard Kipling and John Maynard Keynes.

Visweswaran says Macmillan India's information processing division is renowned for its typesetting and originating services. The company has two main units in Bangalore and Chennai. The main unit in Bangalore is one of the largest scientific and mathematical typesetting units in the world. The present output is around 400,000 pages a year and that of scanning is around a thousand lines and halftone illustrations per day, he says.

Picture by C. Ratheesh Kumar

raja@thehindu.co.in

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