The Hindu Business Line : Hand IT to the expert

Alongside information, the most valuable asset that any business organisation owns is its people. Today, it is becoming increasingly difficult to get and retain technical manpower.

Employees leave with virtually no notice period. It takes considerable time to recruit another candidate who is equally competent all over again.

This is the background against which the concept of `Total IT Outsourcing' (TITO) is catching up. TITO is about businesses concentrating more on their core competence and leaving the technology requirements to specialists.

Eastern Software Systems (ESS) is an up-and-coming player in the TITO space. Its Chairman and Managing Director, Anil Bakht, tells eWorld why he thinks this concept will click in these times of employee churn. Excerpts from the chat:

How do you put across the concept of total IT outsourcing to a prospective customer?

Eastern Software Systems is one of the leading ERP companies with `ebizframe' as the flagship product. We have many clients in the SMB (small and medium business) space.

Therefore, it is logical for us to pitch for total IT outsourcing to our existing customers as a strategy. They have deployed our solution in their IT environment and are satisfied with our services, especially the speed in responding to their requirements.

The need is more pronounced in companies that rely heavily on IT for their revenue, and therefore their survival. For example, the online reservation system of commercial airlines, e-business companies, banks and financial institutions with substantial online transactions, etc.

Worldover, businesses are going leaner in terms of their head count. Businesses should concentrate on their core activities rather than grapple with technology. It is best left to people or companies for whom IT is the core activity.

THIS ONE is for the specialist - Bijoy Ghosh

What's more, businesses can sign definitive SLAs (service level agreements) with penalty clauses. So, if the service levels go below what has been committed in the agreement, the IT outsourcing service provider can be penalised financially. Service providers are accountable, and therefore more responsible, for just about everything.

In sharp contrast to this, you really cannot hire and fire employees at will or for that matter cut their salaries for a marginal downtime in case you decide to go on your own as far as running the IT department is concerned.

The irony is that businesses outsource non-critical operations such as housekeeping, office security, etc, to specialists but when it comes to critical operations such as IT, they generally prefer to `mess' it on their own.

Again, this is a general observation and not a thumb rule, for some companies may and do succeed in doing it all by themselves. However, it can be safely said that a major proportion does not.

Does your profile as an ERP vendor help?

Yes, being an ERP vendor does help.

Second, the very nature of our solution offering also helps in a way.

ebizframe is an enterprise-wide application with various modules spanning across departments and functions — SCM (supply chain management), planning, production, inventory, marketing, sales, finance, HR and payroll, CRM, etc. Our implementation and support engineers work closely with department/function heads to understand their specific requirements and address their equally unique issues.

ERP has been the main offering right from the inception of our company. Total IT outsourcing was developed as an offering later, over the years, owing to demand from customers and the immense business potential.

Do SMEs find the cost of implementation worth the effort? Do you offer an ASP version?

Small and medium enterprises are not oblivious to the advantages of implementing ERP anymore. They are rather emulating their larger counterparts in deploying IT successfully. They have come to realise that operational efficiency attained through IT is the only mantra that can keep them afloat against competition from bigger players with financial muscle and marketing dollars.

Yes, we were an ASP (application service provider) earlier. However, if you closely consider the ground realities, today every customer wants the ERP application to be customised around his very own business rather than purchasing and implementing a solution that's generic to the industry he operates in. So, hosting a flat ERP solution with a standard set of features, sans any tailoring to peculiar needs, to be accessed by multiple businesses across varied verticals, did not catch up. As a result, we too discontinued the offering.

Does total IT outsourcing mean re-inventing the wheel for the IT staff? How do you cope with frequently changing technologies?

It certainly does not mean re-inventing the wheel for IT staff. This is all about complementing and supplementing their efforts. The overall objective is that IT should benefit the business.

New technologies are emerging out of labs and becoming commercial by the day. The only choice we have is to update ourselves with whatever is relevant amidst whatever is latest almost on a daily basis.

Do you intend to get into TITO-related consulting practice?

Every TITO customer would require consultancy on an ongoing basis. Therefore, it is a value-addition that we extend. We have no intention of making it a full-time business as of now.

The latest trend obtaining all over the world is selective outsourcing, not total outsourcing. What is your take?

You are right about the trend but then there is a broad classification — the large enterprises are going in for selective outsourcing but most SMBs are thinking in terms of total outsourcing.

Do you think India is a mature enough market for total IT outsourcing? Do issues of confidentiality and culture crop up?

As far as India maturing as a market for this concept is concerned, we have no doubts on that front. There is an immense business potential in this business that remains untapped as yet. As they say, education is the first step towards marketing. We need to make customers aware of this concept's advantages. It is only then they'll think and migrate to it. There are no issues on the confidentiality front for it is as well protected as it can be.

Culture is what gets developed over a period of time and people come to accept it gradually.

How does ebizframe measure up to competition in the domestic market where the retail, manufacture and logistics sectors have been booming?

What really has caught up in the market is the increasing trend towards MSP or managed service provider. Many customers have taken a fancy to this in the recent past. This essentially means that each customer hosts his own copy of ebizframe and makes it available to all its end-users.

Yes, retail, manufacturing and logistics verticals have posted huge growth and therefore the demand for ERP in these sectors is also on a high. Another vertical that has shown immense interest and demand in ERP is auto-ancillaries.

ESS is the largest selling Indian ERP brand in the SMB space. We have the largest number of customers in this segment and enjoy the largest chunk of the market pie. In fact, we were one of the first ERP vendors to concentrate on the SMB space. Over the years we have studied the peculiarities and unique requirements of Indian SMBs (made in India for Indian enterprises). We have leveraged on the learning from multiple implementations, done extensive research and development in-house to come up with very Indian features and then integrated them into our product and solution offerings. We offer solutions suited for the Indian market environment e.g. accounting module is equipped to handle income tax, excise, VAT, etc. This, in fact, is our biggest USP.

We are competing against the multinationals both on the price and feature front. This is precisely why we have been rated as one of the top 10 ERPs in the country by Frost and Sullivan; among PC Quest's "Top 10 world-class products from India"; among Dataquest's "Top 7 home-grown software brands"; and Computerworld India's "Most Powerful ERP Companies, Most Powerful ERP Packages".

Some details on other software development programmes that you are pursuing...

Currently, all our software development initiatives are focussed on ebizframe and its enhancement. We are adding new modules and features to the product regularly. The very fact that the enhanced ERP solution is available to Indian customers at attractive price points makes us win against the multinationals.

Very recently, we developed and added Magic Eye, a tool that helps customers get a detailed financial overview of their business operations easily and quickly.Besides this, we have translated and launched ebizframe into five languages besides English — Arabic, French, Russian, Spanish and Thai — to cater to demands from the international markets where ebizframe has been received well.

We recently ported ebizframe on to Red Hat Linux and Oracle 10g as well. We have also developed and launched a new upgrade system called Bolt-On using which the old customers of ebizframe can simply download the new features and enhancements introduced by us, post purchase.

This only goes to show that we have been doing enough R&D and software development.

Spelling gains

The Mumbai-based Recon Oil Industries Ltd (ROIL), a manufacturer and distributor of natural edible oil and food products, has implemented ebizframe and says it has reaped benefits.

ROIL has branch offices at Delhi, Parwanoo, Bhubaneshwar and Hyderabad. Factories are located at Hyderabad and Jaipur.

The company management faced problems on the material supply front, tracking the process at the sub-contractor's site and managing sales data, due to which delivery got delayed. The true inventory value was not known, says a spokesperson. Production cost was not available as the system was not integrated and centralised. Branches and factories were not connected with the head office.

Against this background Ebizframe implementation was started in January 2004. The system went live from April 2005. Ebizframe was adopted with minor customisation and major re-engineering of business processes to improve overall performance, says the spokesperson.

All specifications for raw material, semi finished and finished goods are now incorporated into the system, he says. The turnaround time of delivery against order has been reduced, according to the company. Sales and distribution (including exports), purchase, inventory, production and finance data are live.

Duplication of work has been avoided, saving cost and time, says the spokesperson.

vinson@thehindu.co.in

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