The Hindu Business Line : Turn on SaaS

Till recently for us at eWorld, SaaS (Software as a Service) was like ether. Everyone claimed that it was there, and we could only take their word for it. Sure, Google and Salesforce.com were examples that everyone cited. But if SaaS were really that popular, why weren’t our next door manufacturers and traders using it?

We finally met real-world clients who have been using software that was built around the principle of SaaS. Here’s what they use: An ERP system ‘on tap’, or ‘on-demand’ where they did not need their own servers, networking equipment and, obviously, IT manpower to maintain these systems. All that a user, who wanted to log onto the company’s ERP system, needed was a desktop (or laptop) computer with an Internet connection. Every transaction that the user entered into was recorded and consummated at servers maintained by and in Ramco Systems.

Appropriately named OnDemand Solutions, this division of Ramco has about 1,000 users. eWorld spoke to two organisations who have been with this solution for a while now.

The first was Hindustan Motors. Amar Singh, National Sales & Service Manager at HM, was earlier plant manager at HM’s Indore unit where Ramco’s OnDemand Solutions are in place.

Singh told eWorld that there were two main reasons why HM opted for Ramco’s solution: “The cost was very less and the maintenance of servers was taken out of our range.”

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Use the resource when you want to.

What was as important to him was that the technology that Ramco used was “the latest and we did not have to pay extra for an upgrade and the like.” Importantly, HM could increase its users by any number that suited it: six or 12 or 36 made no difference except in the per monthly costs per user log-in.

Did HM use any other system earlier? Yes — from a group company. “It was in-house software essentially, which became old and obsolete. Maintenance was also difficult. That is why we shifted to another system.”

Interestingly, for IT maintenance, the company had about nine people working to ensure that this division of HM in Indore, which makes mini buses, had its systems up and running without pause.

The reason HM’s Indore plant went in for Ramco Systems was that the implementation time for any other ERP system was high. “It would have taken eight-nine months if we had decided to develop it on our own. We could not afford that time lag.” With this offering, HM went online in 45 days.

“Also, any other commercial ERP system would have set us back by a several lakhs, if not crores, of rupees, including purchase of hardware equipment.” Opting for an on-tap solution was the cheapest and fastest, according to Singh.

Hindustan Motors has three units: one at Kolkata for manufacturing Ambassador cars; one at Chennai for Mitsubishi Lancer; and the third at Indore to make mini-buses. As a single entity the Indore unit, which makes about 50-60 vehicles per month, is too small to consider spending crores of rupees on a commercial ERP, he says. The unit has been using Ramco’s offering for about eight months now.

Singh says, “Assuming that I would have spent at least Rs 1 crore had I opted for a commercial ERP, my savings now are huge, given that I spend less than Rs 10,000 per month per user. And, they don’t have to be seated in office. They can access it from any machine that is connected to the Net.” He estimates his monthly savings between Rs 70,000 and Rs 80,000 between Ramco and the road not taken.

And why Ramco? Singh feels that the brand name stood for something in the ERP space. “They were also the first to introduce the software as a service concept in this area.”

HM’s Indore unit has retained one IT person and has deputed the remaining eight to the group’s IT arm that worked with the unit earlier.

But would not the average client be terrified of having its data stored at a remote location that it cannot monitor. Have no fear, says Singh. “Our data is secure with Ramco, with two-three levels of security preventing an unauthorised person from penetrating the system. What’s more, if and when I want to switch to another vendor, Ramco has committed to giving me all the data with back-up.”

For now, Singh’s Indore unit takes a monthly back-up of all data.

Parry Enterprises

This user proved a different ball-game altogether. Like M.K. Bhaskar, Vice-President, Parry Enterprises, Chennai, says, “We are a trader, importing and selling material, unlike the average manufacturer.”

Here’s the insight he gives us, which led to his opting for Ramco’s offering. “The average margins are lower for us than in the manufacturing sector.” As a result, maintaining servers and other systems and software and paying to retain relevant manpower was clearly a headache he could do without.

One of three divisions within Parry Enterprises, the Food Ingredients division, also called the General Marketing division, is involved in the import of and trading in resources such as Cocoa and its ilk.

Bhaskar says, “Over the years, the nature of business has changed. Earlier, ours was the ‘consignment’ model. Goods used to move from our principal and we sold them for him. Through every stage in the transaction, the goods remained in the principal’s name.

Now, it is true imports, where we buy goods from the principal, and then sell it to our buyers.”

“As business increased, we needed more controls, in terms of stock we held, pricing, margins, credit and the like,” he says.

“That is where we felt the need for an ERP system. Earlier, NetAccess, a group company, developed and maintained a system for us. For every additional module we needed, we found it difficult to develop. Maybe the system was inflexible.”

Periodic maintenance fees were also proving costly for this division of Parry Enterprises. What it was willing to shell out did not meet the expenses of the group company.”

“Also, they wanted to station a person here to maintain that — the costs there would have been more than Rs 1 lakh a month, even if he spent 75 per cent of his time for us and the rest for group companies.”

Finally, the company disbanded its system in early 2007.

After obtaining approval from the IT forum, comprising the head of technology for the group and the IT heads of all group companies, this division went in for Ramco’s offering.

As in the case of HM’s Indore unit, described above, a relatively small size was Parry’s concern with regard to expenditure. Says Bhaskar, “A division of our size — 42 people — can’t afford every additional investment that seems required, such as VSAT, Servers, every time we want to expand. Those are hidden costs.”

In this case, the expenses came in the form of charges that the parent company EID Parry was apportioning to this division. The division used the parent’s services, be it equipment or manpower. Even then it was proving costly.

“What attracted us was that there was no initial cost for the Ramco solution. We could also expand as and when we wanted, in terms of number of users.

Monthly, this division of Parry Enterprises spends less than a lakh of rupees. Flexibility in the change in number of log-ins (or users) was an added attraction.. It first started off with six users and now has nine.

It is about a year since implementation. “Cost-wise, the Ramco solution is only marginally better than our expenses with the earlier vendor. However, the resource person here to maintain the system would have meant extra expenditure.”

Importantly for Bhaskar, the headache of managing people or equipment is gone.

Has the new system made a difference to the processes, in terms of eliminating redundant processes and the like?

On the contrary, some processes have lengthened. “The number of steps to a process has increased, as in the case of the purchase order process, from one to three. But we don’t mind that since it has resulted in lesser errors.” Over time, the company’s manpower has also learnt to handle the system efficiently, so it is quicker now.

When the system was implemented afresh, a person used to take about 30 minutes for the purchase order system — now it is only six minutes, he says. The errors have come down from about 8 per cent to 2 per cent!

Does he feel constrained by the lack of extra features? Are there any gaps that he would recommend to Ramco Systems?

“Whenever we ask Ramco for some customisation, they are not able to freely do it for fear that it would affect other users as well. They may have to work on that. Also, most changes we ask for pertain to regulatory changes, so it should be applicable to everyone.”

Ramco Systems’ view

From a vendor’s point of view, who exactly does it want to target? Clearly, miniscule companies, size-wise, are out of its radar. Says Chandra Prabhakar, vice-president, OnDemand Solutions at Ramco, and a 25-year veteran in the IT industry, “Companies with revenues in the region of Rs 20 crore or so are ideal.”

So far, it has introduced this offering only in India. However, plans are in place to launch it in the overseas markets, beginning with the US and followed by South Africa.

Chandra Prabhakar says the company would look at tie-ups with companies operating in those regions to achieve faster penetration.

bharatk@thehindu.co.in

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