The Hindu Business Line : Realty bytes

In recent years, many real-estate companies have been taking to end-to-end IT solutions in a bid to automate their business processes. This has not only helped to increase efficiency and cut cost but also to make their functioning more transparent, they say. It has enabled them to grow, as well.

Rapid growth in business opportunities, inflow of foreign investment into the sector, and the entry of second-generation owners or managers into companies are largely the reasons behind the real-estate industry adopting IT solutions, say industry watchers.

Using IT is linked to the opening up of foreign direct investment in the real-estate market, says Rahul Chawla, Chief Executive, In4velocity Systems, a provider of IT solutions to the real-estate sector. Most of the new developers funded by private equity or real-estate funds use IT, he adds.

The spread of IT could be attributed to the second-generation owners or managers in a company, says Rajesh Ponnan, SBU Head, Construction Solutions, Sobha Renaissance Information Technology Private Ltd. They have more exposure, are aware of technology and rely on technology to a great extent, he points out.

However, the use of complete end-to-end solutions is still fairly recent. Chawla says it is a three-four-year-old phenomenon. In4velocity introduced its product in 2005. Initially the response was slow, but in the last two years, things have begun to change. At present the company gets about seven to ten enquiries a week, he says.

Earlier, different departments in a company would independently decide on the software they would use, but now enterprise resource planning (ERP) has become popular, says Ponnan. He says the industry has moved from fragmented software to consolidated ERP solutions, though it involves a substantial cost escalation.

ERP for integrated communication

Bangalore-based real-estate major Sobha Developers Ltd uses an ERP solution that connect projects in different locations and helps people communicate in an integrated fashion.

N Venkatramani, Executive Director, Sobha Developers, says the company also has another IT system that is largely for the employees. This has an HR module that allows employees to apply for leave, receive pay-slips and lodge complaints online. It also enables the bosses to approve leave and do appraisal online.

This makes information readily available and brings in a lot of transparency, he says. Employees can also register for training through this system. The main advantage is that employees do not have to go around asking for information, Venkatramani says. It also acts as the grievance handling mechanism. This has been operational for the past one-and-a-half years.

Venkatramani says the ERP solution is used for the estimation and the enquiry-generation cycles.

The estimation cycle includes estimation, procurement, purchase-order, receiving of material and payment. The enquiry generation cycle includes enquiry generation, site visit, customer building, payment agreement and payment received from customers.

Adoption of the technology has helped to reduce document movement. It has also helped to control costs and get a better grip on operations.

It is an effective monitoring tool, and has reduced the scope of mischief. There is an integrated information flow between departments, avers Venkatramani.

Sobha Developers also has an online quality management solution. Every aspect of quality for all the projects is evaluated and put on the intranet, where the details can be assessed by everyone. It enables the project managers to know where they stand, compared with the others. Incentives also depend upon this statistic, says Venkatramani.

operations talk to each other

Puravankara Projects Ltd, also Bangalore-based, says a construction company has a complex business model and has to handle various operations such as architecture, construction and sales. IT can integrate each of these operations and make them talk to each other. The company says it has been implementing IT since 2006. It uses an Oracle solution. If the operations are all manual, it becomes cumbersome and one might lose control over operations. It also leads to inefficiency and hence costs go up, says Puravankara.

At present, demand for ERP solutions is high, but not many companies use high-end solutions. Industry experts believe the market will evolve over time and there will be demand for more sophisticated solutions.

Ponnan of Sobha Renaissance says demand for process re-engineering services will see big growth. He defines process re-engineering as making small improvements at the micro level. It will help companies to transform their business to an extent, focussing on the developing areas. It will comprise software, consulting and domain knowledge. However, many real-estate companies will take some time to adopt IT on a scale where it would help them to transform their business on a major scale, says Ponnan.

Business transformation services, which work on a macro level, could see good demand, but very few have happened as of now. This involves changing the entire business set-up, and would require management consulting and industry expertise.

Stabilisation and growth

Chawla says it will still take a few years for the market to stabilise. Once that happens, the demand for next generation solutions will start. The technology providers would have to show the value. Figuring out the right price point is also important.

Technology adoption will keep growing, he feels. The market for IT solutions has huge scope within the real-estate ecosystem comprising suppliers, contractors, developers and investors. Among the 4,000 odd top-tier developers, only about 250 use an IT platform at present. In the SME category, there are about 11,000 players who could use IT. So the addressable market is huge, he stresses.

Wipro Infotech says the vertical is already promising to be a significant contributor to the overall business of Wipro in India, West Asia and other emerging geographies.

Anil Jain, Vice-President, Corporate Business Unit, Wipro Infotech, says, “The encouraging note here is the interest shown by various clients to partner for long-term associations and to partner for both organisational transformation and the projects’ needs.”

He says the vertical has been seeing a lot of changes. The scale and speed of operations have seen a huge shift. Increased competition, changes in funding patterns, professional talent layer managing the business and increased customer centricity are some of the other changes.

Many real-estate companies still think that merely buying software will solve all problems. But it actually goes much beyond that, and depends on building the right kind of business models and processes, stresses Chawla.

Ponnan puts it thus: it is very important to integrate IT with the five Ms — man, money, material, machine and management. This realisation is gradually happening, he says.

Drawings — a mouse click away

The Kolkata-based Merlin Group says it uses IT solutions in its core business processes.

IT solutions are now an integral part of the real-estate industry, says Sushil Mohta, Managing Director, Merlin Group.

“First, all the drawings are now done on AutoCAD software by the architect. The structural engineering companies also use software such as STAD, ETAB for structural design of the building,” he says.

“IT solutions have made communication of drawings very fast. All the drawings are exchanged over e-mail from the architect to the structural engineer and then to the other consultants for HVAC (electrical, fire prevention, plumbing and air-conditioning.) Gone are the days when the architect and engineers’ office used to have large tables with scales, and architects used to work on tracing paper for hours. Now, at the click of the mouse, the drawings are prepared,” he says.

IT solutions are also helpful to the company’s marketing and customer care departments, for maintaining data on customers, their payment installments, reminders, etc. Various documentations are being generated through integrated software, he says.

ERP software integrates the various departments such as site, marketing, finance, procurement, etc.

However, ERP solutions are still new and in the future, better software will be available for the real-estate industry, he says.

Shamik.paul@thehindu.co.in

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In4velocity develops Web-based application for realty sector
Sonata unveils tool for realty sector

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