The Hindu Business Line : SME market is the place to be…

A simple study of the timeline of ‘Ramco Systems’ on Google News shows sudden activity in 1989, followed by years of lull, and then a gradual build-up from 1994 to 2003. However, the only thing I remembered — at the start of my meeting with Kamesh Ramamoorthy, Chief Operating Officer of the Chennai-based Ramco Systems — was the colourful logo that used to adorn the company’s ads.

The logo is different now: A Möbius strip of sorts, in blue, instead of the warp-and-weft-type of lines in vibrant hues. Dreams, perhaps, never end; and, as if emerging from a time-warp, Kamesh begins by talking about why the re-branding had to happen…

Our conversation wanders on to what kept his company ( www.ramco.com) busy all these years, how he achieved operational break-even during the last fiscal, where the point-solutions companies have vanished, how the aviation businesses derive benefit from Ramco’s solutions, and so on. The dialogue continues over e-mail…

Excerpts from the interview:

As an IT product company, how do you see the global economic crisis impacting your operations and strategy?

The present crisis is both a challenge and an opportunity for us to consolidate our existing business and find new partners. Tighter cost control, cost optimisation, better resource productivity and sharper focus across all areas of the business are helping us operationally. We will also continue to invest into the right opportunities in the market, both for partnerships and customers, expand our customer base, nurture existing relationships and aim at annuity-based revenues, embrace innovation in our product design and delivery and focus on employee excellence. Very importantly, we will also pursue the acquisition of experienced talent from the market.

Our strategy of being focused on the West Asia, Africa and Indian markets during the preceding years has been paying off well for us. We are able to counterbalance the negative impact of the downturn in the US and Europe market. We are certainly well-placed to weather the global economic crisis.

For instance, last year, we launched Ramco ‘on-demand’ ERP (RODE), a full-fledged ERP (enterprise resource planning) on SaaS (software-as-a-service) model, timed so as to capitalise on new opportunities that have emerged out of this current crisis. It is important to note that the ‘on-demand’ solution eliminates the tag of high capex, and is working well in today’s turbulent times.

As a company we have already done our ground work to bounce back to the growth course when the global economic situation stabilises. We are making all efforts to seize this opportunity and position ourselves ahead of competition. In spite of all the doom and gloom that seems to encompass the current situation, we are confident that we will have a strong future.

What are the trends for the near- to mid-term that you see in the ERP products space in general, and for your offerings in particular?

In my opinion, for an ERP vendor, the small and medium enterprises (SME) market is the place to be. Growth in the enterprise market has slowed down because of saturation at the enterprise level. Even though maturation, awareness and current adoption of ERP is high in large organisations, it is the SME segment that will drive future growth.

The key operational business drivers for the manufacturing-SME companies will be to increase operational efficiencies, increase labour and capital productivity, reduce fixed and variable costs, integrate better with tier-1 suppliers, sub-contractors and distributors. Clearly, SMEs also face the pressure to become more efficient, competitive and render better customer experience, especially for companies that are in the import and export business.

A recent survey conducted by IDC states that the awareness of the ERP concept among SMEs is only 31 per cent compared to 88 per cent in large organisations. It had also found that a greater number of SME organisations are implementing an ERP solution compared to large organisations, the reason being improved financial processes and management. Also, SMEs need a service-oriented architecture (SoA)-based system as much as the larger organisations do.

Traditionally, the SME market was under-served due to high cost of ownership for ERP. New delivery models such as on-demand ERP are able to address this space very effectively. SMEs look for products with maximum flexibility and minimum expenses. As a company, we are targeting component manufacturers, mill production, discrete manufacturing, trading, and services, and could achieve the milestone of 2,000 users with 150 customers in the span of one year.

Are there any specific reasons why Ramco’s solutions did not achieve high visibility in the domestic market in spite of being an early entrant? How has the company been introspecting about the same? And has it been coming up with any changes to business and product approach, as a result?

When Ramco ventured into building software products, it had to face very high entry barriers, the main barrier being the lack of brand image for an Indian product of any kind. Some of the other reasons were the need for focused marketing, a powerful sales organisation and more importantly, alliances. We have been introspecting from time to time and have taken corrective actions. Our track record with new products reflects significantly better success than what we’ve had in the past. For example, we are doing very well with our aviation product suite and have acquired good customers in a short span of time. We are recognised as one of the top three providers of an aviation MRO (maintenance repair and overhaul) product suite in the global arena. Some of the biggest names in the industry, such as Sabre and IBM, are our business partners in this space. Our hard grind in tough markets worldwide has given us tremendous experience…

Can you tell us about some recent projects where your solutions achieved significant improvements?

I would like to talk about our engagement with the DLF Group, and ETA SA, a company of the Swatch Group.

DLF: The DLF group is a leading real-estate developer in India. The group has over 224 million sq.ft of existing development and 748 million sq.ft of planned projects. The core business traditionally has been into three prime divisions: Homes, offices and shopping malls. To these, DLF has added three more divisions: Hotels, infrastructure and SEZs. As DLF capitalises on the emerging market opportunities to deliver high-end facilities and projects to its wide base of customers, its disparate applications were becoming a bottleneck, hampering the exponential growth.

As a part of Ramco’s real-estate management solution implementation, we migrated fifteen years of legacy data spread across 710 companies, 853 organisation units and 2,210 finance books of DLF. The solution, developed using Ramco Virtual Works 2.0 and SQL Server 2005, was implemented at 14 physical locations. The project was implemented in multiple phases for various companies doing different businesses under the DLF brand. The solution has eliminated the operational data redundancies, enhanced the flow of information and has thus significantly improved productivity and profitability.

ETA: One of the largest manufacturers of watches and movements, this Switzerland-based company produces 120 million watch movements annually comprising over 8,00,000 parts. With revenues of approximately $5 billion, the company has operations in five countries across Europe and Asia. The organisation’s goal was to streamline operations to enable ongoing transformation.

The need was to have the necessary information systems in place to allow the company to adapt its operational business processes over time to handle this increasing complexity. To achieve this transformation the manufacturer needed a solution that would enable centralised planning at headquarters, with distributed execution across 23 production centres worldwide. They needed to be able to manage complex production systems across different physical locations in diverse time zones. Ramco’s enterprise application integrated business processes across production, logistics, sales, finance and human capital management. It also integrated with disparate intra-enterprise systems including quality management, PLM (product lifecycle management) and material handling system. The solution automated bank transfer to clear the payments automatically every alternate day and helped in data warehousing for focused analytics and data mining. Within six months, the business transformation achieved anticipated results. Many new capabilities including capacity planning, automated invoicing reduced the cycle time of the finished good and also contributed to increased sales. The financial and operational gains were significant:

The multi-tenancy architecture allows 13 legal companies and 23 operational locations to operate as one centralised organisation.

The web-architected solution with central deployment reduced maintenance costs and total cost of ownership (TCO).

Focused analytics helped allocate actual consumption order to enable usage-based pricing.

Reductions in purchase cycle time by over 50 per cent, reductions in issue resolution time by 80 per cent and huge reductions in inventory as well.

The new solution is able to meet the company’s constantly evolving IT requirements. It supports 1,200 licensed users in Switzerland and 100 more in Thailand. Moreover, the solution accommodates 300 to 400 users concurrently.

Is the company looking at acquisitions to grow the business? In the opposite, have there been deal feelers from the biggies in the ERP game?

Yes, the company has acquisitions in mind as a medium-term strategy, but currently it’s been put on hold due to the fluctuating market conditions. On the contrary, the focus is on growth and profitability in an organic manner, which we are quite confident of achieving in the coming fiscal.

Any other points of interest…

We would like to highlight that we have been into aviation software solutions for 20 plus years. We are one of the world’s largest providers of aviation maintenance and engineering (M&E)/MRO software solutions. Dedicated to the aerospace and the defence sectors, Ramco has implemented its complete end-to-end suite of solutions for airlines, regional carriers, low-cost/new entry carriers, specialty operators, cargo, helicopter operators and third-party maintenance providers in the commercial and the military sectors.

Our customers include Yemen Airways, Airworks, FlyLal, El Al, Republic Airways, Taca Regional Airlines, Vueling Airlines, Virgin Airlines, and Pinnacle Airlines.

dmurali@thehindu.co.in

Related Stories:
Ramco Systems unveils ERP software

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