Chennai: Late in 2006, N.V. Iyer had a problem that tech-managers grapple with all the time. The head of the IT division of Acme Telepower Ltd, a company that manages telecom infrastructure and provides solutions to clients in the energy sector, was in search of an ERP (enterprise resource planning) software that would integrate all its business applications.
“We needed a quick implementation of an ERP solution that could support a fair amount of customization,” Iyer recalls. Software from large vendors was not just expensive, it would take more time than his requirement allowed him to deploy it; and developing an application from scratch would take time.
Acme Telepower finally zeroed in on a not-so-visible source in the market for ERP solutions: Ramco Systems Ltd, a small loss-making software company in Chennai.
Ramco Systems was able to promise quick implementation —within six months—of its ‘Ramco ERP OnDemand’ leveraging a clever design. Dubbed the ‘componentized model’, the solution comes divided into business processes, modules and activities. Clients can simply pick and choose activities and modules depending on their requirements.
Chetan Phatak, vice-president of Ramco’s India operations, uses the analogy of pre-fabricated constructions to explain: “Other vendors would start from scratch, putting one brick on top of the other. We show them ready-made building blocks, and we can put it together using our business process platform according to specifications and give them the completed building in half the time.”
This model is very similar to another emerging concept in software called ‘service oriented architecture’, which splits up the software into service modules. The additional value that Ramco Systems brings to the table is that its ‘business process platform’-based model —which it has made 16 patent applications on and uses in other software as well—automatically generates software code depending on the ‘activities’ a client chooses, thereby cutting down on deployment time, according to Phatak.
Also, with the platform, change management becomes easier, says V.S. Chandrasekharan, the deputy general manager of information technology, of Adani Logistics, another Ramco customer. “If I need to make some changes in the application one year down the line, all I have to do is define the process and regenerate the code,” he says. A vendor with the traditional approach may need to write out the code afresh.
Will the componentized model help reverse Ramco’s poor financial performance— Rs32.2 crore loss on Rs86.84 crore sales in fiscal 2007 which was attributed to staff costs developing the new platform? A tech expert agrees that Ramco Systems could ride on a promise of 50-60% savings on implementation cost of its ERP suite compared with traditional systems. “Nine-tenths of the cost of an ERP software are maintenance, configuration and updating costs. So, with the componentized approach, costs come down radically,” says Pradeep Udhas, audit firm KPMG International’s global partner in sourcing advisory services.
Ramco declined to reveal the price of its ERP OnDemand Software, but Phatak claims the solution has 12-15% market share among ‘mid-market customers’—industry jargon to describe firms with less than 500 employees or $100 million (Rs410 crore) in sales—up from 6-7% two years ago.
Ramco expects its ‘business process platform’ to drive revenue growth by 20%, P.R.Venkatrama Raja, its vice-chairman and MD, said recently. For a firm that has seen 10 successive loss-making quarters—its shares, which closed at Rs129.9 each on Friday on Bombay Stock Exchange, are hovering close to their one-year low—that may be a make-or-dent option.