Voltas’ SAP business intelligence (BI) powers move to improve profits

Can business IT alignment (BITA) happen without ‘business IT involvement’? Such debates are passé at Indian organizations like Voltas Ltd. At this leading engineering solutions and project-implementation player, business heads are actively involved in IT discussions and decisions. This edition of Two-Way Street presents views and perspectives from E C Prasad, chief financial officer – electro-mechanical & refrigeration business group at Voltas Ltd and Prasanna Wadke, senior manager - corporate IT, Voltas Ltd. The duo speaks on how implementation of the SAP BusinessObjects business intelligence (BI) tool helps Voltas achieve cost optimization in its project-driven business.

SearchCIO.in: As a CFO at Voltas, what do you see as the organization’s business challenges?

E C Prasad: Rising competition from international players is the biggest challenge for us. Many global companies are entering the domestic market through partnerships (as they lack the local knowhow). For instance, the Chinese home appliances manufacturer, G. D. Midea Holding, has a formed joint-venture with Carrier Corporation to manufacture and distribute air conditioning equipment in India. Similarly, Drake and Scull, another player in engineering, mechanical, and plumbing business from the Middle East, has started India operations.
Macro-economic factors are the second challenge. With the slowdown, inflows into the domestic economy have gradually dried up during the past few quarters. Several large corporations have stalled project investments; their internal costs have grown due to inflation. The appreciation of dollar vis-à-vis rupee also has an effect.
Our primary customers in India are steel, power, and construction (hospitals, hotels, large complexes, etc) verticals. The projects we get from these customers are of long durations, but we have to quote the prices right at the planning stage. We import a lot of raw material to implement these projects. With appreciation in the dollar value, our effective raw material import costs goes up, thus adversely impacting project-profitability.

SearchCIO.in: Can IT prove useful in such difficult times?

Prasad: Absolutely. We invest in tools such as SAP business intelligence, as they bring visibility and transparency to our operations. Management can see things in advance and take corrective measures.
Generally, when there is a cost-overrun in a project, it may be late by the time top management sees it. A project’s success depends on your ability to adhere to the cost that you estimated at the time of bidding. During long project tenures, it’s not uncommon to see cost of the materials or manpower going up. If sudden cost overruns are brought to the top management’s notice without delay, then corrective action (such as alternate procurement) can be taken on time. SAP business intelligence tool can help us map risk sensitivity of each project by efficiently tracking cost overruns and deadlines.

Prasanna Wadke: Business heads were already doing the analysis using SAP ECC data even before we implemented the BI tool. That process had a few issues: it was a tedious manual process — the data could not be updated always. If you want to analyze large amounts of data involving multiple parameters, it can be cumbersome with Excel. For example, project profitability data usually has several parameters. So we proposed a tool, SAP business intelligence (BusinessObjects), that can effortlessly perform this task in real time. Business intelligence can also help us to perform regression analysis or what-if analysis.

Prasad: That’s another important functionality. SAP business intelligence’s regression analysis feature helps us to map a project’s sensitivity to various risks. We have to estimate costs even before the bidding process begins. Business intelligence can help us improve our cost estimation. We can compare future scenarios and their effects on project timelines and budgets. For example, what if copper prices fluctuate, inflation worsens, or human resources become expensive?

SearchCIO.in: How much time did the SAP BusinessObjects implementation take?

Wadke: We hired SAP partner 2S Consulting for consultancy, customization, and implementation of the business intelligence suite. The solution is being used at Voltas for various functions such as analyzing account receivables on sales deals, as well as project monitoring and profitability. It has taken us two years to reach this stage, and I feel it will always be a ‘work in progress’. Although SAP’s business intelligence engine remains the same, the parameters are unique to every business unit and function. This calls for customization in the tool. Plus, the SAP BO project has necessitated adequate planning for data governance and enterprise data warehouse programs. Although carried out in parallel, these important activities consume time.

SearchCIO.in: What is the future roadmap for Voltas’ SAP business intelligence project?

Wadke: Now that the divisions which use it are happy with the results, more want to adopt it. We want to spread user adoption across all of Voltas’ business units. The good part is that we have purchased volume licenses for the tool, so cost will not be a barrier to increased adoption. For example, HR department plans to test and use it for employee-attrition analysis and human resource optimization.

Prasad: To further give you an idea about adoption in the electro-mechanical and refrigeration business group (EM & RBG), the SAP business intelligence tool will be used by 50 people across Voltas’ 11 locations in India in the near future. The users will include regional and branch managers, project heads, customer care executives, and top management.

SearchCIO.in: Prasad, you seem to understand these technologies well. Are you involved in IT projects?

Prasad: I am greatly interested in IT projects, as IT can bring visibility and transparency, as well as improve the organization’s profitability. I headed the materials management module during our SAP ERP implementation.

I clear the blueprints for most IT projects. Since I am keen about new projects, I insist on doing a pilot. If the project can work without major glitches at one location or for one business unit or function, I allow its replication.