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Mahindra Consulting: Out of the woods
Looking at the world through the customers’ eyes is how Mahindra
Consulting projects itself. Working on the philosophy of being reactive to changing
customer requirements and partnering with them in taking part in the Net-driven
economy, the company is a shining example of how hard times are actually an
opportunity to prove one’s mettle. STANLEY GLANCY reports
The year was 1996. An automobile giant with five manufacturing
plants spread across the country and more than 15,000 employees spread across
even more locations chose to implement SAP at all its locations. To top this,
the company wanted to take the Big Bang approach, i.e. switch from legacy to
the new system at one go. The company had an internal IT team that was at first
allocated the task of seeing the project to fruition. But a project of this
scale called for more proactive measures.
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| The domestic market might be a good learning ground
but you have to look beyond the blue to survive, says V Mani |
The company decided to set up a subsidiary,
which would solely be concerned with ensuring that the ERP implementation went
through without a hitch. The initial team comprised people picked up from the
parent company’s own internal IT team and experts from other group companies.
Since then, the newly formed entity not only completed the implementation successfully
in 36 months but also went on to use the expertise gained to emerge as a profit
making company in its own right. That new entity was Mahindra Consulting and
the parent company, as you might have guessed by now, is none other than Mahindra
& Mahindra (M&M), the $1.2 billion manufacturer of tractors, jeeps,
light commercial vehicles, sports utility vehicles, general-purpose utility
vehicles and auto components.
Mahindra Consulting (MCL) was awarded the
Star Award by SAP for this implementation, which is said to be one of the largest
SAP implementations in Asia.
Buoyed by this initial success, in 1998
Mahindra Consulting decided to enter the market to offer its services. Following
this, the company became a SAP implementation partner in 1999. The company has
since then teamed with SAP for some key implementations. At this point of time
the company felt the need to enlarge its offerings portfolio and so merged operations
with eMahindra, another group company specialising in e-business solutions.
The promoters believed that ERP and e-business were complementary to each other,
and a combination of the two offerings would give the right edge to customers.
Global visions
Till 2000 Mahindra Consulting (MCL) had
focused mainly on the domestic market with M&M accounting for more than
80 percent of the company’s turnover. Says V Mani, Mahindra Consulting’s country
head for India, "We were able to leverage the M&M brand image to tap customers
in the Indian market. Also, Indian customers do not have too many legacy systems
to worry about. This helped us with respect to learning." The scale of the very
first project handled by the company provided it with invaluable experience
and expertise, which were to see it through the times to come ahead.
Though servicing the domestic market had
its advantages, revenues garnered were not exciting. As Mani says, "The domestic
market might be a good learning ground but you have to look beyond the blue
to survive." This was when the management decided that it was time to go aggressively
global. The company opened an office in the United States that very year. The
decision proved wise, as MCL saw revenues pick up momentum. This was especially
encouraging for a company going global for the first time.
But the great global economic meltdown
was looming on the horizon. Companies were looking at reducing costs. The first
area to feel the brunt of the cost-cutting axe was IT spending. Even IT majors
saw revenues take a dip. The competition became tougher. And MCL was forced
to look to other markets for survival. The next couple of years saw the company
doing projects across the globe, right from Australia to UK to a whole gamut
of Asia-Pacific countries. The company currently has offices in the Middle East,
Singapore and UK. MCL is also doing work for General Motors in China. MCL plans
to set up an office in Germany in the near future and has already tied up with
SAP AG towards this end.
Currently, exports account for more than
65 percent of the company’s revenues. The domestic market continues to play
a key role and accounts for more than 35 percent of its revenues. Though MCL
continues to manage M&M’s internal IT requirements, it has managed to reduce
dependence on the parent company. From 80 percent just two years back it now
accounts for only 20 percent of the company’s revenues.
The second wave
Born during tough times the company had
to face many challenges. But MCL’s strength was that despite the temptation
to take the broad path strewn with opportunities—the lucrative banking, financial
services and insurance sectors—the company stuck to its focus verticals—the
automobile industry and the oil and gas sector. Manufacturing and distribution
continue to remain the company’s core strengths, a legacy from its parent company.
Another strength was that MCL had assiduously developed a good mix of consulting,
technology and support skills. Thus, though its growth plans were affected by
the downturn in 2000, it emerged much stronger from the experience.
And positive aspects like its relationship
with SAP countered the negative market forces to some extent. SAP was going
from strength to strength at this point of time. Hence, the partnership with
SAP proved hugely beneficial for the company. The company also adopted SAP’s
implementation methodologies with additions of its own.
The first stage for the company is project
preparation, wherein risks are analysed and steps are taken to mitigate these
risks. A business blueprint is prepared, wherein measures are outlined for process
simplification. As Prashant Karkhanis, global head of business consulting for
Mahindra Consulting says, "We basically follow the SAP methodology to which
we have added some of our own tools. We try to make the processes mean and lean.
Our main aim is to reduce cost and implementation time for the customer."
Another strategy adopted by MCL to provide
clients with end-to-end services is that of partnering with other companies
in domains where MCL itself doesn’t have any expertise. Says Mani, "We belong
to the second wave of IT companies, most of whom have developed expertise in
niche areas. Hence, we still cannot offer everything to the customer. But clients
prefer to have everything under one roof. This makes it imperative for us to
partner with companies like Infosys and Zensar that have expertise in areas
where we are lacking." Other than working directly with customers MCL also has
ongoing projects through partnering with other large consulting companies. The
company has even collaborated with competitors in order to ensure complete client
satisfaction.
Profitable practices
MCL has blended its solution focus with
a vertical focus. Though its core competency is ERP the company has also diverged
into other areas. Mani feels that there is too much competition in ERP, hence
he thinks it advisable to focus on other areas as well. Here again MCL has divided
its expertise into different horizontals. Says Karkhanis, "Everything falls
under the enterprise solutions group, which has been further divided into various
practices for optimum management.
- Business consulting practice: All the key horizontals,
like core ERP, SCM, CRM and SAP implementation fall under the purview of this
practice. MCL provides pre-product consulting to companies desirous of implementing
an ERP system. The needs of the client are analysed and the processes to be
followed are drawn. The company also provides post-implementation support
on an annual basis. Though its core focus is SAP the company also has a partnership
with Siebel to enable it to implement Siebel’s CRM software. The business
consulting practice (BCP), which comprises a 150-member team, currently contributes
50 percent of MCL’s revenues.
- Technology consulting practice: This practice handles
all the technology-related aspects of consulting. It handles all the technical
aspects of SAP, like SAP technology, content management, integration technology,
and Web-based solutions. MCL has entered into technology partnerships with
IBM, Microsoft, Computer Associates, Siebel and SDRC to work with the company
in creating solutions for its clients. The technology consulting practice
accounts for 30 percent of the company’s revenues.
- Facilities management practice: This practice, which
accounts for 20 percent of revenues, is concerned with providing complete
capability for managing the IT facilities in an organisation, including desktops
and servers. MCL manages the IT infrastructure for M&M, said to be the
largest Microsoft user in Asia. The company has entered into partnerships
with vendors like HP, SAP, Microsoft and other hardware vendors to strengthen
its position in this segment. MCL has also entered into a tie-up with CA to
enable it to provide facilities management to customers.
- Special Services Group (SSG): This is the information
security group of MCL. This practice goes beyond the purview of IT to enable
an organisation to secure its information. A core team of security experts
define the processes and strategies to secure a client’s information from
attacks that are beyond the realm of IT. The company is looking at developing
this practice into a major area of expertise.
Strategies
MCL has put up a benefit exploitation programme.
Through this service the company plans to enhance a customer’s investment in
IT. Says Karkhanis, "We conduct an audit of the company to find out what the
customer’s expectations were before implementation and where it stands after
implementation. Then we conduct a process mapping, we analyse the system topology
and do an audit of system usage. We find gaps between expectations and reality.
We then provide suggestions for the enhancement of the system or put in place
processes for optimum usage of the system."
The company has also tied up with EDS for
providing product lifecycle management (PLM) to clients. According to Karkhanis,
MCL plans to develop this as a separate practice. The partnership enables MCL
to deploy Teamcenter from EDS to enable organisations to implement applications
quickly and thus see a rapid return on investment. Teamcenter’s PLM digital
enterprise backbone brings together the collective knowledge and insight of
the enterprise to help clients make smarter product-related decisions.
MCL is also aggressively targeting small
and medium businesses. The company has introduced SAP’s all-in-one solution,
which deals with providing solutions for this segment, especially for auto ancillaries.
mySAP All-in-One provides SMEs with an out-of-the-box business suite. The solution
can be deployed in eight to 10 weeks’ time. MCL is currently targeting auto
ancillaries including Tier 1, Tier 2 and Tier 3 suppliers.
While the SME segment will remain an important
area for business, MCL’s business strategy will continue to involve approaching
selective customers who will stay with the company for a long time.
Says Mani, "MCL has always followed the
build, consolidate and grow strategy. Second-rung IT companies in the last two
years have restructured to become more focused and aggressive in terms of business
opportunities. This has started bearing fruits for them."
Adds Karkhanis, "Our strategy will be to
reduce cost and optimise the customer’s investment. Innovation is the main criteria.
For instance, we use reusable components wherever possible in project management.
We also automate processes wherever we can. This helps save on time and also
ensures that consistency in the solution is maintained."
MCL has developed some tools to ensure
that everything is documented and the risk is kept to the bare minimum. The
risk management tool helps identify risk issues in a project, following which
a plan is put in place to mitigate the risk. The documentation tool ensures
that every single process of implementation is documented.
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| According to Prashant Karkhanis, MCL’s strategy will
be to reduce cost and optimise the customer’s investment |
The challenges
For MCL the road ahead is not all straight
and smooth. Though offshore business is picking up, the fact is that there are
huge challenges in this segment. Also, budgets have been curtailed for IT spends.
Companies are wary about investing in a new solution. Says Mani, "The US has
got a major influence in terms of spend on IT but the US economy is not picking
up. So we are looking at other markets. One of the main areas is the Asia-Pacific
region, including countries like Singapore and China. We are competing with
many companies. Though we are recognised in India we have to build a similar
brand image abroad."
The road ahead
MCL’s perseverance and focus has definitely
paid off. Despite the many hurdles the company has been witnessing a double
digit growth over the past few years. From a turnover of Rs 22 crore in 2001-02
the company has doubled its revenues to Rs 46 crore in 2002-03. Other than its
focus verticals the company is also building strengths in the consumer goods
and pharma industry. It has built up a client base, which comprises some of
the big names in their respective fields, including the likes of Vikram Ispat,
ABB, Hoechst and Glenmark Pharma, Qatar Petroleum, Unilever in Singapore and
AP Consulting in APAC. MCL is planning to recruit another 500-600 hundred people
in the next couple of years, which is in addition to the more than 400 people
already on board. The company is also looking at opening new centres in Bangalore,
Chennai and Delhi in the next one year. In addition to this, MCL has already
identified a couple of companies for acquisition over the next three months.
Following M&M’s goal of being number
one in its space, MCL aims to be among the top three SAP partners in India.
Says Mani, "The leadership position is critical to us. We are currently in the
building phase wherein we are building our reputation and our strengths. We
are also planning to do a bit of brand building this year.
The company is also planning to step up
its European operations significantly and also in countries like Australia,
South Africa and France where it already has projects through partners. Though
billing rates are not very high in these countries, Mani believes that there
is lots of business to be gained. The Middle East will continue to be the natural
focus for the company due to the plethora of oil and gas companies there.
Second wave companies need to be more focused
and this is what MCL plans to do. But MCL plans to proceed cautiously as it
knows it is working during tough times.
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