Ramco and the art of persistence

The growing acceptance of Ramco’s VirtualWorks, a platform for developing enterprise applications, proves that Ramco Systems’ bet on the high-risk, high-margin product strategy is paying off, says G Sankaranarayanan

Although it has taken well over a decade, Ramco Systems is finally making money. It has registered positive quarterly results across its global operations for two consecutive quarters now (April-May-June and July-August-September, 2004).

Critics had pooh-poohed Ramco’s audacious dream of taking on the SAPs and Oracles of the world in the global ERP market. The management’s unwavering determination to keep its R&D going, even when the company remained in red for a indefinite period, is bearing fruit.

Marshall did not click

Its first ERP product, Marshall, was launched by Bill Gates during his visit to India in 1996. It was the first ERP system in the world that ran atop a Windows server. SAP, the market leader, was insisting upon its own platform back then. However, Marshall was a failure–it was rolled back at several customer sites. (Marshall was later rechristened as Ramco e.Applications). Ramco was announcing intermittently that it had bagged impressive accounts but it did not succeed in meeting the market’s earnings expectations. Its Boeing account, which was expected to bring in revenues in millions, was scuttled due to the 2001 terrorist attack on the World Trade Centre.

Meanwhile, Ramco Systems entered into networking, CRM and other areas of enterprise wide applications (EWA). This seemed to be a strategy to generate revenues to help sustain its operations till its product dream fructified—to borrow an agricultural analogy; its service business was like an “inter-crop”.

Then came VirtualWorks

In 2003, VirtualWorks happened. With the release and introduction of the VirtualWorks architecture into its projects, the company found its second ace. Its global operations started earning profits—Rs 2.3 crore in the quarter ended September, 2004. The turnover grew by 32 percent to Rs 75 crore during the financial year 2003-04 with exports contributing to more than 80 percent. The company is expecting a topline growth of around 25 to 30 percent in the next two to three years.

Ramco is winning large orders for its pre-assembled solutions (‘product sale’) from organisations including Petroleum Helicopters, Inc, Bemis Company, Inc and the Andhra Pradesh government. Its personalised solutions (‘products plus services‘) have won customers such as AFL Wiz and Citigroup, India and Triamun, Switzerland. For platform licensing, it has eThikwini Municipality, Durban, South Africa on its client list.

Some VirtualWorks roll outs are taking place at leading companies such as Preferred Meal Systems Inc of the US, Conair of Canada, Kardex Remstar International Group, Swatch Group and Novarei of Europe, RAK Bank and Al-Salam Aircraft Company (Middle East), Ahmedabad Electric Company and Indian Airlines.

The projects span many verticals including manufacturing–discrete and process, logistics, enterprise asset management, aviation, HRMS (HR management systems, banking & financial services as well as healthcare and public services.

“Persistence and innovation have made this happen,” says P R Venketarama Raja (PRV), Ramco’s managing director. He adds, “Every step has been a learning experience. Today, Ramco Systems is the recognised leader in adaptive enterprise solutions and is the only Indian software company to have applied for 16 patents.”

ERP’s comeback

The return to favour of ERP systems provides a favourable climate for Ramco, whose positioning and offerings match well with the fundamental changes that the ERP sector is witnessing.

Current ERP offerings are based on an architecture that lets third-party products co-exist with them. SAP has NetWeaver and Oracle, Service-Oriented Architecture.

Ramco’s VirtualWorks makes it a pure-play platform company. “VirtualWorks is not just an architecture. It is a new way of developing software solutions. Standardised components and solutions are just a subset while the key advantage of VirtualWorks is its complete technology independence and ability to capture business functions, irrespective of the underlying technology. In other words, ERP as a product is only one of the outputs of the VirtualWorks software factory. It can also be used to develop custom solutions, to address ‘white spaces’ and manage diverse applications resident on multiple technologies,” explains PRV.

Ramco is continuously evolving VirtualWorks–by next August, it expects to add technology layers such as Roll Out and Programme Management.

What makes VirtualWorks different?

VirtualWorks was conceptualised in 1996 as a platform that would create adaptive and technology-independent enterprise solutions. Ramco, embarked upon a new approach to enterprise architecture and application delivery called “model-based architecture”. This represents business processes, rules and data as meta-data that executives can view and understand. The product also automates a major part of the code needed for applications.

The process starts with third-party business model mapping tools such as Visio. The data output from this goes into VirtualWorks which generates codes. The company claims that “VirtualWorks delivers results at 50 percent of the time and 70 percent of the cost of a typical enterprise software project.” The model-based architecture provides significant advantages over conventional software development vis-à-vis increased traceability, upfront preview of the application through user interface (UI) generators and the automation of most of the software development life cycle. Ramco says that the technology brings down the total cost of ownership (TCO).

The conventional software development life cycle involves the handover of varying documents from stage-to-stage (requirements specifications, design document etc.), resulting in requirements leakage and related issues. However, the integrated systems engineering environment in Ramco VirtualWorks uses models, which are a repository of requirements, overcoming these drawbacks and leading to better quality and transparency.

Customers are not required to take upfront technology decisions regarding the platform, network topology, hardware and system software.

In short, the company’s strategy is to let professionals and functional consultants use VirtualWorks as a virtual software factory and translate their intellectual property, in their respective domains, into applications that deliver business benefits to customers, thereby extending their consulting cycle and the gamut of service offerings to their customers.

Can Ramco make it work in the market?

Ramco is looking at the next phase of growth through strong strategic alliances, while being a strategic partner for mission critical solutions to existing customers.

The company is faced with the uphill task of selling a new concept. Furthermore, if its strategy is to “front-end” (interface) with end-users (enterprises), the focus will have to be upon building user communities. “Yes, our primary focus is on nurturing and strengthening this ‘ecosystem’ of VirtualWorks users,” PRV agrees.

He knows that if product-selling is a marketing game, then platform-selling is a game of community building. “Platform-selling is tougher. There is almost an imperative need to convince not just the customers but partners and influencers as well,” he admits.

Everything at present boils down to the question:

Can Ramco Systems, which missed out on a golden opportunity to grab market share with its first Windows-based ERP product, make it work this time around? The answer to this lies in the strategy it chooses to adopt. The company, which for long remained a division of the Rs 1,500 crore Ramco Industries (RIL), a well-known industrial group with interests in textiles and cement, has gained a reputation for being unduly conservative. RIL has been viewed as a typical south Indian group, which is media shy and prefers to grow organically.

“While the Group has been representing traditional sectors, our core value has been one of persistence,” says PRV. On the conservative image of the company, he reasons that since Ramco Systems “has been a research-oriented organisation with a focus on innovative enterprise solutions, it takes time for such strategies to mature and hence, the slow-moving conservative tag.”

That said, Ramco’s budget for marketing is still one percent of its turnover. “Our business is technology-oriented. This has required a huge amount of investment in technology and R&D to develop the product. Now that we have a matured product, we plan to step-up our investments in sales & marketing,” says PRV.

Ramco is employing new senior managers to build communities of consultants (solution providers, who use the VirtualWorks platforms). The company has already built an ‘ecosystem’ in the US, Europe and has identified consultants in Germany, Switzerland, UK and the Netherlands for its community-building exercise.

It has zeroed-in on as many as 75 industry segments and plans to craft a strategy to reach out to consultants representing these segments.

Alok Shende, director, Technology Practice, Frost & Sullivan India opines that Ramco has emerged as a serious contender to the top slot in the Indian enterprise market. “Ramco has built the product right from scratch and with the latest technologies. With Ramco, customers are getting a new product.” However, he says that Ramco has to learn the ropes of marketing an enterprise solution.

PRV adds, “In the last year or two, we have focused our efforts to convince early adopters on how VirtualWorks makes a positive difference to their business. Today, over 42 projects (in the past two years, using Ramco VirtualWorks) are in different stages of execution across the globe.”

However, considering that VirtualWorks is more than a platform or an architecture but a new way of developing software solutions the ultimate endorsement of its success must come from independent software players and domain consultants. By creating a global community of such solution providers, who are largely ignored by major IT firms, Ramco has the opportunity of changing the way people perceive enterprise solutions.

sankar@expresscomputeronline.com