Nominee

HCC’s Sankalp

Hindustan Construction Company undertook project Sankalp—an implementation of SAP R/3 (ERP) and SAP BW (data warehouse) to improve process efficiencies by migrating to implementing best practices, thereby reducing costs and cycle-time

"In the first phase of ERP implementation, the utilisation of the software has been restricted to basic operations since that is where users develop familiarity" - Satish Pendse Chief Information Officer Hindustan Construction Company

Hindustan Construction Company (HCC) is an 80-year-old organisation. It handles multiple infrastructure projects such as construction of nuclear power plants, thermal power plants, dams and roads for the Government of India. Each project is worth Rs 250 to 700 crore. At present it has 30-plus projects in hand, and is executing work worth in excess of Rs 10,000 crore. Three years back this company had a turnover of about 1,000 crore, which has now doubled—and so has its aspiration for innovation.

Previously, HCC was using decentralised systems which had in-house-developed FoxPro-based ASP at the front-end and SQL server, FoxPro and Oracle as database. Data was transferred at regular intervals through the WAN.

Says Satish Pendse, CIO at HCC, “Over the last few years the Indian Government’s investment in infrastructure has increased. Earlier it was 2 percent of GDP, now it has gone up to 4 percent, and chances are that it will increase to 6 or 8 percent in the next 5 to 10 years. Looking at this trend we realised the limitations of our existing different systems to handle the growing volumes of business, and their failure to give a holistic view of the business at any given point of time.” To meet these requirements, HCC planned project Sankalp under which it implemented SAP R/3 (ERP) and SAP BW for the data warehouse.

Making the decision

A number of factors were considered before going in for SAP. It was first tested to see whether the technology was functionally fit to meet HCC’s requirements over the next five years by observing demonstrations of a number of ERPs available in the market. The other criterion was to check if the product was technologically fit, i.e. whether the software integrated with the Intel-based, Unix-based and Oracle-based architecture. The third aspect was the presence and commitment of the vendor in India.

“Before implementation we had to study customer references, but since we could not get Indian references of construction companies implementing ERP, we scouted for information from across the world. We also analysed the strength of the implementation vendor and its partner community. Lastly, we worked on the TCO over five years, including the cost of software, hardware, IT team and implementation partner,” reveals Pendse.

Project in action

As a result of the decision, IBM became the implementation partner, providing a team of 20 consultants with HCC’s in-house team of 20 functional resources and nine technical resources. HCC and IBM teams worked together for the project, while the SAP team supported HCC from Germany.

The implementation of the first phase was done within seven months i.e. one month ahead of schedule, and within the assigned cost. They managed to provide uptime of 99.5 percent on the WAN network, including to remote locations such as Assam, J&K and Kabrai. SAP is now rolled out at two of their project sites located in Kargil, and which are 10,000 feet and 11,000 feet above sea level. HCC is the first company in the world to have SAP running at such high altitudes.

SAP led to the elimination of some of the work altogether. A few financial entries with respect to materials management as well as equipment and tools management are automated. The task of assessing the liability of each of the projects at month-end was a significant exercise using the legacy system; this has become reasonably effortless after the SAP implementation, while the availability of timely and accurate information has led to the improvement in the quality of decisions.

Handling tough times

Since HCC was the first construction organisation in India to implement ERP software covering all mainline business functions, and the first to use the industry vertical solution (IS-ECO), it had only foreign examples to learn from in case of any hiccups during implementation. The other major challenge faced by HCC was to help its employees cope with the transition, and assist them to be in-sync with the technology and process changes happening in the organisation.

Pendse points out, “We have people who have been working successfully in the organisation for the last 20 to 30 years. Convincing them to change their ways of working to leverage the existing ERP was a very big challenge.”

To overcome this challenge, HCC involved people at all levels in Project Sankalp. They formed a project steering committee consisting of the heads and the deputy heads of all departments to view the progress of the implementation every month. Demonstrations were made and debates were encouraged in quarterly review meetings to receive feedback. Newsletters distributed in the company helped in communicating the project developments to the 3,000 employees through interesting formats such quizzes and puzzles.

To help people get used to the new technology, ‘power users’ with extra training were developed in each department. These power users enjoyed the privilege of being more knowledgeable, and became the immediate help-desk for their respective departments. To improve the know-how of the users, HCC also made it mandatory for employees to practise with dummy data for at least one hour everyday.

From the product manager’s point of view in a construction company, a major challenge is making decisions on budgeting and the actual costs incurred during execution of projects for its customers; this was solved by having project management reports on SAP. The issue of managing the huge equipment base of cranes, rollers etc was solved by having data-entry on the utilisation and location of equipment. Other aspects specific to the construction business (such as subcontracting information and subcontracting reference masters) were also mapped by SAP.

Moving ahead

Following the benefits of the innovation, in future HCC plans to roll out SAP at all HCC project sites. Concludes Pendse, “In the first phase of ERP implementation, the utilisation of the software has been restricted to basic operations since that is where users develop familiarity. We therefore need to further exploit the capabilities of the software, using techniques such as advanced level training and formation of a cross-functional taskforce with specific targets relating to the next level of benefits. This will be initiated from July 2007 onwards.”

Next on the agenda will be employee intranets, supplier relationship management, and workflow management. They will also focus on further leveraging the capabilities of data warehouse.