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The ERP behind Tata Power's success

Tata Power is the first utility company in India to implement an industry specific ERP solution, ER Batliwala, CIO of Tata Power, shares the success story with CIOL. Aparna Lal Previous Articles >> India among SAPs top four markets in APAC Microsoft adopts 'Hub and spoke model'

The Elecrticity Act 2003 passed by the government of India made a world of difference to the power situation of India, at least some parts of it. Privatization of the power sector allowed de-licensing of generation; open access to transmission networks; multiple distribution agents for the same area and competitive pricing. Tata Power, established in 1910, pioneered the generation of electricity in India and served Mumbai consumers for over ninety years. It was mainly a Mumbai centric bulk supplier before privatization happened and grabbed on to the big opportunity post-privatization.

Today, Tata Power is the countrys largest private player in the power-sector, with an installed power generation capacity of above 2300 Mega Watts. Apart from Mumbai and Delhi, the company has generation capacities in Jojobera, Jharkhand and Karnataka. Its diverse generation capability facilitates the company in producing low cost energy, thereby giving its consumers a greater value for money. The company has a customer base of 22,000 customers in Mumbai and has acquired 600,000 consumers, post-privatization in Delhi distributing through subsidiary companies. We spoke with ER Batliwala, CIO of Tata Power to understand the role of IT in getting the status of

number one power supplier in the country. The solutions used; the challenges faced; the benefits fetched and the future IT roadmap. Excerpts from the same.
What were the main reasons behind Tata Powers decision to implement an ERP solution? With the privatization of the power sector, we knew that there was a huge opportunity in front of us waiting to be tapped. Till before privatization, Tata Power was a Mumbai-centric company, but as the doors opened, we thought of expanding our roots all over India. The company had a clear vision of expanding in a major way in the downstream segment and we wanted to increase our generation, transmission and distribution capacities, exponentially. With this roadmap, we brought several changes across the company; ERP implementation was one of them. Before implementing ERP we had various legacy systems in operation, but to keep pace with our growth plans we felt that an ERP solution was essential. Tata Power became the first utility company in India to implement an industry specific ERP solution. We had to gear up our systems to cater to our vastly increased customer base; integrate complete business process chain as well as improve efficiencies in operations and maintenance. What made you select SAP as your solution provider? How has the relationship been? Frankly, when we decided to implement ERP back in 2001-2002, SAP was the only company with an ERP solution for the power sector, and hence became our obvious choice. Also, SAP was being considered all across Tata Group of Companies and hence the comfort factor was more, we also got some pricing benefits, making it an ideal choice. That said, I would like to add that we are quite happy with the support provided by SAP at all levels of as well as our implementation partners, Tata Technologies.

Can you share some implementation details with us? What about training? The ERP implementation begun early 2001, we formed a core team for each functional area and tied up with Tata Technologies for implementation. We went live in 2002 and were through with the entire process by May 2003. SAP R/3 implementation covered all generation, distribution across all our locations, near about 28 in number; complete supply chain; centralized procurement; vendor management; complete cash cycle; centralized accounting; project management, budgeting and monitoring; plant defect notification and work order management; HR organizational and personnel administration and customer management and bill-processing. R/3 is the first utility implementation in India. The HR module handled 3300 employee master records and automated the organization management, personnel administration as well as training and event management. The IS-U/CCS 4.62 module managed 40,000 contracts of high-value industrial consumers. It automated processes like management of customer addresses and other master data; management of electrical devices; management of different tariff schemas; entry and validation of energy consumption and demand; invoicing and generation of bills etc. We connected all geographical locations Mumbai and other states that we have presence in over a WAN backbone. We procured 570 SAP user licenses across Tata Power. Training our people on the SAP modules was very critical to the success of the entire process. A core team with 47 people both from IT department as well as various functional experts were trained in the first lot by our implementation partners, Tata Technologies. This team was trained in the software configuration, implementation as well as the testing of various modules. This team in turn trained the end users. What benefits did Tata Power get by implementing ERP? Benefits happened in four major areas - cycle time reduction, inventory reduction, manpower reduction thereby making people available for redeployment, and most importantly it helped us provide better quality information. Implementing SAP R/3 reduced procurement cycle times (PR release to PO release) from 41 days to 17 days (material procurement); 90 days to 14 days in capital procurement; accounts closing cycle time (annual in SAP) reduced from 38 days to 8 days; stock reduction by Rs 28 cr at major stocking location; manpower savings due to centralization and automation of processes; billing integrity index improved from 3.00% to 1.83%; billing complaints response index has improved from 90% to 99%. How do you plan to map the technology initiatives at Tata Power with the growing business challenges? To match up with our expansion plans in the generation, transmission as well as distribution segments we are planning a major upgrade to SAP. We are moving from R/3 to the mySAP family for support to operational excellence, cost control as well as meet all statutory requirements. To support business and process innovation (BPI), we are creating a web-portal for our customers that will enable easy information, spot billing and power trading facilities to them. We will have an integrated Data Warehouse, a Business Information Warehouse (BIW) as well as a Data Management System (DMS) a Content Management System (CMS) and a Knowledge Management System (KMS) to support all information needs across the company. We also plan to launch an internal portal, by 2007 that will connect all SAP and non-SAP applications for our internal users, across the entire geographical spread of Tata Power. We are also expanding the entire server landscape as well as the application landscape with SAP at the core. All these technology initiatives will enable us to meet scalability, replicability as well as address speed issues; realise information value; extend enterprise boundaries; better focus on distribution as well as improved project management and execution skills.