Transformers — the word suggests change, the eternal constant, and they are indeed change seekers. What’s unsaid is the hourto-hour, day-after-day grind of just following up repeatedly on details, big and small, to effect that change. In this series Tata Consultancy Services brings you tales of extraordinary business change being wrought in enterprises across India through the judicious use of IT. They affect not just the enterprises, but lives far beyond — they are greater than the sum of their ingredients. Behind these changes are people, like Pankaj Bhargava, Head - IT of Hariyali Kisaan Bazaar, seeking the mandate to usher in the transformation.
INSIDE VILLAGE DREAMS A business technology revamp at Hariyali Kisaan Bazaar, the rural retail arm of DSCL, highlighted the need to better understand the farmer-customersupplier, at the heart of its business, and a vision to capture his heart
INTERVIEW The flip side of business technology transformation is that companies such as TCS are teaming up with banks, retail firms and wireless services providers to transform the face of rural India itself, says G Srinivasa Raghavan
—Vijay Ramachandran AN IDG CUSTOM SOLUTIONS INITIATIVE IN ASSOCIATION WITH
TRANSFORMERS CASE STUDY
A business technology revamp at Hariyali Kisaan Bazaar, the rural retail arm of DCM Shriram Consolidated Ltd., highlighted the need to better understand the farmercustomer-supplier, at the heart of its business, and a vision to capture his heart
ust 18 months ago, a store manager at one of Hariyali Kisaan Bazaar’s 275-plus stores used to to estimate requirements based on manual forecasts and manually create a requsition on what was required. It would go to the warehouse and from there the order would be ﬁlled. What he does now, for over 60 percent of the items his store sells farmers in his area, is, well, nothing – thanks to some clever automation. This is just one of many changes that Hariyali has initiated as part of a wide-ranging technology transformation exercise that when all the dots are connected, will give the rural
retailer a comprehensive view of its farmercustomer-supplier. With only a handful of serious rural retailers, the Indian rural market is open to innovation at a time when India is taking steps to boost agriculture in the face of erratic monsoons and minuscule land holdings by millions of its farmers. schemes such as the one under the National Rural Employment Guarantee Act are also aimed at improving the purchasing power of village India. Hariyali expects to be in the vanguard of Indian rural retailers tapping into that transformation. “We aim to make Hariyali ever more relevant to the Indian rural customer,” said
Rajesh Gupta, President, Hariyali Kisaan Bazaar. “We remain convinced about the strong and attractive potential of this business and are conﬁdent that the steps taken by us should make Hariyali increasingly proﬁtable.” All that starts at the store front, where a farmer might one day walk in for some fertilizer or pesticide, and purchase soap and daily-wear clothes the next.
AUTOMATION For 60 percent of the items retailing at the stores, where there is a speciﬁc pattern, the system itself recognizes what the inventory
CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES
the ‘ACE-Best Customer Award’ for levels are, what they should be, and generates successful implementation of the SAP IS a purchase order where required without any retail package. manual intervention. With Gupta’s mandate behind him, “we realized that our technology landscape what Bhargava is beginning to achieve can be transformed to become a powerful is a technology transformation that will business enabler,” said Pankaj Bhargava, make the IT platform considerably more Hariyali’s Head - IT. “This is just the beginning relevant to the business. Technology-led of the long-term technology transformation business processes will be the linchpin journey we’ve embarked on.” of Hariyali’s initiatives to engage its core The system allows Hariyali to look at the incustomers with a heightened awareness ventory for a particular item at a particular outof their world. let, set ideal stock levels and do a forecasting Gupta and Bhargava see their core exercise based on historical sales and autobusiness undoubtedly as establishing a matically generate a value for the order. trusted brand in the “with TCS’s help rural market that one of the many things must become the we’ve done is to build default first choice an auto-replenish prowhen a farmer looks gram,” he said. for agricultural inputs Each week end, there from fertilizer to is an automated job high-quality advise to that then looks at the simpler requirements depleted inventories such as a can of oil and compares them – making Hariyali a with the values set for one-stop shop. what the ideal levels Hariyali was already should be. The morunning the entire SAP ment the inventories back end, which had are depleted to below the SAP ERP speciﬁc the ideal stock levels, to retail – the SAP IS – the system generates fed by a point-of-sale an order to make up application running the difference. This is at every store. They of course an over-simhad an SAP reporting pliﬁed explanation but application which ran this is the principle. Pankaj Bhargava on top of the ERP and At the warehouse they had a datacenter level also, the purHead - IT, Hariyali Kisaan Bazaar infrastructure as well. chase orders are genWhat they needed erated automatically, was to take the next steps in making that eliminating manual interventions and any technology play not just a more active role kind of non-scientiﬁc processes in planning. in business but to play a central role in The result is that it has increased the enabling Hariyali’s business – this was the availability of the items at the stores and only way, the retail chain’s leaders realized, reduced ‘stock-outs.’ The store-level people to boost the company’s revenue by making have to make no manual inputs. They are it unswervingly customer centric. completely free from any kind of errors from The engagement with TCS grew out of the manual processes. trust built over more than a year, starting with There are other parameters such as a merchandising and assortment planning transportation costs, what is the minimum a program and culminating in the Indian vendor would sell and various other factors on computer-services giant being handed the supply chain that are all fed into the system. the mandate to develop a full-ﬂedged, 3-5 year technology road map. TECHNOLOGY ROAD MAP “One of the challenges when we started the road map exercise was to tie Hariyali was no stranger to technology. The everything together,’” Gupta said. “For unit was among the ﬁrst in India to implement instance if our advisory team goes to the SAP for retail back in 2005, and it also won
We realized that our technology landscape can be transformed to become a powerful business enabler. This is just the beginning of our longterm technology transformation.”
BUSINESS CHALLENGES Relationship Orientation- the relationships with farmers assume critical importance because of repetitiveness and a customer being a vendor for output or trading business Better, fast & simpler system for prompt decision making Business Diversiﬁcation – the increasing focus in the farm sector services like Milk etc Supply Chain System Integration – Suppliers to Retail outlets Business Consolidation Rendering of credit and ﬁnancial services by harnessing relationships Geographical spread and connectivity User education and training
IT CHALLENGES Requirement of technical competence beyond the scope of the current management system Capabilities of Existing Support Partners Managing multiple system & process ownerships Increasing IT management costs ERP management & Fine-tuning Business Intelligence Infrastructure Issues Rapid Data Growth – Increasing Storage Demand Hardware obsolescence Maintenance of Data Center Hardware & Applications Data Back-up Connectivity options Business continuity Vendor management – No single point of ownership Source: Hariyali Kisaan Bazaar
TRANSFORMERS CASE STUDY farmer and gives him some advise, what is the impact of that advise – is it making our retail business better, is the farmer coming back to us, is it increasing the farmer’s trust in the Hariyali brand – these are some of the lines that we took the technology, along with TCS’s help.” A lot of the pieces in the technology road map, from agri services to customer analytics to the customer management philosophy, essentially hinge on this entire idea of linking all the facets of Hariyali’s business together and tying them back to the main business, which is rural retail. Hariyali has five to six categories – one is the entire category of agri-inputs, including seeds, fertilizers and pesticides. Then there is a huge category of foods and grocery – staples, packaged foods. Nonfoods would include all the FMCG products. Then there are apparels and household products where Hariyali also retails private-label items. There would be consumer durables such as television sets, stereo sets and so on. Some stores also sell fuel, in some they sell LPG and in others they might sell truck and tractor tires – all stocked depending on the local requirements. In all the stores, they also do financial s e r v i ce s re t a i l i n g , s u c h a s s e l l i n g
at Hariyali. For this, in addition to studying the existing systems and applications, Bhargava also facilitated their interactions with every business unit that IT was looking to provide better services to. These units included the entire ﬁnancial services unit, the retail unit and the fmcg group. There was also a new business, commodity trading.
NEEDED: A 360-DEGREE VIEW OF THE CUSTOMER
Hariyali aims to become ever more relevant to the indian rural customer. we are convinced the steps Hariyali is taking will make it increasingly profitable.” Rajesh Gupta President, Hariyali Kisaan Bazaar insurance products to the farmers in partnerships with various financial services companies. What TCS brought to the partnership was a complete methodology. Their ﬁrst task was to understand the current IT landscape
IT STRATEGY Developing an IT vision for Hariyali Evaluate existing IT architecture Evaluation based on retail process model Identify gaps, develop an IT solution blueprint Develop infrastructure, connectivity map Suggest server, network connectivity size, communication infrastructure, network and application security Evaluate and detail outlet-level IT infrastructure needs Solution mapping on SAP and deﬁning conﬁguration needs Developing and managing SAP Interface for new Initiates like Milk & Seed Business Evaluate and recommend POS product based on our needs
As hariyali’s team and TCS went from business head to business head, from unit to unit, ﬁguring out what problems they had in the current technology scheme, what business processes were enabled and which ones needed better support, what they can and can’t do, an important central idea emerged across Hariyali: There was a need for a system that captured a 360-degree view of the customer. One step back, and for instance the retail head might say ‘I don’t have visibility to understand how my category is performing – I don’t have adequate reports to figure out which ones to promote, which are doing well, which ones to stop and which ones to boost.’ A telling instance of how a holistic view of the customer could help was when the
IT INFRASTRUCTURE ROAD MAP Capacity management, review, design, recommendation and Implementation of IT Infrastructure at Head ofﬁce, regional ofﬁces, Hariyali outlets and Distribution Centers for implementing the SAP (ISR) , MAP and POS applications. Estimation, detailing done as follows: Site Layout (in terms of setting up LAN) Site Location (in terms of connectivity) Communication Technology (VSAT, VPN, Internet) Type of usage Evaluate, detail datacenter solution based on the above Workload consolidation to reduce the number and variety of components in the environment Evaluate, detail business continuity, DR solutions Structuring Customer Data Base for rolling out related Business Intelligence Source: Hariyali Kisaan Bazaar
CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES
same farmer who is a customer in the retail business is the supplier in the commodity business. How does Hariyali leverage this relationship? How can it capture every facet of its relationship with the customer? What is he growing, when is the crop maturing, what is his earning proﬁle, how can Hariyali go to the farmer at the right time with the right offer for his crops?
FARMER-CUSTOMERSUPPLIER AT THE CENTER “This gave rise to an entire customer management philosophy – the farmercustomer-supplier became the focal point of all our activities,” said Gupta. A holistic view of the farmer-customer-supplier across business units was what was needed. This became the underlying requirement. “The central theme of the road map is, capture the customer information, understand the customer, and then act on that understanding,” he said. “This means, segmenting the customers, and then building segment-speciﬁc strategies that get executed by the transactional systems – the central theme is about what do I do about my customer.” There are three or four phases of the customer management life cycle. Capture: The ﬁrst and the most important part is that Hariyali should be able to capture the customer information. Often, when they are interacting with the customer, it is happening in at least two or three places. Second, when Hariyali’s experts visit the farmers to render some advise, then there has to be a devise where the customer information can be captured – what is the crop proﬁle, what is the land holding and so on – that can’t be done sitting in the shop. A ﬁeld visit should include a mechanism to capture the customer information. In all their interactions, across these points, they should be able to capture the customer information and update the customer information. Analyze: Second point in this entire philosophy of customer management is the analysis of the customer data. Between the capture and analysis, there is also a cleaning process as information might have been captured multiple times and in different forms. The result of the analyses is that one wants to understand what kind of customer segmentation exists in the entire
THE EVOLVING VISION Initiative
Streamline customer data acquisition, analysis and management
Better store merchandizing; Increase share-of-wallet, cross-selling opportunities; Ability to drive customer behavior/ loyalty
8 Step process to develop a category management discipline in the organization
Ensuring availability of right product/ assortment at store; in line with management goals and customer preferences; Improved margins
Enable Agronomist to deliver services (viz. land analysis, modern farm practices etc) efﬁciently
Establishing Hariyali as a “Trusted” advisor to farmer community; Improving efﬁciency and reach of agronomist; Informed/ timely/ quicker decision making
Develop a reporting & analytics platform or leverage the available SaaS model for enterprise analytics
Infrastructure & Connectivity
Data Center, Disaster Recovery, Security, Bandwidth
High availability of systems
Source: Hariyali Kisaan Bazaar
customer database. Hariyali might have customers buying expensive goods, there might be those buying only agricultural inputs, others buying only apparels and still others purchasing across the categories. Inﬂuence: How does Hariyali inﬂuence the customer’s behavior. If a person is buying agricultural inputs, how does Hariyali inﬂuence him to buy apparels which are of considerably higher proﬁt margins. Should Hariyali send him a discount voucher for the new apparels or a promotion to buy more agri inputs. Certainly the ﬁrst one makes more sense as the farmer is already purchasing agri inputs and Hariyali would like to promote other categories that the farmer isn’t considering yet. This is what is acting on the understanding of the customer – this boils down to customer-speciﬁc schemes or promotions. This integrated system is what Hariyali is trying to build with TCS’s help. The entire customer management philosophy is a closed loop. There is also a component of this system that involves figuring out the effectiveness of the customer-specific scheme. If Hariyali sends a text-message-based coupon with a discount on apparels to a farmer, is he really coming to a Hariyali store to purchase that apparel. This 360degree view would be captured by the integrated system.
When the same customer is also a vendor to Hariyali, one of the segments would be for such farmers. The commodity trading team at Hariyali would look at this segment, figure out when that farmer-customersupplier’s crops are going to mature and time Hariyali’s offer to purchase those crops at the right price.
IT TO RURAL TRANSFORMATION Even as Hariyali Kisaan transforms its IT infrastructure, it can also be seen as an initiative in which, ultimately, Hariyali and TCS are together transforming a small but significant part of the Indian rural landscape itself. While this may not necessarily be their mandate, it is something that is happening nevertheless. Further, as Hariyali innovates its business to master some considerable challenges, chief among them being an efficient and cost effective rural supply chain, it might well set off a ripple effect that will be more far-reaching than merely the improved proﬁtability of a rural retail chain. Timing is all, and Hariyali and TCS may well have timed it to perfection, as India shifts policy and budget gears from sluggish motion in the direction of greater participation of global capital in the nation’s retail chains – the rural customer, who is morphing into the farmer-customer-supplier may yet be the biggest beneﬁciary.
IT TRANSFORMATION CAN
G SRINIVASA RAGHAVAN Vice President, Country Head, India Business, Tata Consultancy Services
Transformation of business technology is not just about changing the face of Indian multinationals, says Raghavan, country head of Indiaâ€™s largest computer services provider, Tata Consultancy Services. The other side of the coin is that companies such as TCS are teaming up with banks, retail ďŹ rms and mobile communication services providers to transform the face of rural India itself.
CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES How does TCS help CIOs do more with less, specifically in the Indian context? If you take the Indian CIOs, the complexities and challenges are very different from their global counterparts. The Indian CIO is faced with double-digit business growth: 18 months from now will be very different from today so the need is a series of smaller projects that can provide business beneﬁts that in turn can fund next series of projects. The second challenge is establishing an IT organization to create a strong IT support environment and at the same time leverage companies such as TCS for the , successful project implementation on range of emerging technologies. The CEO needs to retain some core competency functions whether it is strategic planning or budget planning and management, IT strategy & architecture development and create a strong vendor management capabilities to establish partnership with IT companies & manage them. The third part is from a ﬁnancial perspective, when you engage in multiple delivery models, essentially you can’t keep buying licenses all the time, buying boxes all the time, how can you basically have multiple delivery models? TCS as a business transformation partner for Indian companies and public sectors has gained trust and leadership over the last 40 years. TCS has taken a holistic perspective in providing full services to Indian companies. Today, we have the widest range of India speciﬁc products and assets across industries like banking, insurance, broking, power & utilities, retail, and there by providing time to market for client’s business initiatives. TCS consulting helps CIOs develop unbiased IT architecture and strategy so that they can make their IT scalable, robust and cost effective. TCS is one of the few companies to have successfully implemented projects in the country, TCS has customized delivery methodology to adopt to fast changing economic conditions yet help clients achieve their business beneﬁts. TCS is one of the ﬁrst in India to launch Cloud-based service delivery models for identiﬁed verticals and horizontals. We launched cloud based banking services for Regional rural banks, cooperative banks, etc to launch the banking services cost effectively. Similarly with our platform-based HR services clients don’t have to invest on software licenses, hardware and application development. Clients can leverage best-in-class processes and technologies in transforming their HR functions.
How able are your Indian customers to really exploit your global experience? I think you touched upon a very interesting point. TCS with its experience and maturity in implementing strategic projects in India, along with clients, has established a strong client-engagement model that not only helps CIO/CEOs monitor project performance, but also leverage our global experience. For example, TCS as the largest system integrator in the country helps clients implement change management within the organization to ensure that they derive business beneﬁts of their transformation initiative. Similarly on the domain side, TCS leverages its global experience across industries to bring in those best practices that have worked globally. TCS’s innovation labs provides them access to both domain and technology expertise along with rapid prototyping ability in transforming their business processes. Our engagement model brings these beneﬁts to customers on demand.
Do you see any trends or direction in which engagements with your customers is heading , how is it evolving? The ﬁrst big trend that I see is clients are more open in sharing their business objectives, business directions, IT objectives
and IT imperatives and even outlining of what budgets they are ready to spend. Then partners like TCS can come back and say where they would play the role. if I take the top 300 ﬁrms or the top leaders in established segments... they are extremely open and when they see a partner like TCS with tremendous global experience in each of the verticals that says ‘this is what we do globally and what we can do for you’ then the engagements becomes signiﬁcantly higher. The second one where i see a signiﬁcant traction in terms of outsourcing. Clients today are looking for a more transparent, accountable, unbiased and cost effective IT management that can help their business scale beyond boundaries. in the process establish a longterm, trusted-advisory relationship.
Your engagement with Hariyali, one could look at it as a small but significant rural transformation effort, no? Absolutely. There is a fundamental transformation happening in rural India in the market which I think many industries are taking note of. First, the rural market sustained the India’s economic growth through the global crisis.. It provides a tremendous amount of stability in the economic condition. Further, because of initiatives such as the National Rural Employment Guarantee Scheme they are slowly beginning to create a more stable rural population which is just not dependent on the farming practices of yore – that’s the signiﬁcant change that we need to recognize. The rural growth rate is able to sustain the change in the rural market: IT in banking and ﬁnancial services is playing a role in helping Indian banks reach out to the ‘un-banked’ 120 million people in the country. This is an area where TCS has invested in a very signiﬁcant model and IT Assets, a farmer today will become an account holder by opening an account, do funds transfer, deposit cash, and also avail cheaper loans, instead of getting a high interest loan from the unorganized market. We launched this more than 18 months back and today are partnering with more than 10 banks in bringing this population into the banking spectrum. The same technology can be adopted by other industries in their own rural integration or expansion efforts like digital supply chain in rural market for CPG and automotive sectors. Then, in the context of its partnership with organizations such as Hariyali and others, TCS is looking at an integrated platform through our rural gateway that aims to become a one-stop shop for the rural customer, exploiting mobile and information and communication technologies. We have created a rural cell in TCS to work closely with partners like retail, or banking ﬁrms, or micro ﬁnance, which provides an ability to render services, mobile based distribution channel. In a way we call it business correspondent or facilitator, even the local paan shop can be harnessed to provide such services. The rural challenge is the technology the reach and distribution at the doorstep. TCS has today provided an end-to-end model to get these services to the door step of the rural community, fast integrating them to the mainstream economy.
Transformers is brought to you by IDG Custom Solutions Group in association with
VILLAGE DREAMS INTERVIEW —Vijay Ramachandran AN IDG CUSTOM SOLUTIONS INITIATIVE IN ASSOCIATION WITH A business technology revamp at Hariyali...