Cloud in the Enterprise is Far from a Reality

Wednesday, March 23, 2011

Rahul Neel Mani

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From being SAP’s first employee in India to taking over as Managing Director of IFS Solutions India, Thiru Vengadam has traversed a long distance in his 23-year professional career. In his first media interaction after joining IFS, Vengadam talks to Yashvendra Singh about his plans for the company.

Q: How is IFS doing globally and in India?

A: We are doing well globally. For the period January-December, 2010, IFS reported net revenue at SKr (Swedish Krona) 2.59 billion. Worldwide, we have a strong base of 2,000 customers.

In India, we are focused on the three verticals of Aerospace, Energy and Utility, and Engineering. We have 35 customers in these verticals in India. All three verticals are witnessing exponential growth. Aerospace, for instance, is growing at 300-400 percent. 

The ERP market in India is, therefore, poised for growth. In 2010, the ERP market, which included software application, implementation maintenance services, and the related hardware, was pegged at $2 billion and I think NASSCOM has projected a growth of 21 percent.

Q: But the verticals you are targeting would already have high levels of ERP deployment?

A: It is just the opposite. Companies have standalone systems, not ERP. We are trying to integrate all of that into a single integrated ERP system. You will be surprised to know the findings of our recently conducted survey. According to it, there are about 45 power generation companies in India, and only three have ERP.

Q: Why should a CIO look at IFS where there is Oracle and SAP?

A: Businesses can gain speed and agility by deploying our applications. A CIO’s mandate is to look for applications and IT infrastructure that lead to growth. Our product offers everything in one application. IFS Applications is a single, integrated product supporting the management of core processes like service and asset, manufacturing, projects and supply chain.

Combined with software for critical business processes such as financials and HR, it comes across as a complete ERP solution. Besides, our applications have lower cost of ownership. However, it is not just the price that customers come to us. They deploy IFS because of functionality, fitment, technology and ability of the application.

The other advantage is the application architecture. It is easy to deploy. You can deploy it on the internet on local area network. Some of the large ERPs are complex. If the application is complex, it will take more time to deploy, configure, and train people.

Q: Give an instance where you have bagged a project where other MNCs were in fray.

A: There is a defense project, which I can’t reveal because of its secret nature. But we have successfully done a Proof-of-Concept, which the other two large players could not. They have now withdrawn from the race.

It is generally seen that despite other well-entrenched payers like SAP and Oracle, whenever someone does an analysis they find our product better and closer to what they require. We ensure flexibility in deployments as per our customer’s requirements. For instance, the deployment in HAL (Hindustan Aeronautics Ltd) is different from that in NHPC (National Hydroelectric Power Corporation).

Q: So tell me how are the two deployments at HAL and NHPC different from each other?

A: HAL has 29 divisions. Deployments in such sites are complex because the locations are scattered. In HAL, therefore, we have our applications running in a distributed environment. Every location has a server with our ERP running, while at the corporate level there is consolidated information. HAL has 10,000 IFS installations.

At NHPC, in contrast, we have done a centralized implementation. While NHPC also has 32 locations, they are in hilly areas and the company lacks infrastructure to maintain these facilities. In such a scenario, we have deployed the main server at the corporate office and given access to other locations through the Internet. People in other locations just have a front-end device.

Q: With cloud computing gaining traction, why would a CIO want to incur a huge capex?

A: We believe the larger companies may not go for cloud for at least the next five years. They can invest and they would want to keep things under their control. The scenario when large companies stop buying software is still years away, and by that time newer delivery mechanisms would have come up.

Companies in future will have access to larger markets, and we can go into markets we are not addressing now. It will be additional revenue for us.

Q: A major challenge for a CIO is to avoid information stagnating in data silos. How does IFS prevent such a situation?

A: IFS Applications are built on the principle of open architecture, allowing other applications to access information and invoke functionality. Total solution integration ensures free flow of information whatever combination of software one uses.

Both the services layer and application core are accessible to other applications and environments through IFS’ access providers for .NET, and Java or through SOAP. This allows any activity or service in IFS Applications to be invoked as a web service.

Q: Technology trends are changing fast. By the time a product is launched, customer requirements have changed. How have you aligned yourself with this reality?

A: We have realized this change. Today, IFS Applications is developed in close collaboration with our customers. We have opened our R&D to customers. Regular feedback and relatively small-scale releases mean that we get the functionality right, the quality is high, deliveries are fast, and we can control roll-out much better.

This approach has enabled us to cut our work-in-progress by 60 percent, increase our delivery rate by a factor of 10, and greatly enhanced quality. The time and money saved is being further invested in making the process even more agile and more efficient.

Q: How are you expanding the market for yourself?

A: Presently, all enterprises in India use ERP from one or the other multi-national vendor. Local suppliers will be eliminated from the market. We have been trying to create an ecosystem like other MNCs, in the market for much longer, have done.

By mid this year, we will have partnered with at least three to four companies. Secondly, to create awareness, we will be participating in a number of defense and utility-related events within the first quarter itself. Thirdly, we are undertaking direct marketing activities to further increase our visibility.

Cross-posted from CTO Forum

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