TCS Transformers - March 2011

AN IDG CUSTOM SOLUTIONS INITIATIVE IN ASSOCIATION WITH

TRANSFORMING BUSINESS THROUGH JUDICIOUS APPLICATION OF IT

MOVING TOWARDS AN ENHANCED Instead of being mere box-movers operating at wafer-thin margins in the scramble to win the price-war, Infiniti Retail is transforming business with the help of IT to gain customer insights, enhance business agility and achieve its ultimate goal: customer satisfaction.

PLUS INTERVIEW Rajesh Doshi, Senior Executive Director (Systems), National Securities Depository Ltd (NSDL) spells out how IT can be leveraged to handle both flexibility and scalability effectively.

TRANSFORMERS CASE STUDY

MOVING TOWARDS AN ENHANCED

CUSTOMER EXPERIENCE Company Infiniti Retail Limited Industry Retail Offering Consumer Electronics and Durables

Instead of being mere box-movers operating at wafer-thin margins in the scramble to win the pricewar, Infiniti Retail is transforming business with the help of IT to gain customer insights, enhance business agility and achieve its ultimate goal: customer satisfaction.

CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES

T

he great Indian bazaar is indeed on a roll.

The Indian retail scene is definitely being propelled by the strong and consistent economic growth in the region, with the increasing individual buying capacity.

The expanding middle and upper class consumer base along with rapid construction of organized retail infrastructure are helping augment the retail growth as we see, effectively translating into immense market opportunity.

One of the key subsets of the retail experiencing substantial growth in the region is the consumer electronics sales, which the BMI forecasts to be at Rs.1,30,876 crore (US$ 29.09 billion) in 2011. In fact, it is expected to grow by 55.6 percent in next three years, reaching Rs.2,03,670 crore (US$ 45.27 billion) in 2014 with projected double-digit growth of various products such as notebooks and tablets, mobile handsets and entertainment systems.

Capitalizing on this burgeoning retail growth and the ever expanding middle and upper class consumer base, Infiniti Retail Limited began tapping into this lucrative market since October 2006 and over the years has fast emerged as the one of the fastest growing Indian multi-brand electronics retailer with its brand Croma.

Infiniti Retail, while establishing, conformed to the prevalent retail methodologies and began with a robust backend supporting its strategic sourcing, inventory management, logistics and distribution. But quite soon, the fast growing electronics megastore realized that the nearly 80 percent of the Indian retail market is controlled by the family-run shops and mere price-differentiation may not be a sustainable strategy for growth. “India is indeed a nation of shopkeepers. Due to the region being price sensitive and the price-wars being the key business model among a whole lot of retailers, the onus to discipline the prices in the market lies with manufacturers. Similar to the Maximum Retail Price (MRP), the consumer durables market has a standard Market Operating Price (MOP) enforced by the manufacturers on the retailers. Here, it becomes quite hard for organized retail enterprise to compete with tiny family-run shops, without dealing with the MOP in an acceptable, transparent manner. We realized that playing the price game will soon be hazardous and self-destructive at our levels,� recalls Avijit Mitra, Chief Financial Officer, Infiniti Retail.

The company policies are shifting from being control focused to being customer focused. The entire mindset is slated to be shifted.“ AVIJIT MITRA, Chief Financial Officer, Infiniti Retail

Instead of being mere box-movers operating at wafer-thin margins in the scramble to win the pricewar, Infiniti Retail decided to transform itself into a services organization and differentiate itself through improved customer experience and satisfaction.

The organized electronic retailer desired to become more customer-centric with enough agility to sustain growth and operate efficiently.

Between late 2008 and early 2009, Infiniti Retail embarked on an elaborate three-phased Business Transformation project that began to bring about critical changes to its IT ecosystem and business processes revolutionizing the way it functions and operates, bringing about a deciding change in the organizational mindset and enhancing its business agility to have a direct impact on customer experience. Tata Consultancy Services was hence roped in to help equip the organization to change the rules of game while fulfilling its ultimate goal of enhancing the customer satisfaction.

Workshops with various stakeholders were conducted so that the expectations and capabilities of the systems were aligned, with the business

MORE ON THE BACK-END Infiniti Retail began with one store at Mumbai in 2006 and had grown multi-fold to have a range of multi format stores across major Indian cities. The electronics megastore piggybacked on the robust backend system running AS/400-based ERP of the leading Australian retailer Woolworths, which the organization had tied up with to leverage its world-

TRANSFORMERS CASE STUDY

class technical and strategic sourcing support.

I n te re st i n g ly , a s t h e International retail markets do not require much customer touch-points after sale of the products, the earlier POS was not designed for customer data capture that would allow Infiniti to effectively meet its objective of competing through differential customer satisfaction programs.

“In Australia, there is no largely adopted practice of the products being delivered to homes. Moreover, the after-sales service is handled by manufacturers and not the retailers,” points out Mitra. Hence, to begin with, the key processes such as customer relationship management, knowledge management, after-sales service and warranties were largely managed manually at Infiniti Retail.

The backend systems were not entirely supporting the endeavor of Infiniti Retail to transform itself into being customer-centric, as even the customer information was not getting entirely captured in the first place.

At Croma, which offers over 180 brands and 2500+ SKUs through about 60 multi-format stores across India, the customer service was decentralized with the entire delivery, installation and demo process being managed manually. The stores lacked an efficient Point of Sale (POS) platform that could help the retail giant to better its customer checkout experience, and capture key customer-related

information that could be analyzed and leveraged to enhance growth. The analysis and reporting were done manually and were prone to errors and delays. Poor knowledge management capabilities did not support fast market introduction of newer products as well, as growing attrition rates re sulte d i n s i g n i f i ca n t knowledge drain.

“Basically while the backend was extremely robust as we knew how much stock is moving or not moving, we were unaware of who is buying what, who comes to our stores regularly, and what and how men and women were purchasing. The customer-oriented information was not being captured at all. This was proving as a major impediment to achieve our goal of customer satisfaction”, recalls Ameya Vanjari, one of the core members of the consulting division at TCS and the Head of the IT Office at Infiniti Retail.

“Infiniti Retail was looking for IT self sufficiency to enhance core processes and support growth by invigorating the front-end systems that face the customer, capture the details and integrate seamlessly with the back-end systems,” he adds.

The whole e-commerce experience would be designed around the ability to capture customer and employee feedback quickly.

We extended the back-end with the robust SAP ERP platform that seamlessly integrates with the front-end systems of POS, CRM and more.”

AMEYA VANJARI, Head - IT, Infiniti Retail

INVIGORATING THE FRONT-END In order to be more agile and improve its customercentricity, Infiniti Retail along with TCS began by understanding the core business requirements and the roadblocks being presented by the existing technology landscape at the organization.

Company’s value chain was studied thoroughly, while the gaps and improvement opportunities for core processes were aptly identified.

Vanjari explains: fundamentally, the AS/400 systems were essentially built to support efficiencies that are more international rather than local when it came to be integrated with the front-end. We were looking for systems that had capabilities that can not only track the buy-and-sell lifecycle but also equip the organization to help its customer make the right choice while buying, service them exceptionally and help drive more customers into the stores. Because we had planned presence across multiple channels, we needed a platform that would easily support and integrate with the channels and the ensuing consumers.

To bridge the identified gaps, an application architecture that enables the required Business

CUSTOM SOLUTIONS GROUP TATA CONSULTANCY SERVICES

Transformation was redefined to address the pain areas and provide the key customer-centric business differentiators to Infiniti Retail. “We were looking for systems that could help us provide centralized view of our customers, ensuring unified customer service across stores while automating and centralizing the after-sales processes. We also wanted to monitor business activities and share information across the organization, to gain accurate, comprehensive and insightful analytics across various in-store and ecommerce channels,” says Vanjari.

This is when Infiniti Retail decided to not try to retro-fit the front-end capabilities of the AS/400based ERP, but extend the back-end with the robust and established SAP ERP platform that in turn seamlessly integrates with the front-end systems of POS, CRM and more. Infiniti Retail defined a Business Transformation roadmap in late 2008 with various identified IT solutions that would enhance the business. Vanjari and his team began looking at how the as-is processes would run and looked at SAP’s best practices. They ran workshops with the stakeholders to ensure that the expectations and capabilities of systems are well aligned, in tune with the business needs. “We looked at business processes to identify which one can work as-is, ones that would need to be transformed and others that can be effectively tweaked in sync with the SAP’s best practices,” says Vanjari.

He shares an example: the entire merchandizing did not require any major change as the entire product master data is maintained by the Woolworth’s AS/400-based ERP. SAP simply pulls that information from the backend. The capabilities like the ability to capture and manage front-end with the POS is completely new, while the processes regarding extended warranties and the ability to manage gift vouchers were tweaked on the SAP based on its best practices. The capabilities to capture customer’s relevant information required customization in SAP.

TRANSFORMATIONS IN-QUEUE The first phase of the SAP rollout moved the Financial function to FICO from Tally, which obviously couldn’t scale much given the growth rate of Infiniti Retail. The HR and Materials Management also moved to SAP from MS Excel. The second phase is seeing transformation happening at the POS and transaction standpoints. Operational reporting also began around the same time as the information was getting captured by the new systems. The next phase will invigorate the processes of ensuring the improvement in richness of captured data and the analytics being built on top of that.

“The last year and half has been the period to build the foundation. There’ll be two things that

Benefits Galore

Infiniti is already enjoying certain benefits even at the beginning stages of the transformation program: Improved customer satisfaction Enhanced collaboration across stores Improved decision making supported by effective knowledge management and better reporting capabilities Superior operational efficiency and business agility Better Business and IT alignment Single version of truth: Multiple stakeholders brought on board the transformation initiative to formulate common goals and objectives Increased visibility into budget requirements, effort, skill set, time scale, technology components The end-to-end visibility helped stakeholders translate business goals and strategies into business and technology requirements Achieve traceability from requirement gathering to infrastructure planning

we’ll have to focus going forward: the discipline of users to use the system and put clean data or provide information that can be churned which business can use in the future; second is peripheral capabilities, innovations coming in with respect to small things like ability to figure what a customer has bought in the past and hence better engage with the customer,” says Vanjari.

“This is just the beginning. We are using IT to meet our ultimate goal of customer satisfaction.

We’ll enjoy the benefits of the whole exercise in the next financial year. Next year, we’ll see customer enjoying certain direct benefits of some of the things we have done. To that extent, it’s just a base and if we leave it like this then there’ll be a lot of data but no benefits. Obviously the next level will be to introduce effective intelligence and analysis allowing us to proactively better service our customers,” says Mitra.

TRANSFORMERS INTERVIEW

IT Portability & Modularity Are

KEY TO DRIVING AGILITY As organizations are prepping to scale Senior ED-Systems for NSDL, Rajesh Doshi spells out how IT can be leveraged to handle both exibility and scalability.

RAJESH DOSHI Senior Executive Director (Systems), National Securities Depository (NSDL)

Custom Solutions Group TATA CONSULTANCY SERVICES

With the resurgent economy and businesses preparing for imminent growth, how critical has the role of IT and the CIO become?

Evidently, IT has become one of the very important elements for organizations of any vertical whether it is BFSI, manufacturing, telecom, retail or transportation. Its judicious usage becomes a key differentiator. IT helps create platforms that decide how well you service your client, how well you interact with your suppliers, or how well you compete in the market.

IT plays an even more prominent role in the securities market especially when it comes to institutions like Exchanges and Depositories. IT is as important for these institutions as a production plant is to a manufacturing company. Here, IT is not just an enabler but the very engine through which services are delivered. It is not a support function but a core function in the organization. Hence as CIOs, we need to have a complete idea of what the business needs, appreciate the concerns of a business partner and build a robust, scalable, flexible, and user-friendly system that addresses these complexities effectively.

In your line of business, how do you keep a close tab on the expectations of the business and ensure that you are able to scale up operations and address needs?

Let us look at the issue of capacity first. For example, a typical manufacturing industry where the company sets up a certain capacity based on its business plan, and if the demand is found to be more, then it undertakes advance booking. However, in the securities market, regulators and customers expect us to handle any scale of transaction that the market demands, to be serviced on the same day and without any delay. It is not possible for us to refuse servicing any request on the excuse that we had not planned for additional trading and settlement volumes. In order to avoid being overwhelmed, we need to invest in huge capacities and have the ability to scale up in the shortest possible time.

At the same time, we need to be sensitive to the market’s need and roll out new features and functions. It is essential that we provide a user-friendly, easy-to-understand system with robust data integrity.

How can CIOs effectively balance flexibility and scalability while efficiently addressing dynamic business needs?

As the market demands are quite dynamic, CIOs need to be agile enough to effectively address its needs on time. They should be able to undertake some of the quick developments required by the market or regulators. At the same time this development should not compromise core integrity. To achieve this, core systems need a very sound foundation. Having a multi-tier design with reusable components and enabling SOA would definitely help. If CIOs have such an underlying technological platform, then it will be easier for them to handle new requirements thrown in by the business. Obviously, systems should have a well-designed architecture. It should expose services in a way that can be easily exploited. Also, they should have a very strong quality assurance discipline in place. Prior to a rollout, new systems should be tested for new functionality and also be subjected to a full regression test. A complete application security and stress testing should be carried out. Often a vulnerability left

in a hurried deployment can be detrimental at later stages when the enterprise tries to strike a balance between being flexible and scalable. The new system recently launched for our depository operations is platform agnostic. Our systems work on mainframes and DB2 but is has also been tested to work as efficiently on Unix and Oracle platform. If systems are designed to be portable and modular, it provides a degree of insulation from obsolesce of technology and one can easily migrate to a more modern platform at a later date. With proper quality assurance across the platform, agility can be addressed quite effectively, balancing both flexibility and scalability.

You are at various phases of rolling out projects like centralized repositories, process re-engineering, and data migration at NSDL. What have you learnt from such projects that impact business at large scale?

First, one needs to be pretty clear as to what the business wants and carry out an effective requirement assessment.

Interestingly, we did a lot of projects that were quite unique in nature. NSDL set up the first securities depository in India.

Another project which we did was for the Income Tax Department, for its tax information network (TIN), which we understand is unique. The Central Record Keeping Agency (CRA) system for New Pension Scheme (NPS) which we developed for the Pension Fund Regulatory and Development Authority (PFRDA) is again a first-of-its-kind in India. In these projects while broad concept were well understood, factors such as how the market will adapt to these new systems and what new practices will emerge over a time etcetera remain to be seen. So, we found that rather than taking a lot of time to detail out requirements and undertake full scale development, it was much better to develop a core system that can be exposed to the market quickly but with a sound backbone design to build upon in the future. Our general approach has been to launch quickly with core systems and build further on it based on user feedback, rolling out improvements quickly.

This ensures that the market remains engaged. In these projects, we also formed several key user groups like brokers, participants, R&T agents, CAs, banks etcetera, whose feedback was crucial to evolve the whole eco-system. Finally, for most of our systems we also engaged with IIT-Mumbai to validate various IT strategies, as we would get completely vendor-neutral insights and suggestions, along with futuristic visions. This would help us envisage and build a first-of-its-kind, large scale business transformation project that impacts business at various levels effectively.

Transformers is brought to you by IDG Custom Solutions Group in association with

Leveraging TCS’ Six Sigma framework, to reduce Woolworths' operational costs.

That’s certainty

Woolworths Ltd. is a leading grocery retailer in Australia with a large share of Australia's national grocery market. To retain leadership position in the market and increase overall profitability, the organization needed to reduce operational costs and enhance productivity. As one of the world’s fastest growing technology and business solutions providers, Tata Consultancy Services leveraged its Six Sigma framework in assisting Woolworths improve its IT and Business processes. Completing ten improvement projects and improving process efficiencies. Resulting in better business processes to provide a competitive edge and reducing operational costs by $1 million. And of course, enabling Woolworths to experience certainty.