bhel pwc report

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ForewordThe Indian public sector undertakings (PSEs) have signi cantly contributed to the countrysecono ic resurgence. Since the econo ic liberalisation in 1990-91,they have exhibitedresilience against the global econo ic slowdown and have been ajor contributors to Indiasgrowth. In the last two decades, listed central PSEs have contributed an impressive 25% to

the countrys GDP.However, challenges related to productivity and ef ciency pose ajor barriers to theirgrowth trajectories. Caught between stringent regulations, technological obsolescence andunavailability of suitably skilled anpower, PSEs need to constantly ne tune their businessand growth strategies with increasing focus on ef ciencies and quality of services.

In an increasingly technology driven environ ent, these co panies need to adopttechnology solutions that not only align the selves to the organisations business needsbut also help the achieve growth and ef ciencies. Enterprise resource planning (ERP)solutions or any large software syste ust be scalable enough to support the appreciating volu es, integration needs and co plexities that acco pany this growth.

To achieve competitive advantage, PSEs need to leverage emerging technologies and bestpractices. They also need to adopt innovative ways of analysing data and tracking businessperfor ance para eters. It is i portant to anage organisational changes to create aculture that otivates e ployees during i ple entation of such technologies .This paper highlights the i perativeness of infor ation technology for PSEs within aknowledge anage ent fra ework to achieve co petitive advantage.


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Contents Page Chapter

06 Indian public sector enterprises: An overview

08 IT penetration

14 Success stories

20 The way forward


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Public sector enterprises (PSE) in Indiahave been witnessing exciting ti es since

the big hit Coal India Ltds (CIL) initialpublic offering (IPO). Listed central PSEsare now contributing over 26% of Indiasarket capitalisation and six of thehave gured a ong the top 10 co paniesin India, based on their average marketcapitalisation. After independence, theIndian govern ent de ned PSE-centricpolicies in the state ents of 1973, 1977,1980 and 1991. The 1980 IndustrialPolicy State ent was i portantas it encouraged domestic marketcompetition, technological upgradationand odernisation by encouragingforeign invest ent in developed areas.The PSEs contribute an impressive 25% tothe countrys GDP. The ve Maharatnas 1 collectively reported an inco e of4,326.3 billion INR in FY10, around7.1% of Indias GDP. The 15 Navratnas 2collectively reported an inco e of3,762.2 billion INR, around 6.1% of thecountrys GDP.

Over the last few years, the govern enthas used PSEs to guide the econo ythrough troubled waters. PSEs haveovercome short-term interests toaxi ise long-ter gains.So e speci c exa ples include thefollowing:

Rural growth in li elight now, hasbeen led by PSEs for over 50 years.

PSEs pay as high as 25.4% of theirpro t as corporate tax while the

Indian public sector enterprise: An overview

Chapter 01

effective tax rate on the private sectoras a whole is 23% 3.

PSEs are today en eshed in theco on ans life on account of thefocus on inclusive growth. Balancedregional develop ent is one of the chiefachieve ents of PSEs. Indias self-reliancein strategic sectors and the growingtechnical skills of the population helpeds all and ediu enterprises (SMEs)grow. The social control which lasted fordecades ensured equal distribution ofgoods and services.

The CIL IPO, which was oversubscribed15 ti es, has re-af r ed investor

con dence in PSEs that had wanedduring the mid 2000s. The governmentintends to reap bene ts fro thecredibility and recognition that theseenterprises hold in Indian markets as wellas overseas. Robust PSEs have investedin India and overseas too. They havesucceeded in eeting global challenges ofcompetition, advancing technologies andfree arkets. Several central PSEs haveestablished subsidiaries and alliancesabroad.

However, all the problems are not solved

yet. Regional disparities, une ploy ent,skewed income distribution persist.While these ay take so e ti e to beresolved, there are other pain-points thePSEs have taken head-on. Inef cienciesand limitations inherent in PSEs due topolitical and bureaucratic constraintsneed to be addressed urgently. So e ofthese include the following:

1 Coal India Ltd, Indian Oil Corporation Ltd, NTPC Ltd, Oil & Natural Gas Corporation Ltd,Steel Authority of India Ltd

2 Bharat Electronics Ltd, Bharat Heavy Electrical Ltd, Bharat Petroleum Corporation Ltd, GAIL (India) LtdHindustan Aeronautics Ltd, Hindustan Petroleum Corporation Ltd, Mahanagar Telephone Nigam Ltd, National Aluminium Company Ltd, NMDC Ltd,Neyveli Lignite Corporation Ltd, Oil India Ltd, Power Finance Corporation Ltd, Power Grid Corporation of India Ltd, Rashtriya Ispat Nigam Ltd, RuralElectri cation Corporation Ltd, Shipping Corporation of India Ltd

3 Ministry of Heavy Industries and Public Enterprises: Government o f India Annual Report 2010-2011 http://dhi.nic.in/annrep_eng_1011.htm


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I proving the i age of PSEs in theinds of custo ers

Increasing the accountability ofe ployees and transparency inprocesses

Increasing knowledge andinfor ation-sharing with focus onti e-sensitivity

Many PSEs have looked at IT and IT-enabled processes to strategically addressthese issues.

PSEs are not run as only-pro t akingorganisations but are also givendevelop ental goals. Setting of

quanti able key perfor ance indicators(KPIs) to re ect critical success factors isanother area of focus. These KPIs can beaintained and tracked effectively usingIT syste s.

PSEs have multiple control authoritiessuch as ministries, committees andagencies. IT can help bring standardisationin processes with minimum redundancies.End-to-end visibility of processes fortransparency is rising with the increasinguse of integrated IT solutions, enterpriseresource planning (ERP) and perfor anceanage ent syste s. As IT penetrationincreases, problems and processbottlenecks will reduce. In the followingchapters, we shall delve into these.

Addressing problems with IT will helpPSEs maintain and sustain their growthrates and continue to contribute to theIndian econo y in a ajor way.


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ObjectivesTechnology strea lines business activity,akes IT ore cost-ef cient, reduces

wastage in the case of anufacturingcompanies and optimises resources.Companies need to align IT to businessas IT implementations without businessi peratives are nothing but wasted efforts.

IT plays ultiple roles in the Indian PSEset-up. However, its pri ary objective isto enforce accountability and increasespeed. IT also plays conventionalroles such as increasing productivityand standardisation of infor ationanage ent. Other key objectives are asfollows:

Increasing transparency andaccountability

I proving process ef ciency

Reducing cost

I proving productivity and custo erreach

We take a closer look at so e of theseobjectives and how they are realised.

Transparency and accountability In India, during the pre-liberalisation era,PSEs were deemed to be working in anautocratic anner with no accountability.Once the Indian arkets were thrownopen to the world, competition increasedanifold. There was a need to onitor theef ciency and sustainability of PSEs andput in place accountability fra eworks.

The pri ary role of IT in the Indiancontext therefore changed fro beinga business enabler or driver to that ofan enforcer. The potential was huge. Alldecisions and approvals would leavebehind electronic traces, the funda entalbasis for enforcing an accountability

fra ework. The govern ent and PSEsstarted looking at IT to improve theiri age fro that of a black-box to a oretransparent organisation.

Process ef ciency A ajor objective of private and publicsector enterprises globally in their ITprogrammes is to bring in standardef cient processes across the organisation.Before a ajor syste roll-out, PSEsensure their processes are rst studies andscaled to industry best practice levels. Thisnot only allows their IT syste s to be oreeffective, but also increases their overallef ciencies, reducing process turnaroundti es and costs. However, this objective ofIT syste s has never been fully realised inmost PSEs. We will delve into the reasonsin the next section.

The eProcurement systemused by many PSEs now fortheir procurement is a popularexample of this role of IT.What used to be an arbitraryand much maligned systemof procurement has nowbecome more transparent,thanks to computerisation.The eProcurement system plugged most loopholes in the procurement process that couldbe exploited by those with vestedinterests.

BSNL has achieved costef ciencies by eliminatingredundant systems and going in for a rating and billing solutionthat was based on an open source platform. Not only did its new IT system reduce costs of billingcustomers, it also boosted revenueby reducing cases of inaccuratebilling.

Cost reductionMany studies and surveys have suggestedthat auto ation of processes through an

integrated IT set-up reduces costs. Giventhe global economic downturn, the cost-cutting role of IT has beco e pro inent.While India has not been signi cantly hit,cost concerns exist. IT has proved to be aajor cost reduction enabler in any PSEsby cutting down logistics costs ainly.


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BHEL has implemented a state-of-the-art ERP systemreplacing its disparate technology systems. It has covered all itsbusiness functions such as salesand distribution, nance andcontrol, material management, production planning and qualitymanagement. This system hasincreased productivity levels,mainly due to the availability ofreal-time information for betterdecision-making.

The National Aviation Companyof India Ltd has implemented a frequent yer programme based onan integrated IT system. The systemallowed Air India and Indian Airlines to offer reward miles toits regular customers, providingthem with an incentive to y theairline more often. While this isa standard practice in the airlineindustry, it is an example of how an IT system at the back-end can helpan organisation reach out to its

customers better.

Productivity improvement An integrated IT infrastructure withinan organisation has enabled some PSEs

to have a high degree of auto ationin their processes. This, in turn, hasallowed e ployees to spend lessertime on administrative processes andconcentrate on their core competencies,i proving productivity drastically. Real-ti e infor ation provided by integratedIT syste s has i proved daily decision-aking and the overall productivity ofPSEs.

Enhancing customer reachIT syste s at PSEs have been designedto enable organisations to reach out to

their end custo ers with better offerings.IT uses custo er infor ation ef cientlyenabling organisations develop targetedand custo ised offerings that engage theend consumer.

This role of IT is being used by so ePSEs, but it has tremendous potentialgoing forward. It can be used for targetedarketing initiatives if the data available isreliable and accurate.


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Opportunities As outlined earlier, PSEs are among thefastest growing Indian corporate houses.

While they rank high when it co es to ITspending, there is still great scope for ITto play a bigger role and drive the growthfurther. Long-ter sustainability of thehealth of PSEs is going to be deter inedby the robustness and ef ciency of the ITsyste s they have in place to cover theirprocesses.

The table below highlights so e of thebusiness issues faced by the PSEs andhow IT can intervene.

Opport Undertakingies How IT can help

Enhanceddecision-making Manage ent infor ationsyste s allow upperanage ent to take infor eddecisions and monitorperfor ance.

Key perfor ancemeasurementmechanism

Business analytic tools giveinsightful etrics and helponitor the on a daily basis.

Standardisation ofprocesses affectingef cient scalability

Putting in place an ERPsyste after business processreview will help standardiseprocedures.

Customer relationship Customer relationshipmanagement modules can

help provide centralisedcusto er infor ationallowing PSEs to servicecustomers better.

Knowledge andinfor ation-sharingand anage ent forti ely and high-qualitydelivery of projects

Knowledge managementsyste s which enablee ployees to share andretrieve infor ationsea lessly are widelyavailable. Companies can usethe to increase productivity.

ERP systemsMost PSEs lack standardisedprocesses leading to a set of disparate

processes, making data collectionunreliable and inaccurate. Also, thisinhibits the effectiveness of a systeselection process and the selectedsyste usually fails to eet its statedobjectives co pletely. The CAG ITcompliance audit in Indian PSEsrepeatedly focuses on the lack ofstandardised processes as a reasonfor the failure of IT syste s. Thus,the rst step for any PSE looking to

fully integrate its functionsis to make sure it starts with a process review andstandardises processes acrossall areas of operation.

The business landscape forPSEs is full of challenges warranting quick response.To maintain their leadershipposition, they ight need tofocus on several deliverables:

Implement vendor baseexpansion and greaterapplication of IT.

Use ore tools at plants and

sites to accelerate projectexecution and strea linedelivery syste s to executeprojects on time.

Use global sourcing,indigenisation and integratedoperations improvementinitiatives to deliverbetter product quality at acompetitive cost.

Grow by way of tie-ups andbusiness associations.

To meet current business challenges tosustain competitiveness in the market,

these companies must undertake anERP i ple entation driven businesstransfor ation exercise.

For so e co panies, overco ingchallenges posed by heterogeneous ITplatfor s is i portant. This needs to bedone while ensuring an integrated viewof infor ation, project visibility and aconsolidated ERP solution. To i ple entan integrated infor ation syste acrosstheir subsidiaries or SBUs, co paniesust run the ERP i ple entation on asingle integrated syste .

Once an organisation has a standard setof processes, the IT syste s can reallytake off. The biggest opportUndertakingyfor PSEs is the i ple entation of anERP syste . An integrated ERP systecovering all critical core functionsand supporting functions can i proveproductivity and cut costs. PSEs likeNalco, Balco, SAIL RSP, VishakapatnaSteel Plant, Mangalore Re neries andPetroleu Ltd already have a full edgedERP syste in place or are in the processof i ple enting one. Most PSEs havethe revenue and manpower to warrant afull edged ERP syste . An ERP syste offers yriad bene ts.It provides a real-ti e view of theorganisations different functions. Iti proves plant throughput signi cantlyand allows better tracking of custo erand e ployee data. It can also reduceinventory costs considerably. The veryintegration of different functions in anorganisation leads to ore synchronousdecision- aking facilitated by data.


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Key barriersIndian PSEs face a few obstacles in theirquest to i prove the level of ef cient

auto ation of their key functions. Theseinclude ineffective change anage entand lack of standardised processes. Wetake a look at so e of the points thatoften co e up when the IT syste s atPSEs are evaluated.

Resistance to change A large-scale IT syste i ple entationis a change management challengefor any co pany. There are ti es when e ployees are slow to adoptnew technologies. Even after any years, odules re ain unused. Thisresistance to change is probably a littlemore pronounced in PSEs. This is dueto lack of anage ent buy-in beforei ple entation, lack of involve entof staff in early trial runs and a ulti-layered decision- aking structureleading to a lack of clear vision on thegoals of the IT progra e.

Mishandling of the change anage entaspect is a key issue that hurts anorganisation the most. This can set theorganisation back by ve to seven yearsin their road ap for IT. A failure of thechange management programme createsdoubts about IT syste s in the inds ofe ployees who re ain sceptical aboutnewer and better initiatives that mightbe next on the agenda. Such a failurehas a cascading effect on future ITprogrammes.

Lack of standard processesLack of processes is one of the biggesthindrances PSEs face while effectively

adopting IT syste s. An IT syste canonly be as effective as the processes beingfollowed. Lack of processes leads to so eof the following proble s.

There is li ited ability to choose aneffective IT syste to eet the needsof the organisation.

There is a high possibility of duplicateor inaccurate data being fed intothe syste , aking the very basisof decision- aking and reportinginaccurate.

There is a isalign ent of chosen ITsyste s and processes which inhibitse ployee use of IT syste s, renderingthe syste s a dead invest ent.

The perception of IT syste s asa disturbance to daily processesgains ground and management ande ployee buy-in is lost.

To x this, co panies ust conduct abusiness process review and improveprocesses incorporating best practicesand aligning with IT. ERP or any other ITsyste should then be chosen keeping inind the standard operating processes ofthese r s. Only then can the co pletebene ts of an IT syste be realised.

Lack of trained IT personnelLack of trained IT personnel is a problethat plagues any PSEs. While ost PSEs

hire r s fro outside to i ple enttheir IT syste s, lack of a strong IT tea within their ranks seriously ha pers theirability to extract axi u value frothe partnership.

In any PSEs, this eans that thesoftware installed has not beencustomised to meet client needs. It alsoindicates that there was no validationcheck for the data being entered, leadingto duplicate and inaccurate data. Thisleads to inef cient use of IT syste s,causing modules to remain unused due toinherent disparities within the processes.

Another ajor proble is the inadequatetraining provided to e ployees. Withouttraining, e ployees dont understand thebene ts of the syste and cannot akefull use of it.

Demographic of employeesThe de ographic of the e ployees isanother often quoted reason for thelack of successful IT roll-outs in PSEs.The standard argument is that an older working force does not see the bene ts

of co puterisation as uch as a youngerpopulation would. This results in lackof staff buy-in at the earliest levels in aproject. While true in some cases, somePSEs have shown that this is not a majorstumbling block.


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Success storiesChapter 03

IT is an enabler of develop ent acrosseconomic sectors. Some have called this

the digital econo y, and noted that itis important to realise that the digitalecono y is ore than an econo yconducted on the Internet. 4

The digital econo y represents thepervasive use of IT (hardware, software,applications and telecommunications)in all aspects of the econo y, includingthe internal operations of organisations(business, govern ent and non-pro t). Italso includes the use of IT in transactionsbetween organisations as well as betweenindividuals, acting both as consumers andcitizens, and organisations. IT has madeof a host of tools to create, anipulate,organise, transmit, store and act oninfor ation in digital for in new waysand through new organisational for s.Its impact is pervasive as it is being usedin virtually every sector fro far ingto anufacturing, fro services togovernment.

This is not a phenomenon limited to thedeveloped world. Developing econo iesbene t enor ously fro the introductionof IT. So e of the best exa ples are inIndia today.

IT implementation modelsOil and gasPost-liberalisation, the adoption ofERP solutions has been a strategic way

forward for any Indian co paniesto leverage infor ation and achievecompetitive advantage in a deregulatedand aggressive market scenario.

Cost optimisation and enhancingoperational ef ciency as well asproductivity have been the ajorimplementation motivators.

Oil and gas giants like Indian OilCorporation Ltd (IOCL), ONGC, Gas Authority of India Ltd (GAIL) and OilIndia Ltd (OIL) have selected SAP as theirERP solution.

According to a PwC study, IOCLscountrywide network of over 10,144 retailoutlets serviced through 165 bulk storageter inals, 95 aviation fuelling stationsand 87 LPG bottling plants are supportedby SAP. There are over 500 custodeveloped reports across all odules ofSAP. GAIL has covered its entire businessthrough nine odules of SAP R/3solution including material management,sales and distribution, plant maintenance,project syste s, nance and control,human resources, production planning,

quality anage ent and custo errelationship anage ent. OIL hastaken a step further by i ple entingSAP SRM suite of applications overthe base SAP R/e solution to enablee-procure ent and auto ation of theprocure ent process. The key driversfor ONGCs SAP i ple entation likeany of the co panies in this sector wasstandardisation of business processes,enabling integrated infor ationavailability on a real-ti e basis andeli ination of duplication of activitiesacross business processes by capturing

data at a single source point.

IOCLs B2B exchange approach IOCL, Indias largest state-owned oilco pany, accounting for 48% of the

petroleum products market share, wasfacing opti isation issues with its B2Banual settle ent and resolution of large volu es of oil products. To aug ent thisprocess, it managed to persuade anotherPSE oil co pany to share a linked IT-enabled platfor and achieve a business worth 35,000 crore INR.

Buying and selling of petroleu products with other co panies is very crucial tothe business odel of oil co panies.IOCL is no exception. However, anextensive cross-country docu entprocessing was leading to exchanges ofad-hoc deposits on the due dates on aonthly basis. Actual settle ent wasrealised on the 25th of each onth afterthe reconciliation of all the incongruitiesin product quantity reporting and billing.In occasion of any disputes, settle entrequired the concerned parties to accountfor all the docu ents involved in a singletransaction to support their claim. Adirect outco e of these delays was a hugenancial pile-up translating to losses.

Case highlights The rst phase saw the

automation of ERP systemsof IOCL and BPCL, wheretransactions worth over Rs35,000 crore were involved.

Automating the billing and stock transfer process savedabout 90% time and reducedthe amount of effort.

4 Atkinson & Mckay, Digital Prosperity, (Information Technology Innovation Foundation, 2007)


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This was when the co pany decided tolink its ERP syste s with the co panies

with whom it conducted regular oilexchange. BPCL was the rst co pany which was taken on to this newtechnology sharing platfor .

Built on open source, the i ple entation was carried out in two phases wherethe rst phase involved transactions worth over 35,000 crore INR with theauto ation of ERP syste s of IOCLand BPCL. Once BPCL agreed on thefeasibility of such an arrange ent, aco on platfor was i ple ented forB2B exchanges.

Auto ating the billing and stock transferprocess saved about 90% time andreduced the effort. Also, data entry errorsdropped and settle ents beca e fasterand more transparent.

PowerThe govern ent of India (GoI) is keento increase the per capita consumptionof energy to raise standards of livingin the country. Under the Rajiv GandhiGra een Vidyutikaran Yojana (RGGVY),the Ministry of Power plans to provideelectricity to 120,000 villages in the 11thFive Year Plan (2007-12).

Energy trans ission and distributionis a key co ponent of the electricitysupply chain, but this seg ent haslagged in operational ef ciency as wellas nancial perfor ance. Recognisingthe urgent need for refor s in the powerdistribution sector, the GoI introducedthe Restructured Accelerated PowerDevelop ent and Refor s Progra e(R-APDRP) in 2007. R-APDRP ai edat strengthening transmission and

distribution networks and reduction inaggregate technical and commercial

(AT&C) or transmission and distribution(T&D) losses.

Uner R-APDRP, GoI has planned tospend US$11 billion across variousstates to develop an ICT-enabled powerinfrastructure. In the rst phase of thisprogra e about US$2 billion is plannedto be spent. Key ICT opportunity areas inthis phase include energy accountingand auditing, SCADA syste s, MIS,

Case highlights

A collaborative frameworkacross the enterprise

The new system is beingleveraged to conduct crucialactivities such as management

Meter Reading (billing and collection),auto atic data logging syste , GISmapping, automatic meter reading,prepaid electricity etc. 5

SAP implementation acrossNTPC and change managementinitiatives An ERP roll-out across an organisationis one of the ost extensive and dif cultexercises for its IT tea . During the rollout, all resources of the organisation areput to deploy it successfully. As a result,other IT initiatives are sidelined.

However, the decision-makers in powergiant NTPC decided to go against this

statistic. So, when the co panys ITtea was fully absorbed in rolling out

an SAP implementation along with theongoing change management initiatives,the senior management introduced anenterprise-wide collaborative initiative.The otive behind this was not only tohelp with change management but also toincrease productivity and reduce cost andensure that the organisation went beyond just ERP i ple entation.

The co pany adopted an audio and video conferencing fra ework toreach out to all its e ployees as a partof its collaborative efforts. Changeanage ent with ERP i ple entationakes it i perative to interact extensively with all users and the conferencing set-up was supposed to facilitate this.

To overco e the challenges of akingpeople use the new technology, astandard anual of dos and donts wascreated and circulated among all projectheads. The new syste helped conductkey activities such as anage entcommittee meetings, project monitoringand reviews of the upco ing ther al orhydro power generating projects. Also,management committee meetings tookplace regularly, across 40 locations withover 150 participants si ultaneously.

Thus, the co pany saved cost and founda synergy in proble -solving ethodsduring various stages of upco ingprojects. It also made sure that theorganisational hierarchy and geographicalbarriers do not pose as real-time barriers when it came to capturing ideas andguring out ways to i ple ent the .

5 Cybermedia Research: Energy and power sector report. http://www.cmrindia.com/global_market_research.asp


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Bharat Heavy Electricals Ltd(BHEL) RFID enabled bin trackingsolutionBHEL is the largest engineering andanufacturing enterprise in the energy

and infrastructure sector with revenuesof US$4.7 billion. It anufacturesover 180 products categorised under30 ajor groups, catering to thebasic infrastructure verticals likepower generation and transmission,transportation, renewable energy andteleco unication. BHEL providesco plete turnkey solutions to coreinfrastructure sectors like powergeneration and mass transportationand caters to the require ents of both,large private sector customers as well asgovern ents of various countries.

Business requirementCatering to the huge de and for powerplants, BHEL factories work round theclock to anufacture various power plantasse blies like turbines, engines etc. Onesuch plant anufactures blades that gointo aking the turbines of a power plant.

At the new blade shop of this plant,raw aterial (in for of stainless steelbars) and se i- nished blades are fedto sophisticated co puter nu ericallycontrolled (CNC) achines whichcut, grind and polish them into thenished blades for the turbines. Theseraw material stainless steel bars, semi-nished blades and blade asse bliesare stored in an automated storage andretrieval syste (ASRS). The ASRS akesef cient use of the available storagespace by acco odating large quantitiesof various aterials in vertically storedetallic bins. Their ASRS co prised of:

540 bins 34 coluns with eight rows in each colun Total area 12,430 cubic feet

The ASRS control software keeps a recordof the bin location and the contents of

each bin which is anually fed into thesyste . The process is error-prone andleads to inaccurate data over time. Aisplaced bin translates into:

Unproductive labour required tosearch the misplaced bins

Manufacturing achine downti edoes to the syste s inability to feedraw materials on time

Delays in project co pletion leadingto penalties

BHEL needed a solution that could help

it keep track of the bin location, theaterial infor ation that was stored inthe bin and be able to verify if the correctbin was being retrieved when asked for.The objective was as follows:

Verify if the correct bin was pickedby the ASRS crane even before thebin was brought to the base stationgiving an opportunity to the operatorto take corrective action ahead ofti e, preventing loss of ti e due toincorrect bin retrieval thus improvingoperation ef ciency of the ASRS

Gain visibility on the bin content( aterial stock-keeping unit(SKU)and quantity

With RFID deploy ent on the ASRS,the operators of the ASRS were beingable to verify if the correct bin was beingretrieved fro the syste , even beforethe syste brought the bin to the basestation. They were also able to updatethe database with the aterial SKUinfor ation as well as the quantity thatthe bin holds.

The bene ts accrued by introducing RFIDbased bin veri cation were as follows:

Instances of incorrect bin retrieval were reduced fro a daily average ofseven to nil.

Quantity of SKU held in the bin wasupdated in real-ti e whenever anyaterial was re oved fro the bin;this resulted in 100% accuracy in SKUinventory count.

This i proved the bin put-away andretrieval ef ciency of the ASRS, thusensuring the high cost CNC achines were fed with the correct aterial andthat BHEL was able to eet the deadlinesset by its custo ers for erecting the powerplants. 6

6 Keytone Technologies: Case Studies: Bhel RFID Case Study http://www.keytonetech.com/resources/assettrace/BHEL%20Case%20Study.pdf.


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E-procurement initiatives in IndiaWith the advent of the Internet inIndia in the late 1990s, individuals and

organisations started identifying waysand eans of auto ating their keyprocesses. E-procurement is an area where the Internet was instrumental inauto ating the purchase process, therebysigni cantly reducing cost and ti e.

The broad spectru of e-procure entis much more than just a plain vanillasyste for aking purchases online.It is a co prehensive platfor , usingthe Internet to ake it easier, fasterand cost-effective for businesses tosource their require ents on a ti elybasis, and in a way that is aligned withorganisational goals and objectives.In the current scenario, characterisedby a focus on key strategic initiatives,lesser time-to-market and increasedglobal competition, e-procurement aidsorganisations in streamlining their entirepurchasing process, so that they can focuson core business activities and increasepro tability.

Si ply stated, e-procure ent isthe electronic business-to-business(B2B),business-to-consu ers (B2C)or business-to-govern ent (B2G) saleand purchase of goods and services.The medium used might be the Internetor any other edia like electronicdata interchange (EDI) and enterpriseintegrations (for erly known as EAI).

Over the last few years, several stategovernments and PSEs in India havetaken an aggressively pro-active stanceon e-procurement. The e-procurementprocess is unique to govern ent. Whilecorporate purchasing has becomesupplier anage ent and driven bybusiness partnerships, government

procurement remains dedicated tolevelling the playing eld betweenco petitors by use of the sealedcompetitive bidding and awarding bids tothe lowest bidder eeting speci cation.

Govern ent records are open and theprices revealed in the public arena. Thus,

under public scrutiny, public purchasersust atte pt to conserve the taxpayersoney in an open arena. Fortune 500co panies boast of aintaining a keysupplier base of 10-15 rst and secondarysuppliers which is minuscule to what agovernment has as registered vendors andany ore that bid, but never ake it tothe vendor list. Given this divergence, agovernment has to adopt e-procurementsolutions that take into account theabove factors. Govern ent ust forgeits own odel of e-procure ent and, bydoing so, encourage the competition so

heartily sought. The deluge of requests via the Internet fro co panies wantingto compete will have to be managed.Govern ent ust create a odel thatpays for itself, thus axi ising thetaxpayer contribution without da agingsmall and emerging businesses.

Govern ent ust i ple ent a solutionthat weakens the procure ent cycle without paralysing other functions. Thise-procurement process recommendationshould i prove the procure ent cycle without upsetting the government

policies and procedures necessary to thesuccessful governance of the populaceand businesses.

Govern ent to business consists ofthe electronic interactions betweengovernment agencies and privatebusinesses. It allows e-transactioninitiatives such as e-procurementand the develop ent of an electronicarketplace for govern ent. Co panieseverywhere are conducting business-to-business e-commerce in order tolower their costs and i prove inventorycontrol. The opportunity to conductonline transactions with governmentreduces red tape and si pli es regulatoryprocesses, therefore helping businesses tobeco e ore co petitive. The delivery ofintegrated, single-source public services

creates opportunities for businessesand govern ent to partner together for

establishing a web presence faster andcheaper.

State govern ents like those of AndhraPradesh and Gujarat have initiatede-procurement within their e-governanceprogra es. Using e-procure ent,these govern ents have not only savedon their procurement costs but havealso brought about transparency in theirprocesses and have earned goodwilland trust. Included in these large-scalebene ts are cost reduction, i proveddecision- aking, process ef ciency, priceand supplier behaviour forecasting andsupplier perfor ance onitoring whichulti ately leads to vendor rationalisationand standardisation.

Public sector Undertakings likeONGC, IOC, BHEL have all taken upe-procurement initiatives to rationalisethe US$30 to US$40 billion purchasesthey ake every year.

The entire procure ent process for the Andhra Pradesh government is beingauto ated and strea lined. The focusis to avoid cartel for ation, besides

reducing inventory costs and creatinga level playing eld for suppliers andbuyers. For the govern ent of AndhraPradesh, the value of procure ent isore than US$2 billion across ore than150 departments, which will be coveredby a single e-platfor . Si ilarly inGujarat, a fuel exchange has been set upfor GSFMC (a consortiu of various PSEsin Gujarat) wherein the participatinge bers buy and sell fuel online.

The purpose of e-procure ent is costreduction and enhancing operationalef ciency in the procure ent process.However, developing nations likeIndia still have a long way to go ini ple enting this technology widely.So e of the key challenges faced here areas follows:


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The lack of IT infrastructure

Sourcing goods through onlinechannels is relatively unheard of.

Despite relatively high levels ofco puterisation, any organisationsnd it easier to do business over thetelephone.

Li ited Internet and broadbandpenetration especially in rural areas, where companies need to ensure anuninterrupted connection.

These are so e of the areas ofopportunities for e-procure entfacilitator co panies to offer their

solutions over channels other thanthe Internet, perhaps using telecom oras technology evolve, over televisionnetworks. 7

7 Source: http://www.slideshare.net/pksinghtatawala/e-procurement-4750175


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The way forwardChapter 04

For any business, irrespective of size andscale, innovative technology solutions

are the need of the hour. However,the challenge for PSEs is not to adopthigh-end solutions, but to align existinginfrastructure with new deploy entsand engage their manpower in the newsyste s effortlessly. There exists a hugescope for technology in the govern entsectors. Although it is dif cult to predict whether technology will induce peopleto work ore ef ciently, it is safe toassume that it can speed-up the processand bring in order, accountabilityand transparency in the business. Forhighly centralised organisations suchas PSEs, the innovation and adoptionof technology can be i ple ented intwo ways. They ay choose a big bangapproach where innovation is introducedsi ultaneously across the r . Withthis, differences a ong organisationalenterprises are ini ised, and the rdoes not have to operate using differentsets of processes. In the second approach,organisations implement the innovation within a single business unit. After theinitial implementation is complete, itextends to other business enterprises.However, irrespective of the approach,the following hygiene factors need to beaintained:

Standardisation of processes throughthe i ple entation of fra eworkssuch as the CMMI, TQM and ISO9000.

Standardisation of reports toensure eli ination of duplicate andredundant activities.

A few key initiatives during each phase ofimplementation will ensure the successand sustainability of the technology

adoption programme in the long term.

Pre-implementationBusiness process standardisationIntegration of syste s is i portantto manage big enterprises such as the

PSEs. Business processes should bere-engineered to t the new technologyor software instead of custo ising thesoftware to t the existing businessprocesses. Besides, custo ising softwarecan increase costs and errors. Theco plexity and agnitude of the effortsrequired ay deter organisations frocustomisation. Implementations like anERP project have changed processes. An adequate degree of t, betweenthe organisation and the technologypackage, is critical for the success of anyimplementation.

Product and vendor selectionWhile choosing a software vendor,the main concern is that even thoughthe enterprise syste ight havesubstantial resource tools and untappedapplications, it ay eventually turn outto be inappropriate for the operationalprocess. This can result in huge losses forthe organisation.

Co panies should be careful in choosinga solution package. It should matchthe legacy syste s, e.g., the hardware

platfor , databases and operatingsyste s.

To select the right vendor and product,co panies ust de ne their keyrequire ents, identify possible vendorsor aintain a aster database of pre-selected vendors. They ust also developscenarios for proof of concept, facilitatesoftware de onstrations and engagean external partner or consultant toconduct vendor due diligence and planimplementation.

Success parameters A technology solution will provide noreturns if users are unable to use it.

Therefore, functional tea s need to trainend-users on the new syste . An ERPsyste that includes an intuitive, easy-to-use interface will allow organisationsto train e ployees quickly and cost-effectively.

Measure KPIsOrganisations cant anage what theydont easure. Unless they easurethe solution results, they will not know whether their business processes aregetting better or worse. Therefore,during the implementation process,the functional tea s need to de ne which metrics (e.g. KPIs) to measure todeter ine the success of their technologyimplementation.

An implementation should help theorganisation i prove its perfor ance.KPIs are quanti able etrics that re ectthe perfor ance of an organisationin achieving its goals and objectives.Organisations need to nd KPIs thatre ect strategic value drivers rather than just measuring non-critical businessactivities and processes. The rightKPIs align all business enterprises,depart ents and individuals with clearlyde ned targets and bench arks to createaccountability and track progress.

While business enterprises, departmentsand individuals must use KPIs thatsupport overall business objectives,each will have its own KPIs that re ectits perfor ance. E.g., sales ight trackthings like average sale, average marginper sale, sales-per-sales rep and lostaccounts. While the accounts receivablesdepartment might track total receivables,receivables over 30, 60 or 90 days,

average overdue receivable, averageaccount ageing etc.


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While determining KPIs, organisationsust easure factors that interest their

business and adopt an overall verticalindustry etric. This will help theco pare their perfor ance.

ImplementationIT programme managementNote: Project of ces (POs) areoften referred as progra e of ce,progra e anage ent of ce, projectanage ent of ce, central project of ce,project support of ce, etc. In the report,the ter PO applies to the different typesand con gurations.

A PO interacts with all projectstakeholders and supports projectsponsors and anagers by providingassistance, guidance and subject matterexpertise.

The PO provides support for thefollowing:

Single projects: It providesmanagement with an independent view of project status and ensuresconsistent project management,quality, docu entation and unifor

standards are applied across projects. Multiple projects: It provides, in

addition to the services provided for asingle project, portfolio anage entsupport.

Enterprise-wide projects: Anenterprise PO provides assistancefor large strategic initiatives byconsolidating outputs fro ultipleprojects, while aligning and providingoversight to ultiple POs.

PO roles and functions


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Research has indicated the followingcauses for project success and failure:

SuccessFor al governance and change approvalguidelines Business owners accountable for

project results

Training in project management

Measure ent and feedback syste s

For al priorities for requests andchanges

Regular co unication with users

Clear tracking of people, skills and ti e

Inventory of skill-based co petencies

Automated project management tools

Failure Inadequate planning and inco plete

require ents

Insuf cient involve ent ofstakeholders

Infrequent co unication withbusiness owners

Poor contain ent of the projects scope

Poor anage ent of expectations,roles and responsibilities

Ineffective resource anage ent

Incomplete deliverables betweengroups

No relevant authority to overco eimpediments

Poor project estimations


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The project bene ts realisation process isco posed of the following ele ents:

Business drivers: This ay includebecoming a low-cost producer,locking-in suppliers or custo ersby offering superior levels of service,creating barriers to entry, retainingarket share, co petitive parity, etc.

Types of bene ts: It includes improvedinventory turnover, reduced warrantyclai s and delivery costs, faster-to-market product and servicedevelopment, and lower customerorder processing costs.

Change drivers: It includesexternal drivers such as new orobsolete technologies, legislationor regulation changes, competitionor market changes, supplier orcustomer demands and obsoleteproduct or services. The internaldrivers include new management,high staff turnover and labourinef ciencies.

Strategy and business i peratives:It is a result of business drivers,different types of bene ts or changedrivers. It creates projects to address

business issues which link or impactthe organisations business strategy.

Business case: It includes a detailedbusiness justi cation to de ne theproject(s) necessary to address thebusiness imperatives. Items suchas the competitive impact, resourcerequire ents, organisational i pact,cost and bene t calculations, criticalsuccess factors, key perfor anceindicators and associatedperfor ance easures for a partof it.

Project investment objectives andscope: It includes clearly de ned

scope, project schedule, timing andduration of project resources, projectassumption and dependencies,accurate project cost estimates andoutputs, business outcomes andeasures bene ts.

Ownership and responsibilities: Itincludes the de nition and acceptanceof the roles and responsibilities for allaspects of the project and the bene tsrealisation process fro inception todelivery.

Project anage ent: It extends

the traditional easures ofproject success (the project outputsmeasured on time, to budget andto speci cation) to include bene tsmanagement. This incorporates thebusiness outco es and the bene tsrealisation which is an integral part ofthe project right fro its inception.

Business process, technology, organisational and facility changes:These represent the componentsthat ust be changed to successfullydeliver the planned business

outco es and business bene ts. Bene ts realised: These are the

easured tangible bene ts thathave resulted fro the project andthat con r the cost and bene tcalculations. They use select keyperfor ance indicators and easures.

Creating a business case monitoringand bene ts realisation process, whichincorporates all the elements, addssigni cant value by focussing not just onbusiness outcomes but also on projectoutputs.

IT governanceLately, the subject of IT governancehas been a much debated issue and has

increased the pressure on overseeing itseffectiveness. To provide value to thestakeholder, the current IT environmentrequires regulatory co pliance, costcontrol, availability, risk anage ent,business align ent, ti ely projectdelivery, change and innovation.

The following are so e of the ajordrivers of IT governance withinorganisations such as PSEs:

Need for IT align ent

Regulatory pressure

IT governance as follow-on frocorporate governance projects andenforced by board and executiveanage ent or headquarters.

Need for perfor ance i prove ent,e.g. cost of IT, lack of effectivesolutions and ef ciency gains.

Improved risk management

Organisations that have recentlycommenced IT governance initiativesoften have no echanis in placeto easure the success or bene tsof their efforts. When IT governanceperfor ance easure ent disciplinesand practices are in use, they areostly infor al, subjective or based onqualitative easures. So e organisationseasure progress on the basis of theirIT governance measures (processindicators), rather than the eventualoutcome, e.g. cost savings.

There are any bene ts of IT that are notquanti ed or easured. These includethe following:

Enhanced IT alignment

Cost savings


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I proved custo er satisfaction

Greater security

The use of IT governance fra eworksis widely accepted. According to a PwCsurvey, 95% of organisations seek aid andguidance fro ajor and well-knownfra eworks such as CobiT and ITIL.These fra eworks are co bined witheach other or with other lesser knownfra eworks (such as CMMI and PRINCEII). In addition, any organisationsfocus on getting the basics of ITgovernance correct, i.e. installing theright governance bodies and committees,assigning accountability and opening

communication channels betweenbusiness and IT.

Change management and trainingprogramme According to a Gartner research study,around 70% of change projects fail todeliver expected bene ts. These failuresare not due to wrong solutions but are theresult of poor i ple entation and lack offocus on change anage ent.

Change management for ERPERP provides an integrated view--aninfor ation syste to identify and plan

the enterprise-wide resources neededto take, ake, ship and account forcustomer orders.

ERP syste s atte pt to cover all basicfunctions of an organisation by replacingtwo or more independent applications.

An ERP solution is an integrated syste

where all the functional odules areinterconnected and the ajority oftransactions are carried out online.Data redundancy is ini ised and allfunctional depart ents involved inoperations or production are integratedin one syste . The syste s are usuallyat multiple locations and can cut acrossinternational borders while focusing oncross-functional tea s.

The structure of an organisation canchange post-ERP i ple entationand e ployees can have new roles,

responsibilities and reportingrelationships.

ERP projects are often associated withun anaged expectations followed by

troughs of despair leading to e ployeedisillusion ent. In the absence of aproper change anage ent strategy, theproject is bound to fail. So e bedded andsustained change anage ent is the only way e ployees will re ain co itted tothe success of the project.

While integrating technologies withintraditional organisations such as PSEs,change management should involve thefollowing:

Assess ent of the readiness andcapability of the organisation and its

e ployees Creation of a change anage ent

strategy

Identi cation and prioritisation ofaction points based on opportunitiesfor develop ent

Mobilisation of the organisation forthe transfor ation by involving theanage ent and workforce

For effective change anage ent, thefollowing are critical:

Clear co it ent and direction frosenior management

Clear goals and objectives for theproposed changes

Well-de ned require ents andrealistic expectations fro users

Regular and effective co unication

Clear roles

Bene ts due to the changes


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Post implementationPeople managementRetire ent of crucial staff e bers,absence of adequate co pensation

structures, delayed appraisals, lack ofin-house expertise in dealing with newtechnologies in contrast to the attractivepackages and growth opportunitiesoffered by the private sector akespeople-related issues a major impedimentin implementing technologies.

For PSEs, the ain challenge lies indelivering results with the existinganpower, while they attract newtalent to ll in the gaps. Govern entagencies overlook critical aspects such asproviding people with the right talent andmotivation, appropriate compensationand a stimulating work environment.

Therefore, during any technologyi ple entation e ployee indset ustbe technology-ready and productive.E.g., during an ERP software systei ple entation, anage ent exercisesare key to the sustainability of the syste . A large-scale implementation across theorganisation that covers all the processesneeds to ensure that e ployees workon their daily activities using the newsyste .

Role of stakeholdersFor Indian PSEs, allocation of fundsfor technology i ple entation is notas much a challenge as convincing theanage ent to approve the requiredIT investment. To gain managementconsensus for an IT spend, it is necessaryto prepare an effective plan thatshowcases the bene ts accrued frothe proposed investment. To ensurecomplete acceptance, private companiesresponsible for supplying the technologyand other major stakeholders must work

together to realise the advantages ofadopting any new technology.

In the 1990s, the government spentextensively on setting up IT infrastructure

and creating huge IT support. And nowis the right time to understand the needsof the current environ ent. PSE CIOsneed to advise their organisations and the various stakeholders on the investments worth pursuing for providing the bestpossible services. They need to ensurethat the technology helps organisationsachieve their goals in a ti ely annerand within their budgets.

Bene t management It is essential for anage ent tea sacross co panies to see tangible bene tsof the technology adopted to ensurethat the projects are completed onschedule. This also helps in justifyingthe resources offered. The purchaseand i ple entation of an ERP systeis the only capital project co paniesundertake where a return on investment(RoI) calculation is not andatory. Yet, knowing the RoI of a systeimplementation is important becauseevery syste project is co pared toother capital projects being undertaken.If those other progra es or projects

have an objective return associated withthe , an ERP syste i ple entationprogra e will be tough to justify. Tofacilitate anage ent approval fortechnology approval, bene ts can be seenin various areas. E.g., bene ts can beachieved through reductions in inventory,direct and indirect cost, improveddelivery perfor ance and increased visibility. A few ways in which co paniescan anage bene ts are as follows:

Use of tools like syste alerting andsupplier agreements

I ple entation of de and ow lineside procurement without the needfor back-up inventory

De and ow procure ent andinventory anage ent that

eliminates communication betweenthe purchasing team and suppliers with respect to scheduling andexpediting. The reduction in thesupply chain reduces the i pact ofengineering changes.

Many co panies are forced by arketpressures or their business models toconstantly introduce new products.This creates a communications overloadbetween engineering and anufacturing.Todays integrated syste s and projectmanagement tools help establishmilestones, work schedules and budgetsfor engineering projects. Using thesetools, anage ent has the visibility tomake sure projects are completed on timeand within the budget.

The role of cloud computingThe Indian public sector is warmingup to the opportunities of cloud.The Govern ent of India is activelypromoting cloud computing throughthe construction of various test bedsand the launch of ultiple cloud serviceinitiatives such as e-governance, cloud

grids, etc.The govern ent can apply cloud in thefollowing cases:

Govern ent-to-govern ent (G2G)

Govern ent-to-business (G2B)

Govern ent-to-citizen (G2C)

Govern ent-to-e ployee (G2E)

Although concerns around privacy,security and sovereignty of data continue,the value proposition of oving tothe cloud is too attractive for thegovernments to ignore.


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Global adoption of cloud computing inthe public sector

The US is taking the lead and ovingto a Cloud First strategy. U.S. FederalBudget for 2011 has incorporated cloudco puting as a ajor part of its strategyto achieve ef ciency and reduce costs.It has been mandated that all agenciesshould evaluate cloud computingalternatives as part of their budgetsub issions for all ajor IT invest ents, where relevant. The following deadlineshave been set for project co pletion:

Newly planned or perfor ing ajorIT invest ents acquisitions ust

co plete an analysis that includes acloud computing based alternative aspart of their budget sub issions bySeptember 2011.

All IT investments makingenhance ents to an existinginvest ent ust co plete an analysisthat includes a cloud computing basedalternative as part of their budgetsub issions by Septe ber 2012.

IT invest ents in steady-state ustco plete an analysis that includes acloud computing based alternative as

part of their budget sub issions.

European governments are slow onadopting cloud. The EU is expected to

present European cloud computingstrategy (Euro cloud) next year. Mainconcerns re ain over data privacyand jurisdiction, responsibility and EUlegislation. According to IDC:

Among European governments, 40%have no plans of adopting cloud.

The propensity to adopt cloudco puting a ong the top veEuropean governments showed that22.8% have no plans to adopt and18.9% dont know if they will.

Govern ents of Ger any, UK, France,Italy and Spain are adopting cloud but with a cautious approach.

The UK govern ent plans to build theG-Cloud govern ent cloud servicestrategy. Though the UK govern ent is yet to set up a speci c spending budget,it will invest around 60 million toestablish public cloud service network. By2015, the goal of the UK govern ent isto reduce at least 50% of the IT resourcesthrough public cloud services. It hopesto save 20 illion fro 2012 to 2013, 60 illion fro 2013 to 2014 and 80

illion fro 2014 to 2015.

Cloud adoption trends in the Asia-Paci c region

Govern ents in Asia are looking at cloudservices to bring in ef ciencies in theirICT usage. They are looking to enhancetheir infrastructure and reduce spending.They also believe that by establishing acloud co puting ecosyste within thecountry, they will be able to generatemore business opportunities and evencreate export opportunities for theirservices.


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Australia is expanding the whole of government approach to the cloud.

The Australian Taxation Of ce (ATO)has oved eTax, electronic lodge entsyste (ELS) and tax agent boardad inistrative support syste s intothe cloud.

The Australian Bureau of Statistics hasimplemented a virtualisation solutionto enable transition to a private cloudenvironment.

The treasury or ATO has igratedstandard business reporting (SBR) andbusiness names projects into the cloud.

The Depart ent of I igration andCitizenship (IMMI) initiated a proofof concept for the provisioning of anend-to-end online client lodgementprocess on a cloud platfor .

The Australian Mariti e Safety Authority has i ple ented a publiccloud for SaaS and PaaS deploy entsfro www.salesforce.co .

The Depart ent of I igration andCitizenship (DIAC) has i ple enteda hybrid cloud for IaaS as a proof ofconcept. 8

West Australian Health hasadopted for a private cloud for IaaSdeploy ent. The data centres areexpected to be co pleted in April andJune 2011.

China is leveraging cloud computing totransform the city of Dongying.

Cloud adoption in the public sector inChina is being driven at a local level incities such as Dongying and Wuxi. The Yellow River Delta Cloud Co puting

Centre, built by IBM will provide thefollowing:

Cloud-based platfor for thepetroleu industry to develop oreinnovative application services

Software develop ent and testresources through the Internet, tostart-ups and other companies thatestablish their presence in the city

An eGovern ent Services Platforfor the Dongying econo icdevelopment zone

In the City of Wuxi, the govern ent hasdeveloped a cloud services factory to

provide adequate co puting resourcesto the enterprises located in thesoftware park. 9

Future plans include i ple enting acloud based solution and enabling smartroads and a s art airport based on dataanalytics. In addition, healthcare servicescan be oved to the cloud as part of theplan to centralise patients records andmake them available to doctors online.

Hong Kong governments new IT strategy for 2011 focusses on cloud.

The government is taking a cautiousapproach toward deciding theareas where cloud computing willbe implemented in order to ensurethat data security and privacy areaintained. Use of cloud is beingevaluated in the following areas:

- Use of cloud co puting forsharing infrastructure, softwarecomponents and data

- Adoption over a period oftime rather than a big bandtransfor ation

8 Frost & Sullivan Market Insight 2011 State of Cloud Computing in the Public Sector A Strategic analysis of the business case and overview of initiativesacross Asia Paci c



- Collaboration and communication,internally between depart ents

and with citizens to have theaxi u potential with a shift tocloud technologies

The government plans to use privateclouds in the initial phase to augmentcapabilities. The private cloud aynot be hosted in a government datacentre, but be an outsourced privatecloud, where the government hasco plete knowledge of the location ofits data 10.

Japan to tap government potentialthrough the Kasumigaseki cloud.

In 2009, the Japanese governmente barked on a signi cant cloud initiativeas part of its Digital Japan CreationProject, dubbed the ICT Hatoya a Plan.

The cloud initiative, Kasumigaseki cloud,ai s to do the following:

Establish a large cloud computinginfrastructure to eet the increasingrequire ents of the govern ents ITsyste s.

Save costs and consolidate the ITinfrastructure is expected to ake

operations ore environ ent friendly. Bring greater ef ciencies though a

shared pool of resources, therebyeliminating the need to maintainseparate IT syste s for differentministries

Digitise govern ent docu entsand other popular infor ation, andintroduce standardised for ats andmetadata to improve public access inthe National Digital Archive project.

The Kasu igaseki Cloud is expectedto be co pleted in phases by 2015.


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The South Korean governmentinvesting in cloud to drive ICT industry

competitiveness.South Koreas co unicationco ission has allocated about US$500illion for the develop ent of KoreanCloud Co puting (KCC) facilities.This has been set up to garner 10% ofthe global cloud computing marketand reduce 50% in public sectors ICTspending by 2014.

KCC has partnered with the Ministryof Knowledge Econo y and theMinistry of Public Ad inistration andSecurity for the creation of cloud-based

IT infrastructure that supports thegovern ent as well as the ICT industry.

The South Korea government has alsobeen involved in the Electronics andTeleco unications Research Institutein the Open Cirrus collaborative cloudcomputing research programme.

Governments in other countries are eitherevaluating or taking a cautious approach. Philippines lacks a central authority

to develop standards and this isaffecting cloud adoption.

The Vietnam government iscollaborating with IBM to pro oteadoption.

Lack of infrastructure and lowawareness levels are inhibitingadoption in Indonesia.

The Singapore government ispromoting cloud computing throughsubsidies.

The Thai government is starting totest cloud services for long-ter use.

The Malaysian government iscreating the right environment topush cloud services.

The Taiwanese government isinvesting signi cantly in cloud

services. In case of India, security concerns arehindering adoption.The Indian govern ent is yet to announcea for al cloud strategy and there has been very li ited adoption of cloud co putingeven at state level. This is largely dueto the security and privacy concerns ofproviding control of their critical data tothird-party service providers.

A ong states in the country, the Ja uand Kashmir state government has beenthe rst to adopt cloud co puting for its

e-governance services. The government,using the state data centres based out

of Madhya Pradesh, is provisioninge-governance services such as issuing

death or birth certi cates and tradelicenses through the cloud. Thegovern ent uses Microsofts solution toimplement cloud computing.

Despite low adoption levels, there is asigni cant interest a ong agencies andthe Depart ent of IT in India to pro otecloud co puting across the country. According to analyst r IDC, the cloudco puting arket in India is expectedto grow at a CAGR of 40% by 2014, froan esti ated US$66.7 illion in 2009.Main drivers include cost reduction andperfor ance ef ciency.

Value proposition of cloud co puting in public sector

Source: Frost & Sullivan

Reduction in ICTSpending

By adopting cloud co puting, govern ent agencies can create acentral pool of shared resources software and infrastructure. Theconsolidation of resources and the fact that cloud co puting isore cost effective, leads to reduction in ICT spending.

Agility Govern ents operate in a strict hierarchical anner and the pro -cess for approvals and purchase orders is a ti e consu ing activity.

Cloud co puting provides the capability to eli inate these ti econsu ing activities and provision resources on the y.

Access to MostUpdated Technology

Cloud co puting offers the govern ent the ability to constantlyhave access to the ost updated software and hardware. The onusof upgrading technology is on the service provider in this deliverymodel who ensures access to the most up-to-date solutions.

Eli ination ofProcurement &Maintenance

Another key advantage is the eli ination for the need to procure,onitor, and aintain IT resources. This too is the responsibility ofthe service provider under the delivery odel. Apart fro reduc -ing the workload, this reduces the need for IT staff and allows thegovern ent/agencies to focus on their core areas of work.

Universal Resource Access

Cloud computing is delivered through the Internet enabling universal access to resources. Further ore, it helps the govern ent inestablishing a co on platfor for all its eGovenance initiatives,

one that is easily accessible by the citizens as well


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Adopting cloud computing in thepublic sector: Implementation

challenges Lack of awareness about cloud across

various government departments atlocal, central and state levels

Lack of well-de ned cloud strategyand roadmap

Data privacy and security concerns

Legal co pliance issues

Legacy syste s

Co puter literacy

According to the Global State of

Infor ation Security Survey 2010,following are the pri ary concerns facinggovern ents when they ove to a cloudco puting environ ent:

Lack of ability to enforce securitypolicies as a cloud provider

Inadequate training and IT auditing

Questionable privileged access controlat the provider site

Dif cult data recovery

Proxi ity of one co panys data tothat of another co pany

Inadequate ability to audit theprovider

Transparency and equity of pay-as- you go billing odel 4


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ConclusionChapter 05

During external and internal co petitivepressuresm m m - m m m . 5 $

pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $

pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $pressuresm m m - m m m . 5 $


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Notes


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About CII

The Confederation of Indian Industry (CII) works to create and sustain anenviron ent conducive to the growth of industry in India, partnering industry

and govern ent alike through advisory and consultative processes.CII is a non-govern ent, not-for-pro t, industry led and industry anagedorganization, playing a proactive role in Indias develop ent process. Foundedover 116 years ago, it is Indias pre ier business association, with a directe bership of over 8100 organizations fro the private as well as publicsectors, including SMEs and MNCs, and an indirect e bership of over 90,000co panies fro around 400 national and regional sectoral associations.

CII catalyses change by working closely with govern ent on policy issues,enhancing ef ciency, co petitiveness and expanding business opportunitiesfor industry through a range of specialized services and global linkages. It alsoprovides a platfor for sectoral consensus building and networking. Majore phasis is laid on projecting a positive i age of business, assisting industry toidentify and execute corporate citizenship progra es. Partnerships with over120 NGOs across the country carry forward our initiatives in integrated andinclusive develop ent, which include health, education, livelihood, diversityanage ent, skill develop ent and water, to na e a few.

CII has taken up the agenda of Business for Livelihood for the year 2011-12.This converges the funda ental the es of spreading growth to disadvantagedsections of society, building skills for eeting e erging econo ic co pulsions,and fostering a cli ate of good governance. In line with this, CII is placingincreased focus on Af r ative Action, Skills Develop ent and Governanceduring the year.

With 64 of ces and 7 Centres of Excellence in India, and 7 overseas of ces

in Australia, China, France, Singapore, South Africa, UK, and USA, as well asinstitutional partnerships with 223 counterpart organizations in 90 countries,CII serves as a reference point for Indian industry and the internationalbusiness co unity.


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About PwC

PwC r s help organisations and individuals create the value theyre looking for.Were a network of r s in 158 countries with close to 169,000 people who are

co itted to delivering quality in assurance, tax and advisory services. Tell us what atters to you and nd out ore by visiting us at www.pwc.co .

In India, PwC (www.pwc.co /India) offers a co prehensive portfolio of Advisory and Tax & Regulatory services; each, in turn, presents a basket of nelyde ned deliverables. Network r s of PwC in India also provide services in Assurance as per the relevant rules and regulations in India.

Providing organisations with the advice they need, wherever they ay belocated, our highly quali ed, experienced professionals, who have soundknowledge of the Indian business environ ent, listen to different points of viewto help organisations solve their business issues and identify and axi ise theopportunities they seek. Our industry specialisation allows us to help co-createsolutions with our clients for their sector of interest.

We are located in these cities: Ah edabad, Bangalore, Bhubaneshwar, Chennai,Delhi NCR, Hyderabad, Kolkata, Mu bai and Pune.

Partha KunduPwC - Executive Director / PartnerDirect: +91 (33) 44044298 | Mobile: +91 (0) 9830017065E ail: [email protected]

PricewaterhouseCoopers Private Li itedPlot No. 56 & 57, Block DN, Sector V, Salt Lake | Kolkata 700091 | India

Dilraj Singh GandhiPwC - Principal ConsultantDirect: +91 (124) 4620272 | Mobile: +91(0) 9818215814E ail: [email protected] Private Li itedBuilding 8, 7th & 8th Floor, Tower B, DLF Cyber City, Gurgaon 122002| India

Contacts


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