Evolution: Enabling Tata

EVOLUTION
Enabling Tata

An equal measure of new-e ventures and internet-enabled old-e ones constitute Group Tata's response to the Net.

Roshni Jayakar

This elephant isn't just trying to dance; it's trying to do the samba. If things go well, the Rs 35,000-crore Tata Group will end up being as net-savvy as, well, Marc Andreessen. One of the men behind the wheel of the country's largest group's expedition into the wild wild web is 48-year-old R.R. Bhinge, whose business card reads CEO, Tata Management Services. Since February, 2000, Bhinge has made three presentations on the best way to leverage the Net to the group's Chairman Ratan Tata, and the Group Executive Office (geo), comprising R. Gopalakrishnan, Executive Director, Tata Sons, Kishore Chaukar, Managing director, Tata Industries, and Ishaat Hussain, Director, Tata Industries. Bhinge's recommendations have been tinged with caution: in May, 2000, when the American media was filled with stories about boo.com going bust, he was attending an executive development programme at the Wharton School. R. Gopalakrishnan, 56, Executive Director, Tata Sons, peppers his explanation of the group's level-headed approach to creating a Net-strategy with e-hyphenations: ''It's not an e-hurricane or an e-tornado... It is a pragmatic strategy-oriented awareness of what technology can do for the business. (It is about) getting companies to start applying these technologies.''

That doesn't mean you'll find a diktat from the geo to the 100-odd companies in the group to get up close and personal with the Net or else... Instead, each company has been left to chart out the specifics of how it will use the Net as a source of competitive advantage-much like, as Bhinge is quick to point out, ge. Still, it isn't hard to pigeon-hole these efforts. For the group's brick-and-mortar companies, it's all about that cliché-e-nablement. For the others, including new companies like Tata Internet as well as existing companies operating in infotech space, the mantra is tapping business opportunities that have emerged, directly and indirectly, from the Net.

In a form of reverse mentoring, Group Tata's tech companies have taken on the responsibility of guiding other companies through the chaos that is the internet. Infotech consulting hot-house tcs provides technology services to other group companies. Details S. Ramadorai, 57, Managing Director, TCS: ''TCS is playing the role of systems integrator or consultant.'' Tata Technologies helps group companies use the Net to their advantage across their business processes. Tata Interactive and Tata Net take care of things like hosting and building b2b fronts. And the infrastructure these companies need to build, is the domain of the Tata Energy Companies (TEC). As Kishore Chaukar, 51, Managing Director, Tata Industries, puts it: ''The skills are resident in various group companies. Why look elsewhere?''

The Net & I: or, there's more to e-biz than e-commerce

Like the country, Group Tata follows a federal governance system. Thus, to borrow a few terms from the Indian constitution, there are central subjects (issues on which the geo calls the shots), state subjects (those on which the businesses do), and concurrent subjects. Increasing profitability and fostering entrepreneurship, for instance, are the responsibilities of the businesses. So too is integrating the Net into business processes.

Thus, Tata Steel has built a steel market space in association with public sector behemoth sail and launched Tata Ryerson Steel Service Centres (a JV with Ryerson & Ryerson, a US-based steel service centre) that connects the company's pro duction schedules to the customers. Explains J.J. Irani, 64, Managing Director, Tata Steel: ''I firmly believe a brick-and-mortar company must use the opportunities and methods offered by the New Economy to improve its existing businesses.''

Another group company, Tata Engineering (formerly TELCO) is doing just that. It uses an internet-enabled Value Chain Management (VCM) module developed by Tata Technologies that has helped it cut inventories and response time. Already, seven out of every 10 of the company's transactions with its vendors happen on-line, at myvaluechain.net, a b2b site developed by Tata Technologies. And Praveen Kadle, 43, Senior Vice-President, Tata Engineering, expects the site to account for all transactions (value: Rs 6,000 crore) with suppliers by 2001.

Sometime this month, once payment gateways are in place, most financial transactions between the company, its vendors, and its suppliers-will go on-line. Also on the anvil (we looked, there is no new-e equivalent for the term) is a proposal to link vendors to the company through a design exchange. This, the company hopes, will help reduce the cycle time involved in component development. Another proposal is to build a customer front-end to the VCM module that will help customers book vehicles, order replacements, or access information on financing options. Tata Engineering's cost-savings from its e-biz drive is in terms of reduction in inventories and transaction costs. Thus its average inventory level has come down from 65 days to 20.

Why, even a company like Tata Chemicals, which operates in as traditional a business as chemicals and fertilisers, has gone tech with a vengeance. Not just in terms of predictable things like linking distributors through the Net, but in using an unique mix of a geographical intelligence system and internet-enabled logistics to up sales. The company has 40 'mother centres', large brick-and-mortar facilities with a warehouse, soil-testing lab, training centre, plots of land to demonstrate the impact of fertilisers and pesticides, and agronomists. The mother centre has access to a satellite picture of the area controlled by it (this picture is updated every 15 days). This picture provides information on the kind of crops grown on land in the area controlled by the centre, and details on the fertiliser and pesticide inputs they need. Thus, the mother centre can anticipate need for a particular product, and through its logistics network, ensure that it is available. Time and place, says an executive at Tata Chemicals, are everything in the agri-inputs business: ''Urea sells 80 per cent in two 15-day periods separated by six months. So, if you are not here in those 15 days you lose out.'' The impact of Tata Chemical's mother centres? The sales of urea has increased by 42 per cent; that of pesticides has doubled.

Indian Hotel's transition to internet-enabled Valhalla was easier: the company operates in the hospitality space and could benefit from things like on-line bookings and alliances with travel sites (a big thing on the www). However, it hasn't ignored the back-end: it is building a Wide Area Network that will connect all 54 of its properties, something that will cut communication costs from the current Rs 22 crore to between Rs 1 crore and Rs 2 crore. This emphasis on the back-end, says Prakash Shukla, 38, Senior Vice-President, Indian Hotels, is critical: ''...because we believe in using the net not just as a mechanism to generate incremental business, but as a strategic tool.''

The all-new economy: or, opportunities galore

There's no scarcity of companies that want to be access majors in the group. Like Tata Net, a subsidiary of Tata Industries that intends to be an integrated access and content provider in both the corporate and consumer space. The company's Net service will kick off in end-October; it will tap high-margin business models like providing data centre services or serving as an asp (Application Service Provider, a company that uses the Net as a delivery mechanism to provide applications to other firms); and it will operate as a b2b facilitator. It also plans to add two more vertical portals-companies focusing on personal finance and food-to its existing content repertoire of two vortals, travnova.com (travel) and womannova.com.

Tata Internet apart, there are at least 10 group companies in different nodes of the communication value chain. TEC, which powers Mumbai, is in the process of building a broadband backbone in the city, and plans to extend this across the country leveraging the group's presence in other states (like Andhra Pradesh and Karnataka, for instance, where Tata Teleservices and the Birla-Tata-at&t combine provide cellular telephony services). Says Adi Engineer, 62, Executive Director, Tata Electric, TEC: ''We are creating a broadband highway for others to ride, and there's lot of revenue potential in doing that.'' To exploit this potential, TEC proposes to forge alliances with companies that can bring tangibles like last mile access, content, and right of way (row) to the table.

The www also has a transaction end to it and the group proposes to establish a beach-head there too, creating and managing on-line markets (b2b sites and industry exchanges). Explains G. Madhavan, 35, General Manager, Tata Industries, and the man in-charge of Tata Internet: ''We will run five such exchanges-steel, auto, hospitality, retail, and financial services.'' Are there other areas the group plans to tap in its new-found new-e avatar. May be. For Chaukar confesses that ''entertainment and logistics are terrific businesses in terms of opportunities''. His response to queries on whether the group is considering a foray into these areas is a curt ''No Idea''. That could mean yes. Or, it could mean no. There is no telling with the new Group Tata.

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