Emerson Network Power was recently ranked as one of the leading innovators in the usage of information technology. Srikanth R P finds its Indian subsidiary following the parent company’s footsteps

Thanks to Emerson’s e-procurement initiative, savings are expected to reach $100million over the next five years, says R S Nalakumar

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In the current economic scenario, the role of the CIO has increased in prominence. The investments made in information technology too have been increasingly coming under the scanner. While some organisations measure the return on investment (RoI) of a particular technology or application in absolute terms, there are others that have the maturity to see beyond the usual RoI jargon and take into consideration other non-tangible benefits too.

One such organisation is Emerson Network Power (India) which looks at every investment made in IT in terms of both tangible and non-tangible benefits over the long term. It is this outlook which has made the organisation completely different from other companies where visions get clouded by short-term gains.

Says R S Nalakumar, Corporate Champion-IT & e-business at Emerson Network Power (India), “In a country with a workforce of around 600 million, the manufacturing sector is in need of a serious change in mindset: IT deployment has negative connotations in the minds of most employees. Emerson Network Power (India) has consistently maintained that the ideal manufacturing environment consists of combining technological advances with strategic management insights to attain a company’s goals and potential. The primary reason why we do not categorise an individual IT investment amount is because the RoI is so tremendous that there is no way we can tag an amount to it. Most organisations calculate RoI in monetary terms, but Emerson Network Power (India) practices a measurement of the non-tangible benefits too, which in our nine years of Indian operations actually has a more tangible result than other calculations.”

It is due to this strategic outlook towards IT that Emerson Network Power is considered to be one of the best users of information technology today. Take the recent InformationWeek survey, which ranks Emerson as one of the leading innovators in the usage of information technology.

Integration is the key
Right from the beginning, the company’s focus was to integrate all the key departments and move all disparate departments to a single application. To do this, the company first implemented an Indian ERP system called COINCAP. But, as business volumes grew and new business segments started emerging, the company decided to go in for QAD’s MFG/PRO ERP system—considered to be the best ERP system for manufacturing companies—in the year 1999.

The MFG/PRO system integrates all the departments together and all the various departments share a common centralised database. As all the departments refer to one common database, there are no duplication or reconciliation issues.

Additionally, the system helps the management to monitor online the progress of sales and inventory. Further, all service calls are consolidated with online escalation models, enabling the management to take actions on a pro-active basis rather than a reactive basis. The ERP system has also reduced communication costs by a great extent since the same information is available to all users.

Currently, VSATs are used for connecting all the primary eight locations, while all second level locations are connected using ISDN and VPNs. The same network is also connected to the Emerson global network. A decision support system runs on top of the ERP system to provide need-based MIS reports to the management. This system is currently used for sales and the company has plans to use it for inventory and finance.

One more key initiative the company has taken is to share centralised hardware resources across all countries using Citrix to protect current investments and reduce the time taken to change to newer technologies.

MIN—material information network
While the ERP system and other IT systems have paid huge dividends to the company, in terms of cost savings and innovativeness, nothing comes close to the e-procurement initiative taken by the company.

Explains Nalakumar, “Emerson’s Material Informa-tion Network (MIN) is the company’s global e-procurement initiative. Emerson Network Power (India) introduced this application in June 2002. Initiated in 1996, 60-plus Emerson divisions are being included across seven stages with the Indian subsidiary on board at stage seven. MIN optimises information flow with technology to co-ordinate purchase decisions across divisions. Savings are expected to reach $100 million over the next five years.”

Other than the savings that Emerson gets from dynamic pricing, the company also gets the advantage of procuring the goods faster. To achieve the full benefits of the e-procurement initiative, the company is following a data validation process wherein it classifies all its purchased items based on a common coding system. All suppliers are also being linked to a unique Dun & Bradstreet DUNS number. As all the data is labelled using a common coding system, Emerson can compare the prices of any component with global counterparts and common orders can be leveraged to drive a buyer’s market. Another advantage is better use of existing inventory by identifying demand in counterparts for overstocked parts and exchanging these internally. In the days to come, this can prove to be a big area of cost savings for the company. The MIN program is especially important in the current scenario, as it will help compensate for lower revenue growth and price deflation in a recessionary market.

Knowledge management
Emerson has also invested substantially in knowledge management, which it believes will play a huge role in its future growth. In line with this vision, the company has implemented a document management system, which captures all the information from various departments. There is also a provision to document knowledge derived from day-to-day operations of all employees and store it in an easily accessible manner over the intranet. To encourage employees, Emerson is looking at initiating a non-monetary reward system for employees who actively contribute to the knowledge management system.

Future
With the basic systems in place, the company is actively looking at adding applications that can enhance productivity and efficiency. The company is also in the process of launching a human resource management system that will help the organisation to regularly update records of all employees. For example, information such as skill sets of employees can be captured and accessed quickly. The same system can be used to monitor performance of any employee. The same concept can be extended and the company can maintain training requests linked to training needs generated out of the performance monitoring systems.

Going forward, the company has plans to develop an intranet for its business partners to access key case studies and troubleshoot their problems.