How Tata Power Trading Achieved a Sustainable Business Model Using the Cloud

IDG News Service - The power trading market is one where electricity is traded as a commodity, and Tata Power Trading Company (TPTC) is one of the major players in this space. A wholly-owned subsidiary of Tata Power, TPTC acts as an intermediary between the consumers--state electricity boards, in this case; and the suppliers--a power generating company or a captive power generator, for instance.

Power trading business is unique in that while the revenues generated are massive, the profit margins are much lower. Ujjal Kumar Ghatak, CIO, Tata Power, sheds more light on this anomaly.

"Tata Power Trading, a company with a work-force of around 35 odd employees, makes annual revenue of around Rs 2,000 crore, but has a comparatively much lower profit margin of only around Rs 14 crore," he informs. Business Case Before TPTC implemented a CRM solution, customers used to contact the company over phone, e-mail or other means and state their requirements. Based on the amount of power to be supplied, a suitable client proposal would be generated using SunGard ZaiNet--a risk and trading solution that was implemented back in 2009 and was hosted on Tata Power's private cloud.

This quote would later be sent back to the client, and after their approval, the power scheduling, dispatching, and billing processes would be initiated. This process was predominantly time-consuming, and manual intervention made it highly error-prone as well. Even though TPTC had not experienced instances of an error causing severe losses, Ghatak wanted a fail-proof system to make sure no avenues for revenue loss were open. This would also help the organization stay ahead of the curve in the power trading sector.

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Given this scenario, Ghatak realized it would be impractical, as well as financially unviable to develop an internal IT infrastructure for the power trading company. Also, he recognized that as the TPTC business would grow over time, its business processes needed to be streamlined as well. The best way to achieve this goal was with the help of cloud computing. The cloud fit TPTC's bill perfectly as there wouldn't be any upfront costs to be paid. Solution Ghatak understood the importance of ensuring TPTC had the most optimum IT solutions in place. Starting from 2009, when the decision was taken to host the SunGard ZaiNet on the private cloud, to moving to the public cloud to avail Salesforce.com's CRM solution in 2011, he made sure that the power trading company's operational efficiency increased, while at the same time, the overall costs involved in setting up such implementations were kept to a minimum.

"The power trading business is highly dependent on IT," states Ghatak, emphasizing the importance of IT in the sector. "Users cannot survive without IT which is 100 percent required for daily operations. If tomorrow ERP (systems) such as SAP doesn't work, they won't be able to carry out the billing and collection processes."

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Benefits to TPTC Opting for a cloud CRM solution has helped TPTC streamline its business processes. TPTC's customers can now log online with the required credentials and place their requirements through the Salesforce.com app. Moreover, with Salesforce.com, TPTC doesn't need to worry about the app's availability, because even if the app goes down suddenly and unexpectedly, Salesforce.com's backup instance would be up and running. Also, implementing the SunGard ZaiNet solution helped TPTC re-deploy resources who were earlier involved in the manual calculation of risk and other related calculations to other areas.

By adopting the cloud to streamline business processes, Ghatak brought in an IT system that would play to the unique features of the power trading business and aid in keeping pace with the organization's growth. Since the public cloud model involves no capex and Tata Power is providing for the private cloud, all the necessary payments are now made from the profits that TPTC makes, and thus, the business model for the power trading company has been made sustainable.

Eric Ernest is a correspondent for CIO India and ComputerWorld India. Send your feedback to eric_ernest@idgindia.com.

To meet the requirements of working in a unique environment such as those that existed in the power trading business and to accommodate its future business needs, the Tata Power Trading Company chose to streamline its business processes using cloud technology. Here's how its CIO, Ujjal Kumar Ghatak did it.