How Mumbai uses SAP to make sense of city chaos

An IT head of one of the world's biggest cities has warned organisations considering big business software roll-outs to expect potential turmoil if they don't plan their projects carefully.

Mumbai city council, the Municipal Corporation of Greater Mumbai, has to manage the needs of at least 12.5 million registered citizens, not counting the many millions of inhabitants of no confirmed abode who flock to the city for work from the rest of India.

Adding to the severe daily bustle and the permanent traffic jams in the city is the fact that 5 million people come into the centre of the city and leave it every day on the suburban train system.

Mumbai is an established user of SAP business software to help manage its various taxes and revenues, covering transport of goods taxes, property taxes, water taxes and charges for other council services levied against its citizens and businesses. It also uses SAP to help manage its large budgets, including an annual IT software, hardware and IT services budget of around $25 million.

That IT budget may not sound that high for a city of Mumbai's size but one has to remember that the city pays lower Indian prices for the IT it needs. Mumbai also says it intends to become a "full SAP house", adopting all the functionality it can activate and deploy with its existing SAP business software platforms.

Mahesh Narvekar, Mumbai's director of IT, talking to an international SAP Labs press tour in the city earlier this month, said, "Our biggest problem is our floating population and the lack of town planning that is possible as a result - there are 400 different families entering the city every single day, and many of them have set up home on the side of the road."

Narvekar said the city's $4 billion annual revenue was supported by SAP ERP and CRM business software and other sourced integrated software linked to a SAP business portal. He said, "We are now moving to a 100 percent SAP supported system using all the features that are available to us."

His deputy, Rajendra Phanse, assistant manager of IT at Mumbai, told, "We have 60 departments and it is they who are ultimately responsible to make sure the SAP modules we make available to them fully work for their needs."

Phanse said his department made this easier by making sure common software requirements were established for the council, and customising the SAP software as little as possible.

He said, "You have to study the best SAP practices that are already available and minimise customisation - as when the next upgrade is available for the software you have to customise again!

"For any new deployments you also have to make sure you have your data ready - your master data and your customisation data before even thinking about aligning your system."

Other considerations, said Phanse, included not only assessing software license costs but also the costly requirements of actually making the software work.

These included "huge" hardware upgrade costs, taking account of potentially high connectivity costs for bring your own devices (BYOD) and possibly expanded network capacity too.

Phanse, who has worked in Mumbai's IT department for 20 years, added that training costs for new ERP functionality were also "high", but that the complexity involved in achieving the extra functionality was worth it.

Phanse said SAP was a "good choice" for the council over other ERP alternatives as "90 percent of the functionality we need was already there", as opposed to the "only 50 percent ready products" from other suppliers, which "would require more programming".

Unlike many organisations who are allocated a total budget to deliver widespread IT requirements, and left to get on with it as they choose, the 33-strong Mumbai IT team have to pitch for a project by project budget on top of staffing and other basic costs. And money handed over only comes after the council considers whether previous standalone projects have been successful or not.

No annual budget increases are added automatically, it is always itemised and has to be passed by both the council finance committee and the full council. This process can be seen as more financially efficient as it usually avoids budget surpluses and money being spent just because it has to be as it will taken away by the central account if it isn't.

The last five years have seen Mumbai invest in a new data centre, continuous SAP deployments, and the first investments in a new geographical information system (GIS) to support the city's flood defence systems. Phanse said future projects could include new data storage platforms, updated client systems, and wider mobility programmes.

Mumbai also plans to bring in a new IT consultant after its contract with Tata Consultancy Services came to an end in 2010. It now plans to bring in PriceWaterhouseCoopers to help with its IT roll-outs.

The complexity of using SAP business software systems was confirmed by another major Indian customer on the SAP press trip.

Journalists were flown up country from Mumbai to visit the country's very important Gujarat Co-operative Milk Marketing Federation (GCMMF), which was formed out of a dairy farmers' resistance against British control of the country's milk industry, as part of the national independence movement against British rule'.

India is the world's biggest producer of milk, contributing 25 percent of the world's total. The GCMMF alone contributes 3.5 percent of the world's total through its Amul brand of hundreds of dairy-based goods that are exported across the world. But the Amul brand is little known in western Europe as the European Union bans milk products that use milk that is not produced with milking machines. A large percentage of Amul milk is hand-milked.

Most of the 3.2 million dairy farmers who are part of the co-op - many of whom only have a few cows or water buffalos - cannot afford milking machines so are excluded from Western European markets.

Kishore Jhala, GCMMF chief general manager, said of the organisation's SAP system - used to manage the production of those 3.2 million farmers, "SAP is a very dangerous system, as a workaround to a problem is usually not possible. There is only one way to solve a problem - the one set down by SAP, and rightly so - but sometimes it's hard to convince people in the organisation that this is the right way."

Jhala said the speed and transparency offered by the system made up for the lack of any perceived flexibility in SAP platforms.

RS Sodhi, managing director of the GCMMF, said, "Every morning I can get out my iPad and check the production and sales figures that I want, when before it would take two to three days, or sometimes the data would not be available at all."

As well as the inflexibility of some aspects of SAP, the GCMMF was also scathing of some of its competitors in the food industry and the subsidies they enjoyed through a western government subsidised milk industry.

Sodhi said, "The likes of Nestle, Tesco, Danone and Wal-Mart are the ones who benefit from milk subsidies, when our co-op receives no subsidies at all.

"It isn't European dairy farmers benefitting from those subsidies as they are now receiving far less for their milk from the ones they sell it to, while our farmers are receiving far higher prices for what they produce."

A SAP representative on the tour light heartedly refused to comment on that statement, as "some of those other companies are our customers too."

Photograph of Mumbai’s Gateway to India by Rhaessner

Copyright © 2012 IDG Communications, Inc.

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