On a Cloud ERP

On a Cloud ERP

“The ethos in an information technology (IT) services company and a software products firm are poles apart. At services companies, one thinks about how to get more work from a customer and keep servicing that client further. In a products company, you think about how to make your product so good, a customer does not call you,” says P.R.Venketrama Raja, vice chairman, managing director and CEO of Ramco Systems (Ramco). This is not a one-off observation Raja has made about this industry. Ever since he started Ramco back in 1992, as a small research and development division of Ramco Group, he has been a keen observer of the IT industry and has been able to predict the trends.

It was this insider’s view that we were interested in, particularly in understanding Raja’s take on cloud computing. In the past, The Smart CEO had featured a cover story on software-as-a-service. We spoke about the opportunities in the space and what startup entrepreneurs and venture investors thought about the sector. But, the mandate for that story did not include understanding how a large IT products company should revamp its strategy to tap into the opportunities that cloud computing presents.  In this article, Raja talks about Ramco’s cloud computing strategy and the need to increase the awareness among customers to make the adoption of cloud computing successful in India.

Raja’s thoughts on leadership:

“I think you should have the ability to read the long-term signals in the market. Your people are investing their lives with you. You need to tell them what the end goal is and give them the belief that there is always a chance of reaching that goal.”

Building a foundation

Tracing back to the beginning, Ramco’s first ERP tool was launched in 1994 and in about two years it became the company’s marquee product.  Raja believes that, today, Ramco’s ERP product is as sophisticated as SAP R/3 (now called SAP ERP), the global market leader in the space. Over the years, Ramco has served over 1,000 customers in 35 countries. Over one-lakh users from multiple industries have used the product to enhance resource utilisation and improve efficiency. Ramco’s unique selling point has been the architecture and framework that went into creating this product.

Ramco VirtualWorks™ – as the framework is called – is the underlying engine of the ERP tool. It is based on business process models that help client companies make feature enhancements and business process changes with utmost flexibility. From clients in the financial services industry to manufacturing companies – the ERP tool deployed at all these industries use the VirtualWorks™ platform. Raja is convinced the framework has been crucial to Ramco’s success till date. He says, “It allows us to role out new features with smaller teams and greater flexibility.”

Raja is now betting on a cloud computing strategy. He wants to move “each and every module of the standalone ERP tool” into the cloud. Ramco OnDemand, as the product is called, he believes, will be a game-changer for the company. After its launch in early 2010, the company has rolled out and implemented an aggressive marketing strategy to sell its cloud product to clients in the Indian market.

The cloud strategy

Over 80 per cent of the features in the standalone ERP product is available in the cloud offering. Raja says, “We will have to fundamentally rethink user experience as we move to the cloud. My belief is even small and medium sized companies (SMEs) should use sophisticated ERPs. A stripped down cloud software is certainly not the best way to automate.”

Consciously, Raja has pushed for the full-blown product to be available on the cloud. A variety of industries – from aviation to financial services – can use Ramco OnDemand. The product can be rolled out for use in almost less than a week, while a similar implementation of a non-cloud solution can take months.

From a technology standpoint, Raja believes, Ramco is in a comfortable position. He is now focusing on customer education, increasing awareness about the benefits of a cloud ERP solution and building the support ecosystem. Over 270 customers in India are currently on board. “We are focusing on hitting 1,000 customers over the next 18 months,” adds Raja.

Current customers in India vouch for the benefits that cloud computing offers. From reduced capital expenditure to more efficient operations in the IT administration department – there is more and more business that is coming in from existing customers. Birla Tyres, a current Ramco customer, initially moved their sales, distribution and dealer management operations to Ramco OnDemand. It also wanted to integrate analytics and business intelligence tools by gathering data from other systems. Raja believes that the speed, flexibility and cost-savings from the Ramco solution are now prompting them to move the whole system into the cloud.

Increasing awareness

Raja says, “The number one focus for me today is educating a prospective client on the benefits of cloud computing, in general, and Ramco OnDemand, specifically.” He is probably right. Today, several SMEs in India are going the traditional software way simply because no one has educated them about the benefits of cloud computing. Entrepreneurs still think it is a “buzz word” and software services and consulting companies do not recommend cloud options since it affects their own business. Raja says, “Logically, I am convinced cloud is the way forward.” Now, he is working on explaining this logic to prospective customers.

While Ramco OnDemand is a fairly mature product today, as business scales, support and implementation groups will continue to grow. For the full-blown product with all features, Ramco OnDemand costs Rs. 5,000 per month, per user. Based on data gathered from current product rollouts done by Ramco, cost-savings for customers are phenomenal compared to implementing a non-cloud standalone ERP. The process of upgrading the software and maintaining the software is easier as well.

Later this year, the company will launch its ERP to work on tablet computers. Today, most of its customers come from the Indian market, and it is exploring the idea of forming alliances to push the product in global markets.

With Indian companies now ready to automate and better organise their IT departments, the market is certainly ready. Ramco’s brand name coupled with its ability to make a mark with its early customers is certainly giving it an edge. On a parting note, Raja says, “If we can execute well, we can be a dominant player in the cloud ERP space. As someone driving this effort, the intent and strategy is clear. We will have to continuously make adjustments to that strategy and give ourselves a chance of reaching that end goal.”