SAP® Customer Success Story Tata Motors “SAP has a clear superiority in the market. It has a large presence and good support, so we chose the SAP ERP Solution for our company. The results have definitely exceeded our expectations” Probir Mitra, CIO, Tata Motors. AT A GL ANCE Company Name n Industry n Product & Services n : Tata Motors Limited : Automotive SAP® Solutions & Services TATA MOTORS SAP® ERP helps Tata Motors to serve their customers better and faster SAP® ERP Solution Version 4. 6 : Commercial vehicles and passenger vehicles n Employees : 24,000 n Website : www. atamotors. com n Implementation partner : Tata Technologies and a little bit of consulting organized by SAP India. Implementation Highlights n n Time frame: 2 years Users: 3500 Why SAP n Challenges & Opportunities n Replacement for homegrown legacy systems n Build a single location-independent integrated enterprise n Richer quality of data and real-time access to database It was the clear leader in the market for such solutions n It was the best package available for automotive industry n Multiple functionalities were covered
Benefits n n Objectives n Rationalize business processes across all manufacturing units n Improve efficiency by reduction in effort-duplication n Reduction in operational costs n Reach and respond to the customer rapidly Enterprise integration Financial benefits of reducing inventories n Better control of receivables n Significant reduction in time taken for financial consolidation n A single unified database Existing Environment Database : Oracle Hardware : Pre-dominantly IBM with a smattering of HP and Sun Operating System : Unix
Tata Motors Limited, India’s largest automobile company, is the leader by far in commercial vehicles in each segment, and the second largest in the passenger vehicles market with winning products in the compact, mid-size car and utility vehicle segments. The company is the world’s fifth largest medium and heavy commercial vehicle manufacturer. Established in 1945, Tata Motors’ presence indeed cuts across the length and breadth of India. Close to 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954.
The company’s manufacturing base is spread across Jamshedpur, Pune and Lucknow, supported by a nation-wide dealership, sales, services and spare parts network comprising over 2,000 touch points. Their annual turnover last year was Rs. 27,000 crores. The company’s 24,000 employees are guided by the vision to be best in the manner in which they operate, best in the products they deliver, and best in their value system and ethics. They became the first company from India’s engineering sector to be listed in the New York Stock Exchange in September 2004.
They have several international collaborations and acquisitions including Daewoo of Korea and MarcoPolo of Brazil. Tata Motors and the Fiat Group have recently signed a Memorandum Of Understanding to establish an industrial joint venture in India to manufacture passenger vehicles, engines and transmissions for overseas markets. “SAP has a clear superiority in the market. It has a large presence and good support, so we chose the SAP ERP Solution for our company. The results have definitely exceeded our expectations,” Says Probir Mitra, CIO, Tata Motors.
Before implementing the SAP ERP Solution, there were several homegrown applications that managed all of the company’s IT requirements. Since they were developed over long periods of time, they were on multiple platforms and hence difficult to merge. The biggest drawback of the legacy applications was that they were function and location specific and were built on local and individual perception of needs. Common and rationalized processes and practices across all organizational units were not enforced.
Therefore, managing functions like HR, sales and finance across three manufacturing units spread across the country and their corporate office was tedious and time-consuming. Integrated functions like materials management and payment processing were separate entities, causing delays in individual transactions. This led to unnecessary increase in overhead costs and duplicated efforts at each unit. Tata Motors soon understood that the need of the hour was a unified real time database that gave up-to-date information to all their stakeholders – both internal and external.
They had to move from their legacy decentralized platforms into a consolidated enterprise platform and rationalize the business processes across the various units. This would give them an enterprise perspective both across process and IT infrastructure. The company could then serve their customers much better and faster, even while reducing operational costs and cutting manufacturing cycle times. They decided to go in for the SAP ERP Solution, which provided them all the answers and much more. The SAP Solution would enable them to improve business continuity by unifying the database and functions across the country into one single entity.
It would no longer require any location-specific expertise and thus be much easier to maintain. With the SAP solution, customization and upgradation costs could be lowered. Risks, which emanate from attrition or change of guard in the company, would also be minimized. Implementation of the SAP ERP Solution. Tata Motors outsources their IT to Tata Technologies, which is their 100% subsidiary company. So Tata Technologies became their implementation partner. SAP India also organized some consulting for them, which had consultants from both India and abroad.
In 1997, when the seed of implementation was sown, the WAN infrastructure in India did not permit a single server implementation. Hence a distributed server implementation was done in stages over a period of two years between 1998 and 2000. The version used was 3. 1H. In August 2003, they moved over from SAP 3. 1H to SAP 4. 6C on a single server platform. There are 3500 users across the country. Once SAP was implemented, rationalization of several processes was done extensively. Various business processes like materials, finance, logistics, etc. were stripped down to their asic components and a lot of re-engineering had to be done, as all these processes became location-independent. Tata Motors also opted for the standard cost functionality, which was a significant business process change for them. Benefits prices we offer, etc. very easily. It brought a synergy in purchasing by strategically sourcing critical components for the entire organization. This resulted in strategic partnering with vendors with volume discounts,” says Mitra. “With the Company being listed in the New York stock exchange, SOX compliance becomes mandatory.
Without SAP, SOX compliance would have been extremely difficult with the large and fragmented spread of legacy application. ” adds Probir Mitra. With the SAP ERP Solution in place, Tata Motors has experienced significant benefits in productivity and cost control. The number of servers as well as the number of different applications run on them has been greatly reduced. The disaster recovery management is being done only for one entity rather than for every application. Non-value-add activities have been lowered. The implementation of a single SAP instance forced a much required change in the organization.
A BPR to achieve uniform processes with business users talking the same language was the outcome. There is a significant reduction in inventories and better control over receivables and other credit control. A shared services platform has also been created for IT and shared financial services. Currently, they are exploring the possibility of a shared services platform for HR too. There has been a reduction of almost 2 weeks time in financial consolidation. The statutory compliance of quarterly closing of books and audit has been very largely facilitated by SAP. Compliance has thus now become more structured and easier to manage.
The speed and granularity of cost data availability is a big improvement. The richness of analytical data using BW has provided enormous benefits. SAP® SRM has provided a seamless integration with vendors. The biggest benefit has been the large unified database for the entire enterprise. “Now anyone across the enterprise can just look in and find out what customers we have, who are our suppliers and vendors, what SAP Solution has helped Tata Motors serve their customers better and meet all their needs. Since information is now on a real-time mode, they are able to quickly respond to their customers, vendors and suppliers demands. Previously, we had to pick up data from four different locations and then consolidate them before you could update your customer. Now, we have up-to-date information about the customer right up to his last transaction,” says Mitra. Future Plans Tata Motors is now a satisfied customer of SAP – they have the largest deployment of the SAP Solution in the automotive industry, considering the spread of functionalities they use. They are keeping abreast of all the new developments and ensure that the applications they run commiserates with the SAP enhancements.
They would definitely choose SAP for their future plans too. “Our experience with SAP has been very good. We are consistently looking to add new functionalities to our existing suite of coverage,” says Mitra. Tata Motors has been able to achieve enterprise integration, a high productivity gain and also build a stronger, enduring relationship with its customers, thanks to the SAP ERP implementation. Thus, the company has not only retained its leadership in India but has also been able to enlarge its footprint in the global automotive industry. www. sap. com/contactsap
