Innovation Mantra for Ashok Leyland’s Lead: R. SeshasayeeAdded 10th Apr 2009
R. SeshasayeeMD, Ashok Leyland
In a country with one of the largest and busiest rail systems in the world, Ashok Leyland's buses carry more people than the entire Indian rail network. While the commercial vehicle industry grew at 33 percent, Ashok Leyland grew 37 percent. How does it do it? In an industry rife with competition, Ashok Leyland has to imitate the reaction time of smaller, more agile companies. Ashok Leyland stays ahead with innovation. And IT makes that possible. The company stands by five values: being international, speedy, innovative, ethical and value creating and it's IT that helps meet these needs.
- Q.CIO: What is IT’s place at Ashok Leyland?
- Q.How have you optimized your processes and has this had an impact on costs?
- Q.What about innovation? How has it contributed to the organization?
- Q.Does IT help with product innovation?
- Q.Ashok Leyland's unit in Ennore, Tamil Nadu is a model of energy-efficiency. How did the CIO contribute?
- Q.Do tech investments at Ashok Leyland need to prove ROI?
- Q.How does your CIO reinforce your market strategy? Or product development?
- Q.What is ADES and how does it complement your capabilities?
- Q.Ashok Leyland is a leader in defence vehicles. How important is IT to this product line?
- Q.Where does the Indian auto industry rank against its global peers?
- Q.How will new industryspecific technologies make a difference to your processes and products over the next few years?
Full Interview with R. Seshasayee
Obviously, IT is very important to us. To use an automotive metaphor, I'd say that if people were the main engine for movement and growth, IT is the transmission. IT is the system through which the power of people is transmitted into movement - the organization's movement. IT has been pretty important to our set up. Over the last several years, we have evolved our IT architecture from a purely transactionbased architecture - which was our starting point - to a stage where IT is integral to product development and our marketing strategies. IT is totally interwoven into the DNA of the company.
Yes, of course. If you look at the last nine years, there is no doubt that we have achieved cost optimization. We started this journey about 10 years ago when we put together a long-term IT strategy. That roadmap has become integral to the profit plan of the company. Since then, we have had 30 percent growth in production and sales. Return on investments has also moved steadily upwards during this period - without a single year of backtracking. We've had steady improvements year after year on all parameters related to asset and inventory turnaround. This progress has also shown up in manpower productivity analysis. None of this would have been possible without making IT an integral part of our growth strategy. At a sublime level, the results are evident. And, at more specific levels, the use of IT has certainly enabled us to take critical action with regard to inventory - and with fairly impressive results. It has also improved our efficiency in terms of logistics since we have a hundred thousand vehicles moving around the country.
One of the interesting things we have today is a huge program that connects thousands of mechanics directly to us. We are looking at state-of-art-technology using voice recognition, etcetera. With this, we will be able to reach out to a much larger universe of customers - not necessarily direct customers - but indirect ones like mechanics and retailers. That's a part of our innovation, and while we are still studying it, it is most likely to be Web-based technology. Also, we were one of the first few in the industry to have supply chain automation. We have an active portal, which enables all our suppliers to appraise vendor quality for themselves. It allows complete transparency; everybody can access information on the transactions of the company and so on. It's an active portal.
For product innovation, customer connect is very important. We have an initiative that we are currently de ploying, which tracks various customer segments by mapping the use of our vehicles across them. We identify various value driversand capture it on a Data Management Service (DMS). We want to ensure that this data is part of the value delivery process. It's a fairly ambitious project but right now we have completed the first module of the DMS rollout. Eventually, it will morph into a tool for marketing to assess our value delivery.
We have a fairly elaborate process. Most of the manufacturing units have installed networking units for energy meters with an automated system to track and monitor energy consumption. The result is that data is delivered at the shop floor and energy monitoring is interwoven into shop management practices. This is only possible because of instantaneous information.
Obviously, every investment has to have ROI. Before we embark on major initiatives like CRM (customer relationship management) or PLM (product lifecycle management), we assess these investments and forecast their benefits. But I would like to point out that there are quite a few initiatives that - although are subject to ROI assessment today - become mandatory later. For example, today, I don't think anyone can even question whether ERP should be assessed. We don't look at accounting and finance from an ROI perspective. These are the foundations of business. This is part of an evolution, so what was subject to an ROI test 10 years ago is now a precondition for any business strategy.
Broadly, there are three roles that our CIO performs. One is to be integral to the process of integration development . For example, take product development. He is so closely involved in the PLM implementation that I can't think of the product development function being carried out without his involvement. He is pretty much a part of that kind of functional process improvement. In the same vein, there's also what we call customer connect - the CRM. It's not your standard CRM package. It's a tailor-made program and it is another project where the CIO is involved.
Another role the CIO plays is bringing industry-specific IT innovations to the organization's notice. He is like a window; a source through which knowledge comes into the organization. Of course, he is not necessarily the only person to introduce new ideas, but the CIO has a big role here. The third function the CIO serves is providing and managing our huge IT infrastructure. We are hugely dependent on the entire IT infrastructure. It's a truism that you only remember the IT team when there's a 10-minute connectivity problem. The fact that our CIO is running our huge infrastructure without breakdowns - and making sure that IT isn't only noticed by its failures - is, I think, the biggest challenge that he meets successfully.
ADES (Ashley Design and Engineering Services) is a testing and engineering outfit focused on the automotive side. It's a part of Ashok Leyland but serves third parties also. Ashok Leyland has its own dedicated product development and ADES is a separate outfit which takes work from outside. We have developed some critical competencies in ADES and when Ashok Leyland requires those critical competencies, we go to ADES.
We have a lot of new product development related to the defence business. One important part of defence is developing a fairly large number of variants and doing it quickly. Today, we have a large number of design, testing and validation tools, which are all IT-based. This means that we can simulate a lot of testing. I'd like to think our product development is pretty contemporary in terms of simulation - particularly with defence vehicles because quite often we have to predict behavior.
In the last 10 years, there has been tremendous growth in India's auto industry and it has been pretty much exposed to all contemporary technologies. Some of this is being used, others not. But, the Indian industry knows what is contemporary and useful. What's being used is partly driven by what the customer wants. If you look at some of the comfort or safety issues, these are driven in part by legislation, in part by market needs. The Indian industry knows what is available on the shelf and, therefore, is in a position to employ a technology appropriately according to a market and a customer's requirements. That said, there are a lot of technologies which an Indian customer may not want, even if it is offered, for reasons of cost or because they are not relevant. There will always be a difference between the technology requirement between a customer in the US or Japan and a customer in India. For instance, night vision technology could be made ready for all bus operators in India, it could easily be made immediately available, but would there be demand? If you ask whether we are providing the right choices to the customer for good value, the Indian customer will definitely say yes. The Indian customer has as much choice as any other customer globally and he has all the technologies at his command. The Indian customer is not being denied.
I think there are two types of innovations that are happening in the IT industry. There is a broad spectrum of technology improvements coming around, which could be exploited with varying levels of success by various industries. RFID is an example. That technology could be used in some industries more productively than in others. We have used RFID to ensure that the right components are being issued to the assembly. When a technology is available, we push new frontiers to see how we can develop our own applications and capabilities. Second, there are specific information technologies for the automotive industry. Let's take the automation of vehicles, for instance - the electronic management of brakes.
There is a chip sitting in there that gets various systems to talk to each other and passes information from one system to another in order to make the vehicle more efficient. That's a key element f competitive product building and competitive business. In my view, even with respect to automotive electronics, which is based on an information technology platform, there are specific requirements in each market that are related to each customer group. Therefore, it is important that we look at what is being developed, how it needs to be customized and how we can derive competitive advantage.
There's another dimension IT specific technologies. We also use IT for a different type of experiment: the transport exchange, for example. The business objective this exchange is to bring shippers - those who want to send goods - and the transport operators together on an electronic platform. We've got kiosks all over the country. There is a data transaction taking place between the shipper and the transporter and there are new price discoveries on freight, for example, which benefit both. So, in effect, we are using IT to eliminate middlemen, and thus benefit our customers. That is a very different use of IT in that it doesn't directly impact the business that we run- but has 'adjacent' benefits.
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