‘We don’t see tech spending necessarily going down’

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: Think of Microsoft and PC software like Windows and Office suites come to mind. Microsoft’s offerings for the manufacturing industry—one of the top two verticals that the world’s largest software maker focuses on—largely go unnoticed. Indian manufacturing industry seems to be hot on Microsoft general manager, manufacturing and resources industry unit, Charles Johnson’s priority list. While US companies wrestle with the economy, Indian companies with an average growth of 9 % in the last four years, seem to be stronger. In a candid chat with Pragati Verma, Charles details pressures on manufacturing companies and tech enablers that could help them out. Excerpts:

Analysts at IDC and Gartner have recently lowered IT spend predictions for 2009. Have you seen priorities change at manufacturing firms?

Yes. Manufacturers have relied a lot on historical sales and forecasts. In these economic times, you have no visibility of what your businesses will look like and whether the forecast is actually based on real numbers. So the number one priority of our customers is better insight across each line of business. So for CEOs, corporate performance management is the number one priority. In many companies earlier, they used to just produce, produce and produce and manage inventory later. Now they are thinking—what you need to produce to ensure employee productivity. This is becoming the key priority for customers in India too.

Next on their agenda is accelerating innovation, especially around new hybrid technologies and energy technologies. It could be a new drugs facility, or better energy fuel, or more hybrid cars, or designing something that’s better than iPods and Zunes, or even phones. Earlier, it used to take three years from design to actual production. They now want to take 18 months. Also, they are looking at improving operational efficiencies. They need just in time inventory to be able to have just in time manufacturing. As Indian manufacturers expand to global markets, they need to have optimal production facilities.

Managing your supply chain, right from procurement to the end customer, continues to be important. What we find is that customers have their SAP, but are not sure if they should expose their order management information to the rest of their enterprise. But how do employees or suppliers make a guess on the supply when you actually don’t have access to SAP? That’s what collaboration technology enables.

And the last thing, with the growing significance of the supply chain we find a lot of our efforts being centered around enabling a better customer experience with sales force automation. So how do you make sure the right customer order is fulfilled at the right time. You see the concept of order fulfillment on websites—many customers consider buying online.

Is your focus on Indian manufacturing firms sharpening because the economy is slowing down in many parts of the world?

To be frank with you, we don’t see tech spending necessarily going down. I would say growth is accelerating at a greater rate in India than other countries. Even US and European companies see great opportunities to accelerate growth in the Indian market. Some of our projects are actually for European or US based customers that we execute in India. The other aspect is in the automation of business processes, where manufacturers are moving from low cost manufacturing to actual original design manufacturing and generic product manufacturing.

Therefore, customers are actually designing the products themselves and manufacturing them. So we see a strong innovations base in manufacturers across every vertical, here in India. And we are excited about that.

In that case, technology needs of Indian manufacturing companies must be different from others?

Oh yes. Basically, they don’t have a legacy system here. So they want the latest technologies and real time visibility. They also have intense amount of pressure to support because in many cases, they are the supply chain, or they need to extend their information to rest of the chain. They are expanding to other countries too. So their needs are even greater, in some cases than the US.

Hence we take them as someone who has a greater need and greater appetite for innovation. India is in a unique position as the regional equipment manufacturer.

China would continue to be the top priority…..

The difference is that Indian customers generally respect IP. In China, many of Microsoft’s customers respect it, but a lot of the other customers don’t. They are all thinking about world class operations. They all care about meeting the needs of consumers. I think Indian customers are more aggressive; they want to grow in other parts of the world too.

In China, the manufacturing efficiencies are driven primarily by scale—that’s single denominator that they will apply before opening any company. In terms of cost per unit, China has already got a head-start advantage. They would have already capitalised and amortised their assets in the last 15-20 years. So they can afford to offer better prices.

India has rightfully earned a place in high specification quality engineering and highly innovative design, which is intellectual property driven in terms of innovation. You will see that most of the design centres of global giants are being set up in India.I have been travelling to both India and China since 1999.

Today I see that US-based companies are looking to develop joint ventures in India as they now see great opportunities to invest here. Protection of IP and high quality work force has helped India make a name for high quality and engineering innovation.

How big is the contribution of manufacturing in the company’s business today?

Manufacturing is one of the top two sectors with Microsoft. It is pretty substantial. Same is the case with India. In fact, India is the fastest growing.