Corporates turn to IT to cut costs, raise efficiency

Written by Corporate Bureau | Mumbai, Sep 4 | Updated: Sep 5 2008, 06:01am hrs
Corporate entities, faced with rising costs, pilferage and stiff competition, are increasingly turning to deployment of IT to curb losses and improve customer interface. Major among such initiatives are the ones being undertaken by state-owned petroleum firm Hindustan Petroleum Corporation Limited (HPCL) and real estate major Hiranandani Group.

IT giant IBM will be implementing radio-frequency identification (RFID) solutions for HPCL. RFID tags will be used to track liquefied petroleum gas (LPG) cylinders from bottling plants to the end consumer. Real estate major Hiranandani Group has announced a partnership with Hewlett-Packard Pvt Ltd (HP) for beefing up its IT infrastructure.

Curbing illegal diversion of LPG cylinders meant for domestic use constitutes a major challenge for petroleum companies. LPG cylinders meant for domestic usage are heavily subsidised compared to cylinders meant for commercial purposes, and are diverted for commercial use. According to estimates drawn up by the government last year, more than 80,000 cylinders meant for domestic purpose were illegally diverted for commercial and vehicular use, leading to huge losses.

HPCL alone has around 22 million LPG cylinder users.

RFID solutions will not only help the company tackle illegal diversions, but also help strengthen and bring better efficiency in the supply chain, commented Nipun Mehrotra, vice president and general manager, Global Technology Services, IBM India & South Asia. Initially, the project of tagging HPCLs LPG cylinders will be rolled out at the latters Nasik plant and will extend to around 5 lakh cylinders. IBMs deal with HPCL is pegged at around Rs 9 crore.

On the other hand, Hiranandani Groups project of implementing SAP on its systems, to be handled by HP, is a pointer to the Indian real estate industrys growing investment in IT infrastructure. The industry is estimated to touch $97.8 billion by 2010 at a CAGR of 19.5%.

Use of IT infrastructure will help us scale by over 30% and take additional loads without upgrades, commented Joseph Martin, general manager, IT Hiranandani Group. The groups IT infrastructure implementation is worth Rs 6.5 crore. On the whole, the real estate industry in the country is estimated to invest $45 million in deploying IT services by 2012.