How Crompton Greaves Integrated the ERPs of Its Acquisitions
When a slew of acquisitions hit Crompton Greaves with a host of ERPs, increasing expenses and inefficiency, its CIO rolled them all into one and saved crores of rupees.
Eric Ernest May 10th 2013

The Organization:

There’s no doubt that Crompton Greaves is one of the most respected companies in the power sector, but not many know that it’s one of the top ten electrical transformer manufacturers in the world. It got there by piggybacking on the success of a Belgium power transformer company—Pauwels Group—that it acquired in 2005. 

Acquisitions are a vehicle for the company—which is headquartered in Mumbai and is a part of the Avantha Group—to gain a foothold in foreign shores. Which is why, its recent history is peppered with a series of global acquisitions including Ganz in Hungary, Microsol in Ireland, MSE Power Systems in the US, and ZIV in Spain, to name a few.

And thanks to this global spread, the company recently won a Rs 239 crore contract for the construction of a high voltage offshore substation in The Netherlands.

The Business Case:

While its global reach was great news for business, the company’s IT systems weren’t too kicked.

With so many different acquisitions running different flavors of ERP, supply chain systems, CRM, and PLM, it was difficult for Crompton Greaves to manage disparate systems and operations. Especially in ERP. For instance, its Belgium firm had a process for cost reporting that was different from the one in India. “Because of this decentralized system, it took a lot of time for us to collect information,” says J. Ramesh, global CIO, Crompton Greaves.

Another problem was the fact that it was getting increasingly difficult to give a single and complete picture of the company’s performance to the board. This information had to be collated from different sources and if someone was not present at a particular site, the data couldn’t be collected, resulting in the board not getting a full picture of the company's performance.

Also read: The Role of CIOs in Mergers and Acquisitions: Mahindra and Mahindra's Merger Story

So the same work had to be done at various locations, thereby increasing the overall workload. “As we are a big company that makes the same type of products, it makes sense for us to put in a single system that will help us move to implementing a single process,” says Ramesh. It would also help the company save precious costs.

The First Steps:

Till 2010, there were two instances of SAP running in the company, one in India and one from the company’s acquisition of Pauwels—which has offices in Belgium, the U.S., Canada, Ireland, and Indonesia. Additionally, there were other non-SAP ERP instances running in some of the other acquired companies. Ramesh had to move units from the non-SAP ERP systems to SAP, and upgrade the existing SAP instances across geographies.

Then Ramesh decided to first upgrade and migrate both the hardware and software. This included new server hardware, databases, and upgrading SAP itself.

Migrating from non-SAP to SAP was the toughest part of the project as he had to make sure he did not interrupt the smooth running of the business. “A data loss scenario along with an eventual recovery would have jeopardized my job,” says Ramesh. But it was also important to do because, “unless I did this, I wouldn’t be able to opt for a global SAP instance quickly enough,” he adds.

Also read: Heading Towards Better Sales Management: Nilkamal

The Project:

After bringing all the non-SAP instances to SAP—and upgrading the existing SAP—Ramesh needed to consolidate these ERPs under a single global instance and run it from his datacenter in Mumbai. He also implemented a parallel ledger concept in SAP to accommodate different accounting standards.

He first activated the unicode feature in SAP to support multiple global languages. Then he found a way to fix transaction currencies. So, if a unit were in Sweden, the local reporting would be carried out using the Swedish kroner, whereas the consolidated reporting would be done in Indian rupee. Now that language and currency were taken care of, Ramesh decided to move SAP application support from Belgium to India.

The Benefits: Having a single instance ERP has brought several benefits to the company. It saved about Rs 5.5 crore for the company. Also, it was now easier to implement policy changes and monitor them. “Consider that I want to include an assessment of the earnings from each sales order at the time of capturing the order. The business can see whether the company is making the right value addition or not in different locations,” says Ramesh. Another benefit is that with a global ERP, it is easier for the company to standardize processes.

Today, the project has added more feathers to Crompton Greaves’ cap.

Eric Ernest is a correspondent for CIO India and ComputerWorld India. Send your feedback to eric_ernest@idgindia.com

Because of a decentralized system, earlier it took a lot of time for us to collect information