Bajaj Auto Finance Adopts Cloud Based CRM and Increases Productivity by 50 Percent

Summary:

Bajaj Auto Finance has reaped significant rewards for over coming apprehensions on data security and deploying a Cloud based CRM.Rise in transactions from 1,500 per day to a record of 8,500 a day is just one part of the story.

Reader ROI:

Why companies whose IT is integral to their operations are taking to the cloudInfrastructure issues to expect and address

Running a non-banking financial corporation – or NFBC – is a tricky business. That’s because NFBCs, which primarily finance automobiles and general purpose industrial machinery, operate in a narrow strip of land. On the one side are banks, which with their size can afford more competitive lending rates, and on the side are credit cards lapping away at their business with their quick access to cash.

One way NBFCs are hitting back is by broadening their port-folio. By offering more services, an NBFC widens its net and grows the loyalty of existing customers. When Bajaj Auto Finance (BAFL), launched in 1987, for example, it only financed loans on two-wheelers. It quickly expanded that port-folio to include consumer durables and IT products. As a result, the company which made 60 pe-cent of its earning from financing two-and three-wheelers in 2006 only depended on that sector for 32 percent of its revenues in 2009. It continues to leverage that strategy. It recently launched a financing scheme for construction equipment and now offers an ‘insurance distribution and extended warranty’ to its customers.

But the combination of new services and a network of over 50 branches made it increasingly hard for the Rs 600-crore organization to handle all the requirements of its customers. The additional lines of business were beginning to take a toll on the company’s legacy CRM applications, says CIO, Rakesh Bhatt. For example, with the old warhorse – a combination of locally and internally developed CRM applications – it was almost impossible to scale to the end-to-end loan underwriting needs of BAFL’s growing customer base (slowing it down) or to cross-sell their multiple products.

“The earlier platforms restricted the fast deployment of our new business needs,” says Bhatt. “In order to keep pace with the dynamic changes in the market there was a pressing need to identify and launch new platforms.”

Floating Rate

So Bhatt and his team plunged into extensive research to evaluate different CRM applications. Their search brought them face-to-face with cloud-computing based CRM applications. “When we found that the cloud model delivered better, we tested it even more extensively for a 90-day period. We then had a pilot and only once we were completely satisfied did we choose to adopt a cloud-based model. It took us about four months to come to that conclusion,” Bhatt recalls.

That’s not unusual. CIOs are approaching the cloud with caution and adoption has been low. A worldwide Information Technology Intelligence survey done during the middle of last year showed that only 15 percent of enterprises have or are planning to go cloud. In India that number is even lower. According to the CIO research, only 4 percent of Indian CIOs are currently implementing a cloud computing strategy.Among their biggest concerns is security. “An overwhelming 85 percent majority of corporate customers will not implement a private or public cloud computing infrastructure because of fears that cloud providers may not be able to adequately secure sensitive corporate data,” says Information Technology Intelligence principal analyst Laura DiDio. Well aware of the widespread fear surrounding the cloud, Bhatt made sure he attacked the problem early on. “The concerns around data security were addressed during the evaluation stage by understanding the principal’s initiatives and compliance certifications,” he says.

He also dangled the cost effectiveness of the model before the company’s management headquartered in Pune. BAFL, which opted for a subscriberbased model, has about 300 licenses. Bhatt says he buys more in batches of five or 10, although he is allowed to buy even a single one.

Once the application was up, it was quickly extended to include the acquisition-and-approval cycle for sourcing new customers, says Bhatt.This lead to a challenge of integrating the cloud-based platform with datacenterbased applications as well as third-party hosted databases. “In order to achieve this integration we implemented a Web Services-based integration model, which provided a seamless workflow for new customer acquisition data,” says Bhatt.

Bhatt cautions that despite its evident advantages, a cloud initiative can’t simply stand on its own legs and needs hardware upgrades to support it. “Infrastructure growth is essential to ensure an effective integration with the datacenter,” he says. He also admits that he was lucky to get support from the business and technology functions within his organization. “Their support has paid off. Look at the benefits BAFL derived out of these initiatives,” he says, referring to the deep insights into day-to-day business operations the organization has got through real-time dashboards and sophisticated – yet easy to create – reporting analytics.

These benefits, he says, have ensured an improved flow of approval between operations centers and the dealer network, improving general staff productivity by about 50 percent. The new system cut the time it took to navigate processes to approve a loan by four minutes to a new total of 15 minutes. It also equipped the company meet a rise in transactions from 1,500 per day to a record of 8,500 a day – processing one transaction every 4 seconds at peak. It’s also allowed BAFL to deal with an increase in business volume at the counter of over three times. Over the last 14 months, BAFL’s cloud initiatives have picked up steam thanks to the positive impression made by the first project. Post a detailed analysis of the features, benefits, drawbacks, costs (capex and opex), maintenance, uptime and security, and considering the various principals involved in providing these services, BAFL is now moving ahead with the implemention of a unified mail environment and communication platform; with discussion and presentation forums with audio/video capabilities on the cloud. The idea behind this, says Bhatt, is to “arrive at an application architecture which fits in with the business model and allows the technology team to evaluate and take a decision on which architecture component is best suited for an in-premise model or a cloud model.” For BAFL it seems the old adage is coming true: The higher the cloud the better the weather.