ERP-BI Helped Blue Star Seal Off Revenue Leakages

Summary:

Moving ERPs can be one of a CIO’s most intractable problems. How Blue Star’s IT leader handled it.

Highlights:

integrating 10 years of legacy systems into SAP would be tricky. The company’s data lacked integrity, because everything from data structure to coding was different. It would take Blue Star years to integrate its data with the new ERP.Rahul Mehta, GM-IT, Blue Star start his ERP with what he calls a “zero opening balance”.

The Organization: The Rs 2,556-crore Blue Star has been air conditioning homes, offices, and malls for 70 years. But while air conditioners are what they are best known for, most of their business comes from large, prestigious projects, including the Delhi Metro and the Mumbai International Airport for whom they provide everything from the electrical fittings to plumbing.

It was the right time to re-orient and re-map our IT systems. We also wanted to re-look at some ‘holy cow’ processes and do some business process reengineering

The Business Case: Blue Star first forayed into ERP in the early ‘90s. Those were the days when they weren’t any wide area networks and integrating costs were prohibitive, remembers Rahul Mehta, GM-IT, Blue Star. “Our ERP was done on separate systems and was not integrated on a central enterprisewide platform like most ERPs today,” he says. “In fact, in those days we had six factories and each had its own local server!” The problem was that this fragmented system didn’t allow Blue Star to drive central process standardization, or enable seamless transactions. The Project: In the meanwhile, Blue Star was entering a growth phase. It was 2008 and the company had just bagged a number of prestigious multi-crore projects. But its siloed data seriously hampered project managers, who were having a hard time coordinating between the different islands of the supply chain, from warehouses to delivery teams. The after-sales division, in particular, was affected. It struggled to manage customer complaints, track parts, and monitor service levels. As a result, the revenue it earned was considerably lower than industry standards. The business couldn’t afford this. Mehta knew he had to move to a new ERP. “It was the right time to re-orient and re-map our IT systems. We also wanted to re-look at some ‘holy cow’ processes and do some business process reengineering,” says Mehta. First Steps: But integrating 10 years of legacy systems into SAP would be tricky. The company’s data lacked integrity, because everything from data structure to coding was different. It would take Blue Star years to integrate its data with the new ERP. That forced Mehta to take a hard decision. “We decided to start our ERP with a zero opening balance, and shut off all the 40-odd fragmented systems,” says Mehta. Using IBM as an implementation and design partner, Mehta and his team had to manually transfer the chart of accounts, the general ledger, outstanding and open sales, and purchase orders manually through excel sheets into SAP. The process took many hours, but it was a small price to pay to build data integrity, Mehta says. The big challenge for Mehta was to provide business with previous figures for MIS reports and comparison. So he created summary transactions in one or two entries on a monthly basis which was loaded into the SAP BI warehouse.

 

It was the right time to re-orient and re-map our IT systems. We also wanted to re-look at some ‘holy cow’ processes and do some business process reengineering

The Benefits: For Blue Star, the most quantifiable advantage from the project came in the form of increased revenue from the after-sales service department. “Before, we had no way of approaching customers post-warranty to renew contracts or analyze complaints. With the new system, our after-sales folks can go after customers and bring in a major source of revenue,” says Mehta. The ERP project also helped Blue Star build an identical business face across the company. Data collation, which used to be a significant problem, has now become instantaneous leading to greater transparency and a faster turnaround time.