December 2004 | Shobha Ramswamy
R. Ramanan, managing director and chief executive officer of CMC, explains how the TCS connection is helping the company move from strength to strength
Created in 1976 by the Indian government to maintain the installations of IBM, which had then exited the country, Computer Maintenance Company or CMC (as it is currently known) has grown much beyond its initial mandate. From developing solutions for complex projects and handling turnkey assignments to building, managing and supporting software systems across the value chain, the company spans the entire IT spectrum.
Since being acquired by the Tata Group in 2001, CMC's synergy with Tata Consultancy Services (TCS), the flagship IT enterprise in the Tata Group, has been deepening steadily. Going ahead, the path is clear-cut and strategies all mapped. In this interview with Shobha Ramswamy, the companys managing director, R. Ramanan spells out his future growth agenda.
Could you trace CMC's evolution?
As the country's No 1 third-party hardware maintenance company, we had formed a network of collaborations with leading names in hardware and software space, both Indian and global. The company was already involved in major national IT initiatives, owing to its public sector status. So we logically progressed to providing solutions and implementing projects at the national level.
Since then we have come a long way. Our core competency, developed over the last seven years, is in participating in nationwide IT activities. CMC was responsible for automating Indias first stock exchange the Bombay Stock Exchange which handles millions of securities trading transactions every day. We computerised the Indian railway reservation system, the largest in the world. We also designed the first indigenous ticketing system for the railways.
This led to combining hardware and software services, which in turn led to work with embedded and real-time systems. CMC played a leading role when the operations of an Indian port were computerised for the first time. We created two state-of-the-art products, Marine and Container Handling (MACH) and Cargo and Logistics Management (CALM), for this purpose. Later, we spread our reach to education and training units.
What are CMCs core capabilities?
CMC has created competencies in four areas that are gaining importance in the global business world: IT infrastructure management and technology support services; systems integration and software solutions; education and training; and IT-enabled services.
Our competency in IT infrastructure management, be it desktop, server, network, data management or business continuity planning, is well known. After tasting success on the national level, we are confident of taking this beyond our shores. Moreover, I believe that the next wave to hit the IT world will be IT infrastructure management outsourcing. Each and every Fortune 500 company has a requirement for it; the potential is tremendous. We, in synergy with TCS, are in the position to become leaders in this field.
Another area that is developing fast is embedded systems. Previously very few global companies used to outsource embedded software systems or even hardware designs. Today the situation is the opposite. We are looking at leveraging our competencies to provide solutions and services in this sphere.
Bio-metric security area is another unique competency in CMC. Security is crucial today. Many companies are looking to integrate sophisticated levels of security in terms of access to their premises and systems. Our technologies in smart card or bio-metric systems might just offer the right solution.
The company has a clearly defined strategy of leveraging its core competency in complex systems integration solutions; embedded systems design and development; end-to-end IT infrastructure management; IT enabled services; and knowledge management services such as e-learning and corporate training in the international marketplace. We have also made a beginning in the business process outsourcing space for some of our clients in the US (we have established a dedicated 'overseas development centre' at Hyderabad for Xilinx).
How has the change in management benefited CMC?
Fortunately, our movement from the public sector to the Tata Group was smooth. Nevertheless, we do have our share of challenges. Earlier, government projects would automatically be awarded to us; this is not the case anymore. Now we have to bid and win it. This calls for sharpening our business development processes through training programmes and hiring international people.
There is a transformation initiative called C-Change underway in CMC; this is all about moving from ability to agility. The C-Change initiative will impact everything we do, from sales to delivery excellence to people management and customer focus, as well as internal systems.
We are also combining effectively with TCS in making our systems efficient. Earlier, CMC did not own a formal system to measure productivity, responsiveness, service-level agreements or customer satisfaction. Since these initiatives have been launched, we have witnessed significant increases in person productivity. Besides, we have the Tata Business Excellence Model and TCS's Ultimatix system to help us streamline our business and manage it better.
Functionally, a lot of integration, in terms of marketing and business development is still ongoing between TCS and CMC. We completely avoid any conflict of interest. For large projects we bid jointly, while in smaller cases we maintain our individual identities. Incidentally, we won the total outsourcing for Charleston county in the US recently in association with TCS. This was the first win of its kind by any IT company in the country.
What about CMC's plans to strengthen its international presence?
Currently, a whopping 80 per cent of our revenues come from within the country and the rest from our international operations. But that is changing. This financial year, till September 2004, the consolidated profit after tax increased by 107 per cent to Rs 31.68 crore, compared with the Rs 15.32 crore achieved in the corresponding period last year. The profitability growth is driven by an increase in the share of our international business to 25 per cent. We plan to up that to 30 per cent in the next few months.
Going international is a huge opportunity. We have created a unique set of solutions that are global in nature. Clearly, there is an advantage in taking these solutions to the international market. We will continue to achieve strong growth in international business, mainly driven by our successes in the Middle East and Africa regions. We recently won the prestigious Kuwait stock exchange computerisation project. The National Bank of Bahrain has also selected us for our core banking solutions. The Syrian railways are adopting our ticketing systems.
Meanwhile, in Kenya and Tanzania, we have won a bid for fingerprinting technology. We are developing a solution called e-cops exclusively for their requirement. We also have a contract in Sudan for our smart card-based health insurance systems; this is a nation-wide deployment. These recent contracts prove that we have the capability and wherewithal to grab a huge slice of the international pie.
What about R&D?
We will be improving our innovation capability; that will, in time, be our key differentiator. During the previous financial year we invested Rs 12 crore, which is around 1.5 per cent of our turnover, in R&D activities. We will increase this investment if necessary.
Innovation at CMC is fostered through proactive development exercises. Often we develop products in our lab, based on the potential requirement of our clients business. They have seen the usefulness of this prototype. On the cards is a rural healthcare project in PDA technology. We are also looking at various indigenous technologies.
What are your planned strategies for the next few years?
Going forward, we plan to utilise our knowledge to become a quality solutions provider to governments across the globe. We will create and leverage all the solutions created in the spaces of e-governance and state and local computerisation, among others. We are also looking at penetrating the private sector in association with TCS. The third front for us is the international market, where we will position our assets, competencies and solutions. Within the group, too, we have started working with companies to leverage our capabilities in infrastructure management, solutions training and education.