CIOIN

Sudhir Kumar Reddy

CIO, MindTree

Executive summary

MindTree's management  was beginning to feel the drag created by hordes of manual processes and spreadsheets. They also needed the project to take off quickly. They've been rolling out a module a month for about two years. That sustained effort, christened Project mPower, has given MindTree almost real-time visibility into the profitability of all its projects and how every resource is being used.

When Sudhir Kumar Reddy returned from US to India to join MindTree in 2005, he was tasked with taking the Rs 1,150-crore organization through the twists and turns of its first ERP implementation. His aim: to pull the organization closer together and get critical information to move in the right direction - as fast as possible.

They  rolled out a module a month for about two years. That sustained effort, resulted in Project mPower. It has impacted MindTree's top-line. Within two years of the implementation, MindTree reduced its sales-outstanding-days by 33 percent - the interest on that alone saved $500,000 (about Rs 2.5 crore) a year. It also increased resource utilization by 3.5 percent and the accuracy of sales forecast data by 95 percent.

What was needed, says Krishnakumar Natarajan, CEO of MindTree, was a system that could give them "billing, gross margins, financial parameters, and the amount of unused talent every month-end. In the services business, if you have people who are unbilled, it's a loss forever."

MindTree chose to begin with two critical processes: order-to-cash (OTC) and project planning. The second phase would deal with automating the payroll process and phase-III would bring CRM into the ERP fold. But as phase-I took off, Reddy realized that there was a basic flaw with the initial blueprint. The processes at MindTree were project-dependent, which meant that linearly creating process automation would not demonstrate the benefits of an ERP system.

His need for speed and impact, pushed Reddy to revisit the initial ERP blueprint. He says that they changed the approach to building each cross-functional business process into the system, showing results and only then moving on to the next business process. Crucially, Reddy chose to drop the project planning module from phase-I and decided to focus on order-to-cash. His foresight would pay off.

By April 2006, OTC was completely automated, enabling MindTree to integrate the time staff spent on a project with billing. In 2005, before mPower, it took MindTree until the 20th of the following month to arrange for the invoices of 250 projects. With the ERP in place, it created invoices for over 650 projects by the 4th of the following month - giving the CFO visibility into the organization's receivables within three days of each month-end.

"That's an improvement of 16 days despite huge growth in the number of projects. The enterprise saved a whopping $500,000 (about Rs 2.5 crore) a year just in interest on unbilled outstanding," Reddy says. The momentum of that first success allowed Reddy and his team to go on a rollout spree from January 2007 to June 2008, as they consolidated and automated several key business processes. As many as twelve functional business processes, including CRM, expense management, travel management, project tracking, and asset management were automated.

Once in place, mPower helped the enterprise enjoy numerous tangible and intangible benefits. By increasing MindTree's visibility to as early as 4th of the month, early signs of weakness can now be sensed and dealt with by business teams who are now able to guide the organization better with 95 percent more accurate data.

mPower has also improved MindTree's ability to measure utilization more accurately - an important metric in the service industry. A year after mPower was implemented, MindTree calculated that it had improved its utilization by 3.5 percent - a task that would have been impossible to even start on without the ERP project.