The last few years have witnessed the manufacturing sector turning around the corner; it is also widely acknowledged that IT implementation has played its part in resuscitating this sector to health. After achieving an impressive 22% growth in 2004-05, the scenario only got better in fiscal 2005-06 when IT purchase in the vertical grew by 28% to reach Rs 5,080 crore. Add to this, the oil & gas sector that constituted the backbone of the process manufacturing industry, growing by 17% to reach Rs 4,387 crore. The growth was uniform across all facets of the sector; not just process and discrete manufacturing industries recorded growth, automobiles and pharma too were among the heavier IT spenders.

Process manufacturing contributed the lion's share of 55%, followed by discrete manufacturing at 26%, auto & auto ancillaries at 10%, and pharma at 9%. A distinct trend could be identified behind this IT spending pattern. Typically, the discrete manufacturers were early IT adopters and, therefore, had basic enterprise applications like ERP and SCM already in place. Their IT investments during 2005-06 primarily focused on solutions and services centering round CAD/CAM/CAE or PLM and PDM applications. On the other hand, the process industry, barring a few major players, was still engaged in basic computerization. Naturally, this involved increased purchase of hardware, networking and basic enterprise applications that in turn translated into higher spends on IT.

Discrete manufacturing included the engineering, steel and the construction industries, while process manufacturing encompassed oil & gas, chemicals, paint and textile. The automobile and pharma/biotech sectors too upped their IT spending, and many analysts considered these as separate verticals with their own trends and spending patterns distinct from manufacturing.

Heavy Engineering Spends on  IT
On the discrete manufacturing side, the heavy engineering segment contributed a lion's share. Majority of players in the heavy engineering industry have well defined markets and are technology driven, though turnkey engineering capacity is limited to a few domestic entities like BHEL, ABB, L&T and Alsthom. This, coupled with the fact that the initial investment required for heavy engineering/capital goods manufacturing facilities is relatively high, creates a relatively high entry barrier. The technology requirement, however, goes down as one moves towards the light engineering industry.

One of the most important business parameters for heavy engineering companies is competitive delivery time and this was where IT played a crucial role. Most heavy engineering players went for ERP deployments and both SAP and Oracle appeared to be the preferred options. Interestingly, L&T is running multiple ERP systems while BHEL deployed SAP in four units, the other units have ERP systems based on Oracle's RDBMS. During FY '06, companies in this industry also looked at upgrading their ERP policies. In areas like design and engineering, however, most of the programming and application development work was done in-house. Interestingly, few chose to adopt a decentralized approach towards application development and deployment. Therefore, individual units had the independence to develop applications according to their practices.

Similarly, a decentralized approach was adopted for data centers as a centralized one made little sense for dispersed manufacturing units. BHEL, for example, went ahead with a decentralized DR policy-only the Tiruchirapalli unit had a DR system in place in 2005-06 while other units planned for future DR. Heavy engineering powerhouses also went in for e-procurement. Some like L&T and BHEL made their procurement partially online and partially offline. The heavy engineering players relied on project engineering packages like Primavera for their project management with large houses like BHEL and L&T showing the way. A close competition to the Primavera came from Microsoft Support for project management, though that solution was better suited for standalone projects.

Steeling For Integration
For the steel sector too, ERP was the most important component with SAP and Oracle again dominating the show. Meanwhile, companies like Tata Steel used i2 solution for outbound supply chain in many of its steel plants and integrated with its various modules as well as with SAP. In addition to best of breed, custom built solutions were commonly used for scheduling on the shop floor as well as for integrating the level-2 systems (process computers) with planning and scheduling systems, often called as level-3 systems. Also on the horizon was a solution called Broner that emerged as a viable option for shop floor scheduling.

Manufacturing		Oil & Gas

A phased deployment also made sense, as every module of the enterprise wide solution needed to be fine-tuned and aligned with core processes. The first process Tata Steel did was the order generation and fulfillment part. Subsequently, it went ahead with the procurement process and the associated accounting functionalities. The production planning systems for the steel plant was custom built using the APO module of SAP. The biggest challenge in the steel sector was aligning IT with core processes and numerous sub-processer since any loose ends in terms of integration would lead to almost insurmountable complexities.

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