Madras Cements, Ltd.

case W89C25
Revised July 11, 2014
Madras Cements
Case Summary
Madras Cements was a leading cement producer in southern India, but due to inefficient management
of information, transactions, and reporting processes was struggling to control costs. This posed a problem.
Cost efficiency was one of the best ways for the company to secure a competitive edge in the cement
industry. Madras Cements company leaders thought the solution might rest with IT. But the company’s first
attempt to improve reporting processes by implementing an Enterprise Resource Planning (ERP) system fell
short.
Undaunted, Madras Cements’ management team mounted a second ERP implementation, applying lessons
learned from the failed attempt. Chief Financial Officer A.V. Dharmakrishnan, who led the second ERP effort,
worked closely with the IT department and its senior general manager, N. Varadarajan, to build additional
capabilities in the ERP system. This evolved into a continuous journey at Madras Cements to build agility
into every aspect of its business operations. The results of this transformative process were impressive. An
analyst report published in February 2013 claimed that on a five-year basis, Madras Cements had generated
the highest average EBIDTA per ton of cement produced in the industry.1 Madras Cements beat its nearest
competitor by over 15% in terms of EBDITA. A.V. Dharmakrishnan was promoted to CEO of the company in
April 2012 for effectively managing operations and transforming the organization’s culture.
This case illustrates the process of successfully championing ERP implementation in a complex,
diversified conglomerate in a developing country. In particular, it highlights the significance of the social
transformation realized by the Madras Cements team during its second attempt at ERP implementation.
In doing so, the case illustrates significant aspects of ERP implementation; process redesign, change
management, and getting by-in from top management. The case also discusses how Madras Cements made
the digitization transformation to facilitate evidence-based decisions.
Published by WDI Publishing, a division of the William Davidson Institute (WDI) at the University of Michigan.
©2014 Professor C.K. Prahalad and Professor M.S. Krishnan. This case was prepared by MBA students Sanjeev Kumar, Balaji Sudarsanan,
and Adarsh Prabhakar under the supervision of Professor C. K. Prahalad and Professor M. S. Krishnan of the Ross School of Business at
the University of Michigan. Rajeev Ved conducted the field study and initial documentation for the case. M.S. Krishnan has worked as
a paid consultant for Ramco Group.
This document is authorized for use only in Prof. Kedareshwaran S's ERP & Business Process Management-ITS 6004-26.09.2019- at Ta Pai Management Institute (Tapmi) from Sep 2019 to
Mar 2020.
Madras Cements W89C25
Background
Madras Cements Ltd. was the flagship company of the Ramco Group of industries, which was founded
by P.A.C. Ramasamy Raja in 1938. The Ramco Group had multiple lines of businesses, including textiles,
cement, fiber cement products, software, surgical cotton, and biotechnology (see Exhibit 1). By 2011, Ramco
had grown into a massive organization with revenues of 900 million USD and had achieved international
recognition for quality and service. The Ramco brand enjoyed especially strong respect in southern India.
Madras Cements started in 1957 with a cement manufacturing plant in Rajarajeshwari Nagar, also known
as R R Nagar, in the southern Indian state of Tamil Nadu. By 1962, the plant had a manufacturing capacity of
200 metric tons per day. By 1990, the company had seven manufacturing facilities with a combined capacity of
11 million metric tons a year. In addition to cement manufacturing, the company operated several wind power
sites with a combined capacity of 185 megawatts that provided Madras Cements with a more cost efficient power
supply. The cement manufacturing operation remained the flagship company of the Ramco Group. By 1995, the
company was manufacturing at five cement plants and two grinding plants in southern India. (Exhibit 2 shows
the manufacturing facilities. Exhibit 3 describes the process of converting limestone into cement.)
Demand for cement was closely related to overall growth in the economy, particularly in the booming
construction industry. Starting in 1997 (following India’s economic liberalization in 1991), the country
began to witness a significant increase in infrastructure related projects, such as roads and bridges. As a
result, the cement industry experienced strong growth. (Exhibit 4 depicts the cement demand in India from
2004 to 2009.) Industry capacity increased at an annual rate of more than 8% to 217.80 million tons per
annum. By 2009, cement production from large plants was at 181 million tons, reaching capacity utilization
of approximately 83%.
The cement industry in India was highly fragmented, with more than 50 cement producers and more
than 140 manufacturing plants. (Exhibit 5 provides market share information of leading cement producers
in India.) The industry was fragmented, in part, because cement production is dependent on the availability
of limestone, which is heavy and expensive to transport. As a result, the industry was highly regionalized,
with cement plants clustered close to limestone deposits. Some 83% of domestic production in India took
place in the seven limestone rich states of Madhya Pradesh, Andhra Pradesh, Rajasthan, Gujarat, Karnataka,
Tamil Nadu, and Maharashtra. The two major cement manufacturing costs were power and transportation.
The cement manufacturing business consumed vast amounts of power and was significantly affected by
electricity prices. Coal and power accounted for 34% of total cement production costs, while transportation
accounted for about 22%.
Prior to the 1980s, cement had been a controlled commodity in India. But economic liberalization led
to an open market and increased competition. Cement became an open market with few opportunities for
quality differentiation. Every cement manufacturing firm in southern India was subject to price fluctuation.
(Exhibit 6 presents historical cement prices in Madras Cements’ key markets.) The cement industry is capital
intensive. To remain competitive, cement producers focused on lowering their cost structures below the
industry average.
Achieving Operational Efficiency
The top managers of Madras Cements, including former CEO Venketrama Raja and Dharmakrishnan knew
that lowering the company’s cost structure would require accurate, transparent, and timely information. The
company would need effective information architecture to collect and manage this information.
Mar 2020.
Madras Cements had a history of investing heavily in IT infrastructure at each of its plants to
systematically monitor and control costs. With the support of Raja, Madras Cements had launched IT-projects
as early as 1983. Raja had always encouraged the management team to develop IT strategies that would give
the company a competitive edge. Raja was the brain behind the founding of Ramco Systems, one of the first
software product-based businesses in an Indian software industry that was primarily focused on services.
Previous IT Initiatives
In the 1980s, due to price controls and a permit system for cement, Madras Cements had to deal with
thousands of cement customers who wanted only 5-10 tons of cement. Distribution and accounting systems
became complex, prompting Madras Cements to adopt new technologies. Madras Cements was one of the first
in its industry to heavily invest in information architecture development. As early as 1983, the company
set up a UNIX-based mini-computer running COBOL. This move marked the beginning of the company’s IT
revolution.
A computerized payroll, finance, inventory, and invoicing system was developed at the R R Nagar plant
in 1985 and Madras Cements had a dedicated IT staff at its manufacturing plant to support its growing IT
infrastructure. The same model was replicated at the Jayanthipuram, Alathiyur, and Mathoduand plants
as they became operational. In addition to a self-contained information architecture, each plant had an
internal IT organization to support the systems.
By the mid-1990s, the company’s information systems were very different at each of its four plants. As
the company grew, its management information system (MIS) was not able to keep up with the company’s
four factory systems. Each plant had a closed system with its own set of software, platforms, and processes
and did not share information with the other plants.
Madras Cements adopted state-of-the-art technologies in its manufacturing units to bring the company
in line with industry standards. The implementation included fuzzy logic software systems for process
controls, installing programmable logic controllers, using vertical mills for cement grinding, and adopting
advanced X-ray technology for quality control. Madras Cements continued to evolve until all of its critical
business processes were running on IT solutions.
Headquarters, nevertheless, received different metrics from each plant. Each plant measured different
items and measured in dissimilar ways, making it difficult to make comparisons or benchmarks. The Alathiyur
plant, for example, would send a “Combined Parameters at a Glance” report; the other plants did not. Further
complicating the company’s data management, each plant reported its metrics at different times during the
month.
Coordination between departments and people became increasingly problematic. This was before the
ERP era when no real time information was available. Information that was available was neither consistent
nor transparent. Employees used their own formulas and formats for generating reports and analyzing data.
Madras Cements wanted to standardize data management under one platform across all departments
and units. The company wanted to standardize the way its employees looked at data, understood it, and
interpreted it, so they all spoke the same language when analyzing data and making decisions. The company’s
systems, nevertheless, were not able to manage these complexities.
Mar 2020.
Missing the Right Reports: Need for an Enterprise Resource Planning System (ERP)
Headquarters was spending a significant amount of time and resources to standardize reports for
management. The reports had to be consolidated manually at the corporate level, which meant long delays
and the introduction of human error. Each report requested by management required two to three days of
analyst work to put the data in the correct format.
“Reports were prepared by the 10th of the month, the different manufacturing plants held discussions
by the 12th, and senior management met to discuss the reports around the 20th of the following month,”
Dharmakrishnan said. “This timeline was too stretched to react to the market. We, in the past, never looked
at efficiency. Our margins increased primarily by increasing prices.”
Not only were the requested reports not available in real time, but reliability was questionable. The
underlying information was not standard across plants and after the data was massaged to fit the correct
format. It became difficult reconcile data from the four separate plants and there were often disagreements
between corporate analysts and plant personnel regarding the accuracy of the figures in the reports. Madras
Cements was expending resources to create basic management reports, but the managers were making
decisions based on information that was inadequate, incomplete, and inaccurate. It was clear to senior
managers that significant effort would be required to standardize processes across plants and to establish
the information architecture required to effectively monitor and control costs.
First Implementation: An Unsuccessful Attempt
Founded in 1989, Ramco Systems, a sister company of Madras Cements specialized in developing and
deploying ERP solutions. By mid-1990, the company had just finished developing its e.Applications 1.0
ERP suite and was searching for customers to showcase the solution. It was a boon time for ERP. The
systems were being touted an effective IT solution that all companies should adopt. However, there were
innumerable examples of failed ERP implementations, some that had even driven companies out of business.
Employees of Madras Cements were hesitant to embrace the proposed ERP system, and some senior managers
were reluctant to sign off on the ERP implementation.
Nevertheless, in 1998, the e.Applications 1.0 ERP suite was used at Madras Cements to integrate IT at
each of the company’s plants and headquarters. One of the primary reasons for this decision was management’s
desire to assist its sister company, but the ERP implementation cost of about 10 million rupees (244,000
USD based on the 1998 exchange rate), brought few immediate benefits to Madras Cements, and left top
management dissatisfied. There were a number of reasons why the initial implementation did not work.
First, there were organizational challenges. Senior management had not been directly involved in the
project. Mapping and streamlining process flows was not within the scope of the project, and the risks of an
unsuccessful ERP implementation were not thoroughly examined. Vendor selection was also biased toward
the sister company.
Second, the e.Applications 1.0 ERP system had not been fully field tested. Madras Cements was one of
Ramco’s first customers. The system was also not customized to Madras Cements’ needs.
Third, users were not fully trained in use of ERP data for decision-making. They were not aware of the
importance and the impact of the integrated, online nature of the information available through ERP. They
even harbored suspicions that they would be better off without ERP.
4
Mar 2020.
The ERP system was not functioning as expected. The information collected from different plants was
still not standardized, which meant that management still had a difficult time making accurate operational
decisions. One key indicator was the time element associated with power consumption data collection and
collation at each plant — anywhere from a week to a month. This delay hampered senior management’s
ability to effectively control one of the company’s biggest cost components. After the unsuccessful
implementation, senior managers were concerned that they were going to be worse off than they were before
the implementation. They questioned:
Are ERP systems inherently not as productive as everyone claims they are or was Madras
Cements’ bad experience due to factors other than the ERP system?
Rethinking the Approach
Senior managers at Madras Cements viewed the implementation failure as an opportunity to start
rethinking their overall approach to technology management. At an executive meeting, managers took
external inputs and internal suggestions and discussed how they could leverage collective learning from
the unsuccessful ERP implementation. The analysis revealed that the main cause of the failure had been
an emphasis on technology at the expense employee and executive needs. The primary obstacle had been
employees’ reluctance to give up the current culture and practices of information use.
Social Transformation
With fresh knowledge and insights, executive management embarked on a series of initiatives to re-
implement ERP — this time successfully. The company realized it would have to take on more responsibility.
The technology was the vendor’s, but the processes were the company’s. The consensus was that senior
management should drive the project, and Dharmakrishnan was tapped to lead the second ERP implementation.
Senior management realized that the goal of ERP implementation was not just successful deployment,
but implementation of a system that allowed end users to attain tangible business results. This meant
a transformation in how employees and managers used data. Dharmakrishnan knew that the plants were
disconnected. They did not share information and managers were still running their businesses with the same
old regional inefficiencies. Employees would not use technology or data simply because it was available.
Madras Cements had to build a culture of information transparency and knowledge sharing across plants.
Unless management devoted the required resources for training, the implementation would not be successful.
Dharmakrishnan wanted to take the best capabilities Madras Cements had and leverage them in
operations across the country. He felt that the company had to encourage a culture and system in which
employees became adept at exchanging ideas, processes, and systems among Madras Cements’ four plants.
It also was essential that workers lost their “not-invented-here” mindset. Employees would question and
challenge any major change. For the company to establish its presence across India, its employees had to
change the way they thought and acted, taking on progressively more responsibility. They needed the right
information architecture and reports to provide transparency in decision making and to scale operations.
Fresh Start: New Mindset and Managerial Orientation
To create a culture of transparency and operational efficiency, Dharmakrishnan initiated a process

oriented approach. This meant mapping out existing processes and creating a set of flexible and transparent
Mar 2020.
processes that would be standard across plants. In this way, Madras Cements would adopt a total quality
management system companywide. Dharmakrishnan was sure that transforming the business processes into
a flexible and predictable system would provide real time visibility, putting within reach the company’s
primary desired outcome — cost competitiveness. Providing a clear process map and technical description
of business processes would facilitate clear communication among various stakeholders. The challenge would
be putting it into practice.
His first few experiments exposed the inefficiencies of existing processes and managerial decision-
making. Even though employees could see the inefficiencies, they resisted the idea of a single company
vision. Dharmakrishnan had expected that this would be a difficult change to make. It would only come
about by exposing employees slowly to new ideas, enabling them to begin to accept the new competitive
reality as well as the managerial practices that accompanied it. For this, he adopted a phased approach.
The phased implementation allowed for a gradual increase of transparency in business operations at various
levels of management.
He also started encouraging users to focus on understanding which sets of information, available as a
result of a successful ERP implementation, would enable Madras Cements to derive significant cost, quality,
and cycle-time improvements. This was consistent with the message given in the University of Michigan
Executive Program that Dharmakrishnan had attended in late 2000.
New Implementation: Second Chance
When Madras Cements decided to undergo a second ERP implementation, Ramco Systems had created a
revised version of its e.Applications suite, called the e.Applications 3.0 system. Madras Cements’ management
decided to give Ramco Systems a second chance for the ERP implementation, a sign of support for its sister
company. It was imperative that Ramco Systems demonstrate a successful implementation to establish its
presence in the ERP market.
Phased Approach
Dharmakrishnan quickly put together a cross functional team that included analysts from headquarters,
IT personnel, functional experts from headquarters and the plants, as well as implementation experts from
Ramco Systems. Additional resources required from the different functional areas and the plants were brought
in on an as-needed basis. (Exhibits 7A and 7B provide details of the IT organization and infrastructure at
Madras Cements. Exhibit 8 depicts the profiles of users at Madras Cements.)
The team followed the phased approach for ERP implementation that called for rolling out an ERP
package one location and one module at a time. The benefit of this approach was that if an error was
detected at one location, it could be fixed before the ERP package was deployed at all locations. In addition,
with a phased approach, the resource requirements were lower because the implementation was spread over
an extended time frame. The experience gained from implementing the ERP in one module or at location
could be applied to the next module or location.
The phased approach allowed for progressive ERP implementation with minimal risk. Users were trained
gradually one module at a time. User acceptance was something Madras Cements wanted to address during
this second shot at implementation. The only drawback was that it required the company to run its legacy
system and the new ERP system in parallel until ERP was deployed at all sites.
Mar 2020.
Process Redesign and Training

The first task of the core team was to map out existing processes across nine functional areas and
modules. The team quickly found that the processes were different for each plant. These separate processes
were taken as inputs and used to create a set of “to be” processes, which would be standard across all the
plants. Dharmakrishnan spent six months with the core team discussing the overall direction of business
processes and finalizing the logic. The team then mapped existing processes, identifying opportunities to
improve processes, and converting them to “to be” processes. The team also had to account for a weak
communications infrastructure linking the plant sites. The infrastructure was not robust enough to allow for
every transaction to be executed in real time. (Exhibit 9 gives an overall view of the communications network
infrastructure.) Team members had to design processes in such a way that approximately 95% of processing
happened within the local IT infrastructure of each plant. The team took about a month per module to map
existing processes, convert them into “to be” processes and then test the “to be” processes.
To prepare the rest of the company for the implementation, Dharmakrishnan initiated a recurring program
to train users on the ERP system. The training was primarily provided by Ramco Systems and covered a basic
overview of ERP as well as details about the impact of ERP on each of the nine modules. Every employee of
Madras Cements underwent training. The training, apart from educating the employees, also served to allay
any fears employees might have had about job loss due to automation of processes.
In November of 1999, all the processes were fully tested and in place and Ramco Systems started
deploying the e.Applications 3.0 at R R Nagar, Madras Cements’ oldest plant. The goal was to deploy
the complete system at this facility first and work out any problems before deploying the system at the
next manufacturing facility. A month after successful deployment of e.Applications 3.0 at R R Nagar, the
Jayanthipuram plant went online with the e.Applications suite. In the next few months, all of the plants
and the corporate headquarters were successfully using e.Applications 3.0. However, management at Madras
Cements recognized that successful implementation of ERP was not the end, it was in fact the beginning
of a new culture of transparency and evidence-based decision making. This culture required facilitation by
senior management.
Customizing Reports: Information Pull vs. Push

When the ERP suite was implemented, built-in reports were incorporated in the system. However, many
users felt that these canned reports were inadequate for their analysis and decision-making processes.
The real success of ERP was how it would be used to improve operational efficiency and decision-making.
Dharmakrishnan pushed the organization to customize the reports to meet user requirements. He formed a
team of IT analysts within Madras Cements headed by G. Murugesan, the deputy general manager of IT. The
team was tasked with the following:
• Develop user friendly reports that can be understood by every employee.
• Interface all non-ERP applications such as weigh bridge, attendance recording system, and fixed
deposits with the ERP system.
• Capture and incorporate process data into the ERP system in real time.
• Train users in proper and efficient use of reports.
• Study and improve security of data.
The team developed a set of MIS reports under the guidance of Dharmakrishnan and the IT staff. Users
also were trained to use the reports. (Exhibit 10 provides screen shots of sample reports.) More than 80% of
these reports were customized and designed based on the information needs of managers.
Mar 2020.
Business Benefits: The Essence of Transformation

When Dharmakrishnan initiated the ERP exercise, he did not even have a computer at his desk and was
not using any computerized processes to track the business. As he started devoting more time to the ERP
project (almost 70% of his time in 2003), he began to realize the benefits the successful use of the ERP
system could bring to Madras Cements.
One such benefit was how ERP generated data that was used to both reduce inventory and optimize
logistics. Madras Cements had maintained 40 warehouses loaded with various cement products to supply
its distributors. With the new analysis based on ERP data, Dharmakrishnan concluded that Madras Cements
needed only nine warehouses to maintain its delivery standards and meet regulatory requirements. However,
this conclusion was opposed by some of the old guard. They voiced their opposition to the warehouse
reductions by referring to the state regulation that prevented delivery trucks from entering and leaving major
cities during business hours. They argued that all the warehouses were needed to ensure deliveries.
Instead of backing down, Dharmakrishnan went back to his data to see if anything could be done
about the way delivery truck operations were managed. While doing the analysis, he realized that the way
delivery trucks were being dispatched essentially forced them to spend most of the day waiting at rest stops.
After consulting his production planners and logistics partners, Dharmakrishnan and his team were able
to revise the scheduled pickup and drop-off times for the delivery trucks, improving fleet use by 50% and
demonstrating that Madras Cements needed only nine warehouses.
Madras Cements made the reduction in warehouses for a cost savings of more than 9.7 million USD. This
enabled the company to be the only one in its industry to make profits during the years 2003 and 2004,
when its competitors were taking huge losses. Following this episode, opposition to the ERP weakened and
the company saw improvements in customer satisfaction, plant efficiencies, and transparency.
ERP provided a uniform system across plants and corporate headquarters that allowed Madras Cements
to follow up on customer orders to ensure higher customer satisfaction. After ERP was implemented, orders
were shipped less than 24 hours after being received.
Now that everything was automated and standardized, Madras Cements could benchmark one plant’s
performance against others, ensuring efficiencies throughout the company. Instead of waiting to receive and
review reports, managers could act upon the real time information they had to further improve the business,
using “dashboards” of critical information.
Having experienced firsthand the power of technology, Dharmakrishnan wanted to ensure that the
entire company benefited from IT. He had IT personnel attend business meetings as observers to collect
information about what was discussed. He then asked IT to use that information to create and modify reports
to better serve the needs of employees and the business. Although there was some employee resistance,
once employees saw that IT was creating significant cost savings, it quickly subsided.
As a result of these changes, Madras Cements had the lowest cost structure in the cement industry in
India. Successful deployment of e-Applications 3.0 in 2006 across all plants and headquarters resulted in
significant cost savings and efficiency improvements. (See Figure 1).
Mar 2020.
Figure 1
E-Applications 3.0 cost savings and efficiency improvements.
• Overall operations consistency was achieved and productivity was enhanced from 5 tons to 10
tons per hour. This created annual savings of approximately $1.8 million.
• By continuously monitoring factory operations using real time data in ERP, power generator
utilization increased by 10% and electricity consumption was reduced by 10 units per ton.
This resulted in recurring annual savings of about 4 million USD.
Production
• Expected cement bag weight was achieved for 99% of production, resulting in annual savings
of about 2 million USD.
• Weight variation in cement bags was reduced from 40% to 2% resulting in net annual savings
of 2 million USD.
• On average, variable costs decreased by 6 USD per ton.
• Better prices were realized from the vendor by comparing unit prices, available discounts, and
credit periods.
Materials
• Inventory levels were reduced by monitoring materials received and consumed within the
committed time. This resulted in recurring annual savings of approximately 450,000 USD.
• Variable costs were analyzed on a daily basis for each process center.
Management
Accounting • Fuel efficiency was analyzed with calorific value and the market price of the items, arriving at
an economical fuel mix.
• Trial balances of all factories were analyzed with greater detail.
• Administrative overhead was reduced without affecting operations. Reductions were achieved
mainly by process redesign. For example, with IT charges (bank charges for non-local
transactions) all major payments were made locally by negotiating with the excise/sales
Finance
tax/electricity authorities rather than transferring the funds to the factories. Reduction of
administrative expenses resulted in a recurring annual savings of about 450,000 USD.
• One-hundred percent adoption was achieved for the costing system, which updated profit and
loss for the entire firm in real time upon entry of a transaction.
• Pending orders could be executed within 24 hours. This led to increased customer
satisfaction.
• Transporters’ freight was analyzed on a daily basis to determine logistics. Stock transfers to
Sales depots were handled without any re-handling process.
• Analysis of ERP data led to the closing of more than 90% of stock, which enabled the company
to save on stock holding, transportation, and re-handling. This resulted in a recurring annual
savings of about 3.6 million USD.
• Performance was analyzed on a mine, equipment, and shift basis. Based on this analysis,
about 60% of heavy equipment was withdrawn from operations due to poor performance or
underutilization.
• The number of shifts was brought down from three to two.
Overall
• Re-handling of materials was brought down to near zero from the previous rate of 0.40 USD
per metric ton. This resulted in a recurring annual savings of about 700,000 USD.
• The company realized 22 million USD in cost savings overall as a result of successful ERP
implementation.
Source: Madras Cements
Mar 2020.
Web-based Centralized ERP
Madras Cements continued to use the application until 2008, when the goal became to improve the
system. The company decided to move from its decentralized, desktop-based ERP 3.0 system to a centralized
web-based 4.2 system. It took just six months to install the new system and it was a smooth transition
thanks to the experience the team had gained during the previous implementation and assistance from
Ramco Systems.
In the upgrade, the project team interacted with the users extensively during the pre-implementation,
implementation, and post-implementation stages. The team told the ERP vendor what the users wanted. This
was the key to facilitating a smooth implementation.
To ensure that the benefits of the ERP system were penetrating all levels of the company, a special report
was added to the MIS that showed the access patterns of various users and their use of ERP and MIS reports.
Top management, including the chairman, monitored this data and sent gentle reminders to those who were
not using the ERP system properly. One-on-one follow-up sessions were also held with key users to get field
level feedback to sort out any implementation problems.
In addition to providing a better user interface, the new system provided improved control through
centralization. There was more consistency and it was easier to compare metrics across the organization.
The system also interfaced with a strong master data management system to ensure master items were not
duplicated, an essential component of a centralized IT configuration.
ERP became the backbone of Madras Cements’ information architecture and the workhorse of all major
business processes in the organization. The IT team believed that Madras Cements would see a multiplier
effect if it built innovative systems to complement ERP. In 2009, it launched a project called Beyond ERP
to build systems that would interface with ERP. These IT tools and technologies were intended to help
the company monitor, streamline, and secure its business processes while maximizing ERP potential. The
following sections describe some of the systems that were implemented under the Beyond ERP project.
Beyond ERP: Enterprise Mobile Computing
Madras Cements developed an in-house enterprise mobile computing (EMC) system that integrated
PDAs and mobile phones with the ERP to facilitate processes like ordering, invoicing, and pack slipping.
The application proved to be useful for mobile employees such as sales professionals, who could use it to
complete a sales order booking cycle. Soon, more than 80% of orders were booked through these PDAs.
This challenging project was carried out by an in-house team headed by P. Nagendran, the assistant
manager for IT, and guided by Murugesan, the IT deputy general manager. They received an exceptional
response from the sales staff. Plans were made to incorporate additional processes like approvals, credit
limit revision, and daily call reports into the PDA system the following year. (See Table 1 for each step of
the ordering process before and after the EMC implementation.)
The company introduced a customized MIS for mobiles, which enabled top management to access reports
through their mobile devices any time, anywhere around the globe. These reports were also designed in a
contextual manner, mapping information needs to the specific roles of the managers. For example, a senior
marketing manager was presented with all the sales and promotion performance information of interest to
decision making in his/her role.
10
Mar 2020.
Table 1
Order Process before and after EMC
Process Before Enterprise Mobile After Enterprise Mobile Impact
Computing Computing
At any point in time,
a salesperson could
A salesperson checked
use a PDA to access an Information on demand
with the sales office or
Pre-order information interactive information and better customer
maintained his/her own
system to learn about a satisfaction.
paper database.
pending order, credit limit,
etc.
A salesperson called
Empowerment of
someone in the regional A salesperson could book
salesperson; customer
Order booking office, who periodically an order through a PDA at
satisfaction improved due
booked orders into a any time.
to 24/7 order booking.
desktop ERP.
A salesperson contacted A salesperson could obtain Sales productivity rose with
Confirmation of booked
the regional sales office by order confirmation within fewer unnecessary phone
order
phone. one minute on a PDA. calls.
Order status was not
available except by Order status was updated
Order status Sales productivity rose.
checking with the factory automatically in the PDA.
dispatch section.
There was a requirement
for hardware and The simple mobile GSM /
The company cut costs and
Depot invoices complicated MPLS lines GPRS connectivity became
simplified operations.
or an alternative mode of sufficient.
connectivity.
Portability was a problem Portability was no longer a Online invoicing at railhead
Depot invoices
at railheads. problem. became possible.
Invoices were not updated
Stock positions updated
until the next day due to Invoices could be updated
Wagon dispatches online; better decision
problems with connectivity immediately upon dispatch.
making.
at the railhead.
Madras Cements made use of an interactive Short Messaging Service (SMS) platform to facilitate customer
queries related to the status of orders, checks, and last three payments. It also used a push-SMS system to
send data updates automatically to customers and top management officials. For example, when a cement
truck left the factory, an SMS went to the relevant salesperson and customer providing the time of dispatch,
truck number, and the quantity of product.
Compliance Software on top of the ERP

Compliance software at Madras Cements generated reminders and alerts regarding statutory regulations
and operational compliance. The application issued warnings based on ERP data to managers related to
processes that need to be followed. In the case of failures, it warned senior management.
11
Mar 2020.
Security of Information and IT Assets

To ensure the security of information exchanged over the ERP network, Madras Cements adopted
proactive measures, such as user rights management, firewalls (both hardware and software), an online
central antivirus system, proximity and biometrics solutions, and disaster recovery center. An in-house data
center hosted all the servers and provided 24-hour support.
As digitization spread through every aspect of the organization, there was a proliferation of IT assets. A
comprehensive approach to tracking IT assets was designed. A MIS stored the data on the vast IT infrastructure
of desktops, laptops, PDAs, printers, and servers. With the new asset-tracking system one could see with the
click of a mouse, at any point in time, which location had a particular type of asset. The system was also
useful for new hardware replacement requests.
Madras Cements also became paperless office. To accomplish this goal, it developed an online e-approval
system through a work flow process integrated with ERP. Instead of paper documents, only electronic
documents flowed through reviewers and approvers on computers and mobiles.
Insourcing of IT and Business Partnership
Senior managers at Madras Cements recognized the significance of IT in their business and developed
their own IT capabilities to customize the reports and new applications to their business needs. The internal
IT team was the enabling force behind the ERP implementation and the Beyond ERP project. (Exhibit 11
details the IT organizational structure.) Varadarajan, the senior general manager of IT, headed the team and
deputy general managers Murugesan and Muthukrishnan aided him. They developed a partnership between IT
and business for continuous innovation in business processes through strategic digitization. They developed
a strong internal IT group consisting of about 60 professionals. This team included talent with both business
and technology expertise. In addition, the IT team went to management meetings to get a firsthand look at
the information needs of managers.
The organization knew that installing a good ERP system was only the first step; the most important
aspect would be to run ERP and IT processes effectively and efficiently. The flexibility and transparency
provided to business through resilience in systems design and implementation did not come at the cost of
efficiency. The IT department set challenging goals for efficient IT operations and IT cost reduction. The
following table shows the status of the IT cost reduction projects in 2010. These goals were met through
optimization of inputs as well as service provider and supplier negotiations.
Area Annual Cost Savings (In Target for Reduction Status

Thousands of USD)
Connectivity 344 50% Achieved
AMC 98 12% Achieved
ERP Support 375 40% Achieved
DR Site 94 44% In Progress
Madras Cements also was undertaking a project to reduce the cost of replacing hardware with cloud
computing and virtualization.
12
Mar 2020.
Big Data, Google Maps, and Business Intelligence
In 2012 Madras Cements launched several new projects to further leverage digitization for decision
making. It implemented new technology platforms like Google Maps, which was used to track all highway
and dealership billboards. The platform captured information for each Ramco Cement’s billboard (brand name
for the Madras Cements products), such as the vendor who managed the billboard, date last painted, and
size, among other items. (See Exhibit 12). Employees also kept track of competitors’ billboards near the
company’s dealerships, updating the status of billboards (for example, if billboards were damaged) using
pictures taken with mobile phone.
Madras Cements was experiencing uncertainty in cement deliveries by rail. An internal team at Madras
Cements identified the availability of near real time GPS tracking data of each rail wagon on Indian railways.
The company then integrated this information using Google Maps (see Exhibit 13), and used the information
to improve delivery time estimates/delivery times for customers. Similarly, the company leveraged a Google
Earth platform to track power generation at its quarries, warehouses, and windmills. The information was
integrated with the company’s ERP transaction data to generate new business intelligence capabilities.
Conclusion
Before the ERP implementation, each manufacturing facility at Madras Cements manually entered its
reporting data in a separate Excel spreadsheet. The corporate office received these spreadsheets from each
facility at month end. After the ERP implementation, the data were available to senior management in
real time via a browser interface. With a focus on processes and executive leadership, the second ERP
implementation was a success. The ERP strengthened the Madras Cements’ IT abilities and enabled it to share
information in real time across the company, generating significant cost savings.
Madras Cements’ Dharmakrishnan was pleased with the progress the company had made since its first
failed attempt to implement ERP. At the end of each quarter, it was his responsibility to close the books,
a task that used to take days. Collecting all relevant data from the company’s manufacturing plants and
marketing locations across southern India was now done in real time. This was a direct benefit of the
business transformation he had championed in the second ERP implementation. Madras Cements later
launched several projects extending its IT capabilities beyond ERP. It continued to institutionalize a culture
of continuous business process innovation and performance tracking leveraging technology.
Dharmakrishnan wondered: Could Madras Cements leverage its IT architecture to influence revenues by
scaling operations to other Indian markets? Could the company diversify into ready-mix cement, or perhaps
shake up the entire construction industry by introducing just-in-time delivery processes? Or could Madras
Cements aggressively pursue acquisition of underperforming operations in key areas to scale its operations?
13
Mar 2020.
Exhibits
Exhibit 1
Ramco Group of Companies
Source: Ramco Industries Ltd.
14
Mar 2020.
Exhibit 2
Plant Locations
Source: Madras Cements Ltd.
15
Mar 2020.
Exhibit 3
Cement Manufacturing Process
Source: Climate Tech Wiki
Exhibit 4
Cement Demands Across India
Sources: CMIE; Ernst & Young analysis and India Brand Equity Foundation.
16
Mar 2020.
Exhibit 5
Indian Cement Industry Market Share (%)
Source: Parliament of India Rajya Sabha.
Exhibit 6
Historical Cement Prices in Madras Cements’ Key Markets (in Rupees)
Tamil Nadu Kerala

Year Year
Month Month
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
April 175 220 250 262 270 270 315 April 190 227 255 272 275 310 349
May 185 222 250 257 258 280 325 May 210 230 258 268 265 315 353
June 190 228 254 255 242 285 328 June 215 235 262 267 254 315 353
July 189 236 258 253 210 285 328 July 214 240 266 265 235 315 353
August 187 240 260 248 190 285 328 August 212 245 270 260 220 315 353
September 185 240 265 242 230 283 326 September 210 250 275 260 250 310 351
October 182 240 265 235 270 285 323 October 203 250 275 245 295 310 350
November 180 238 265 215 250 285 322 November 200 246 274 210 290 313 350
December 183 244 260 210 240 285 320 December 203 248 268 210 290 315 350
January 190 248 260 228 242 285 January 208 250 268 222 295 315
February 200 248 260 235 247 285 February 218 250 270 235 300 315
March 215 248 262 245 257 305 March 225 250 272 250 305 335
Avg. Price Avg. Price
188 238 259 240 242 285 324 209 243 268 247 273 315 351
for the year
for the year
Andhra Pradesh Karnataka - Ex Godown Prices

Year Year
Month Month
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
April 165 205 212 215 190 250 275 April 195 216 230 240 240 270 295
May 175 207 212 210 165 260 257 May 210 218 230 238 225 275 297
June 175 210 216 208 160 250 255 June 210 220 235 236 210 275 295
July 175 215 220 206 156 253 266 July 210 230 240 234 200 275 294
August 174 213 222 195 150 255 251 August 208 232 244 234 190 275 297
September 173 210 220 180 182 258 223 September 205 226 248 225 215 275 296
October 171 210 218 150 230 262 237 October 205 225 248 210 265 275 296
November 168 208 216 140 220 260 260 November 202 225 246 195 255 278 296
December 170 208 210 143 215 260 236 December 202 226 240 195 245 278 296
January 175 208 210 151 225 265 January 204 228 240 198 240 280
February 185 208 210 158 230 270 February 204 228 240 205 245 280
March 200 208 220 165 237 280 March 214 228 240 215 260 300
Avg. Price Avg. Price
176 209 216 177 197 260 251 206 225 240 219 233 278 296
for the year
for the year
Source: Madras Cements.
17
Mar 2020.
Exhibit 7A
IT Infrastructure: Machines
Server Type Configuration Function
Intel® Xeon® E7-2830 (2.13GHz/64-
ERP Front End ERP Front end Server
core/24MB/105W) 4 Processor\256 GB RAM
Intel® Xeon® E7-2830 (2.13GHz/64- All Database related to ERP
ERP Database Server
core/24MB/105W) 4 Processor\512 GB RAM Application is maintained
Intel® Xeon® E7-2830 (2.13GHz/64-
ERP Database Server ERP DB Failover Cluster
core/24MB/105W) 4 Processor\512 GB RAM
All Internal and External mails are
Intel Quad Core E5320 CPU(1.86 GHz)x2/8
Mail Server routed through the mail server using
GB/2x146 GB
MS-Outlook for client authentication
Intel Quad Core E5320 CPU(1.86 GHz)x2/8
HRMS Front End HRMS Front end Server
GB/2x146 GB
Intel Quad Core E5320 CPU(1.86 GHz)x2/8 All Database related to HRMS
HRMS Database Server
GB/2x146 GB Application is maintained
Exhibit 7B
IT Infrastructure: Number of Workstations
Module RRN JPM ALA COR MKT Total
Finance (GL&AP) 11 6 12 9 - 38
Logistics (POM&IMS) 8 7 10 2 - 27
Maintenance (EQP&MO) 10 12 16 - - 38
HRM (HR&PAYROLL) 3 4 4 5 - 16
Sales (SOM & SHP) 4 3 5 10 - 22
Mines (ORE) 8 3 3 3 - 17
Production (CPP) 6 1 3 - - 10
OCM 3 2 3 - - 8
Marketing - - - - 52 52
General 50 35 61 22 - 168
Total 103 73 117 51 52 396
18
Mar 2020.
Exhibit 8
Number of Users
Module RRN JPM ALA COR Total

Finance (GL&AP) 11 10 12 9 42
Logistics (POM&IMS) 8 11 10 2 31
Maintenance (EQP&MO) 47 43 53 143
HRM (HR&PAYROLL) 8 5 8 5 26
Sales (SOM & SHP) 4 3 5 10 22
Mines (ORE) 33 17 17 4 71
Production (CPP) 13 9 8 30
OCM 15 9 15 3 42
Marketing 139 107 128 33 407
General 50 35 61 22 168
Total 189 142 189 55 575
Exhibit 9
Madras Cements’ Network Infrastructure
19
Mar 2020.
Exhibit 10
Screenshot of Sample Reports
20
Mar 2020.
Exhibit 11
Madras Cements IT Structure in 2011
Exhibit 12
Example of Billboard Tracking and Dealer Locations
21
Mar 2020.
Exhibit 13
Real-Time Tracking of Inventory in Rail Wagons
22
Mar 2020.
Endnotes
1
Vijayakumar, Sanjay. “How South India’s No. 2 cement maker, Madras Cements, is setting industry benchmarks,” Economic Times,
January, 2013.
23
Mar 2020.
Established at the University of Michigan in 1992, the William Davidson Institute
(WDI) is an independent, non-profit research and educational organization focused on
providing private-sector solutions in emerging markets. Through a unique structure
that integrates research, field-based collaborations, education/training, publishing,
and University of Michigan student opportunities, WDI creates long-term value for
academic institutions, partner organizations, and donor agencies active in emerging
markets. WDI also provides a forum for academics, policy makers, business leaders, and
development experts to enhance their understanding of these economies. WDI is one
of the few institutions of higher learning in the United States that is fully dedicated to
understanding, testing, and implementing actionable, private-sector business models
addressing the challenges and opportunities in emerging markets.
Mar 2020.

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case W89C25

Revised July 11, 2014

Achieving Operational Efficiency

First Implementation: An Unsuccessful Attempt

Rethinking the Approach

Fresh Start: New Mindset and Managerial Orientation

To create a culture of transparency and operational efficiency, Dharmakrishnan initiated a process

New Implementation: Second Chance

Process Redesign and Training

Customizing Reports: Information Pull vs. Push

Business Benefits: The Essence of Transformation

Web-based Centralized ERP

Beyond ERP: Enterprise Mobile Computing

Compliance Software on top of the ERP

Security of Information and IT Assets

Insourcing of IT and Business Partnership

Area Annual Cost Savings (In Target for Reduction Status

Big Data, Google Maps, and Business Intelligence

Source: Ramco Industries Ltd.

Source: Madras Cements Ltd.

Source: Climate Tech Wiki

Source: Parliament of India Rajya Sabha.

Tamil Nadu Kerala

Andhra Pradesh Karnataka - Ex Godown Prices

Source: Madras Cements.

Module RRN JPM ALA COR Total

Source: Madras Cements Ltd.

Source: Madras Cements Ltd.

Source: Madras Cements Ltd.

Source: Madras Cements Ltd.

Source: Madras Cements Ltd.

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