Hero Honda Mis

TERM PAPER OF INFORMATION MANAGEMENT IN BUSINESS ON HERO HONDA MOTOR LIMITED’S INFORMATION MANAGEMENT

DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW

ACKNOWLEDGEMENT I express my profound sense of gratitude to my faculty guide Mr Sanjay Medhavi, faculty member, Department of Business Administration, University of Lucknow, and my teacher of ‘Information Management in Business’, for his systematic guidance throughout this term paper. I would also like to thank him for giving such a topic for term paper which helped me to develop a practical insight of whatever I had learnt in the class. I would also like to express my heartfelt thanks to my family members and my friends, who extended all kinds of cooperation to me throughout the course of this work.

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CONTENTS 1. Introduction-------------------------------------------------------------------4 2. Pre SAP Scenario-------------------------------------------------------------5 3. The IT Infrastructure---------------------------------------------------------6

4. Enterprise Application-------------------------------------------------------7 5. Supplier & Customer Relationship Management------------------------9

6. eHR Implementation---------------------------------------------------------11 7. Information & IT security management----------------------------------12 8. Benefits to HHML-------------------------------------------------------------20 9. Bottlenecks----------------------------------------------------------------------22 10. Snapshots of IT setupat HHML--------------------------------------------23 11. Summary-----------------------------------------------------------------------24 12. Bibliography------------------------------------------------------------------25

INTRODUCTION 3

One of the biggest success stories in the Indian two wheeler segment, Hero Honda is a household name today. What’s not so well known is the fact that the company has successfully used IT to help it reach the top.

What started out as a Joint Venture between Hero Group and the Honda Motor Company of Japan, has today become the world’s single largest twowheeler Company. Coming into existence on January 19, 1984, Hero Honda Motors Limited (HHML) gave India nothing less than a revolution on two-wheels, made even more famous by the ‘Fill it - Shut it - Forget it ‘campaign. Driven by the trust of over 5 million customers, the Hero Honda product range today commands a market share of 48% making it a veritable giant in the industry. Add technological excellence, an expansive dealer network, and reliable after sales service to that and we have one of the most customer- friendly companies. Customer satisfaction, a high quality product, coupled with the strength of Honda technology and the Hero group’s dynamism has helped HHML scale new frontiers and exceeds limits. For New Delhi–based Hero Honda, success has brought significant rewards – and some daunting challenges. The company, established in 1985 as a joint venture between Hero Group of India and Honda of Japan, holds a 50% market share in India and has grown to become the world’s largest two-wheeler manufacturer. In the last six years Hero Honda’s sales volume grew by 400%, and this year the company expects to manufacture and sell more than 3 million motorcycles. It’s no wonder that Hero Honda has won accolades in the New Delhi business press. In fact, in 2001 Hero Honda’s chairman Brijmohan Lall Munjal received the “Ernst & Young Entrepreneur of the Year” award for India, and in 2005 he was presented with the “Padma Bhushan,” a prestigious award from the Indian government. But growth has brought unique challenges, too. Hero Honda now supplies motorcycles through more than 500 dealers and 700 service points, institutions, and overseas customers. In addition, the company calls on more than 240 suppliers for its parts and subassemblies. The challenge for Hero Honda: cut time and waste out of its supply chain and add more flexibility in meeting the fastchanging dynamics of the modern market in India Hero Honda is a leader in the two wheeler segment in the country, and even claims to be the world’s largest two wheeler company in its advertising. To reach the heights that it has, Hero Honda has successfully leveraged the IT advantage, especially in recent times.

PRE SAP SCENARIO 4

The company has a highly efficient and reliable network today. But till 1998 Hero Honda depended on legacy systems, which had a high failure rate. The set up was not in a position to cater to the expansion that Hero Honda went through and was not suitably updated. Because it was obsolete, the management decided to revamp the entire IT set up according to S R Balasubramanian, vice president, Information Systems, Hero Honda Motors. HHML had legacy systems working on different platforms, which were developed in-house and tailor-made to their method of working. Since the legacy systems took care of data processing, only some operational reports got generated by the system. Real MIS resided on Excel sheets along with different kinds of analysis. Information, therefore, was fragmented and the authenticity was questionable. Over a period of time, the systems underwent changes and represented a patchwork of several additions and modifications. They were loosely integrated across functional areas. There was duplication and information inconsistency as happens with most legacy applications. It was therefore important to migrate from this platform to something more stable and futuristic.

MOTIVATION FOR CHANGE At that point of time the management perception about IT was also changing and they decided IT would be part and parcel of Hero Honda. This helped in modernising the information systems at the company. Apart from this, competition in business and deployment of bandwidth hungry applications forced the company to migrate from a slower legacy network to the new faster and more reliable network. The management’s vision was to align IT with business. IT was to be used as a strategic business tool rather than for a limited purpose of data processing. An information systems plan was drawn up, which besides other things, stated that the organisation would go for common systems across the organisation. It would also achieve integration between all systems; emphasis would be on improving business processes, to adopt best practices and to cover the entire supply chain. HHML wanted to consider only state-of-the-art systems and one which had a clear road map for the future including conduct of business over the net. Tired of in-house developed systems, they wanted a standard solution and in particular, an ERP. Their idea was to partner with a technology vendor capable of taking them forward as the business expectations increase.

THE IT INFRASTRUCTURE 5

The IT infrastructure of the company is connected over three major Local Area Networks (LANs). These connect the corporate office in New Delhi with two manufacturing plants (Gurgaon and Dharuhera), and other zonal and marketing offices. 21 locations are connected through its Wide Area Network (WAN) set-up. Most of these locations are connected with the corporate office through VPNs, leased lines, and at few places through VSAT connectivity. The motorbike major has a total of seven TDM/TDMA VSATs and two PAMA VSATs. As far as the VPN set-up is concerned, it is still a closed-user group. For connectivity between its Dharuhera and Gurgaon facilities the company uses a very fast radio link. The company has installed the PAMA VSATs from Comsat Max as a backup facility. The Hero Honda network spans 750 nodes across the country. Hero Honda uses 10/100 Mbps Ethernet switched technology for data transmission and is connected with both optic fibre and Cat 5 cables. Optic fibre is used for the backbone, which will also solve the future bandwidth requirements of the company. The company has three Cisco routers. The company also uses a mix of switches from three vendors: Cisco, IBM and 3Com. For non-critical applications, the company has opted for 3Com switches. “As IBM switches are cheaper than Cisco ones, we will be going in for more and more IBM switches in the future,” says Balasubramanian. All the switches and hubs at the company are managed devices. Apart from this the company also uses an IBM RS 6000 server for running SAP applications, and other midrange servers for running Ingres and Oracle. For Lotus Notes applications the company has opted for IBM’s Netfinity servers. As far as other networking hardware is concerned, the Gurgaon plant has two Cisco routers, which are connected to an IBM LAN Route Switch, and the storage box is connected to the RS 6000 server. The company is also using a tape library, which works as a backup device. One of the key features of Hero Honda’s networks is that most sites enjoy excellent backup facilities. For instance, Dharuhera is connected directly to Comsat Max’s PAMA VSAT main hub. The IT facilities at Gurgaon are connected with two electrical sources, two MCBs, and two UPSes. The company has also installed an extra server as a backup. It possesses a Network Attached Storage system, with plans to shift to a Storage Area Network. For this Hero Honda has gone in for an IBM Trivoli solution. The whole idea was that information systems should be able to cater to 99 percent of availability. Even if a LAN or a switch fails it should just take 10 minutes to switch to another LAN or switch.

ENTERPRISE APPLICATIONS

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A good and reliable messaging system was a long-standing need at Hero Honda. When they first introduced messaging, it took off very well. To ensure its success the management arranged training programmes at all the three major areas and also invited the regional offices to join in. The success of the messaging system was so good that people started overlooking the VSAT network. The company messaging set up evolved around Lotus Notes. They evaluated both Microsoft Exchange and Lotus Notes, and finally decided to go in for Lotus Notes. The Lotus Notes application at Hero Honda evolved around those applications that users are familiar with. This is done as a part of the information systems plan along with the business plan to integrate information systems in the organisation, integrate all the departments. As the management knew that the implementation of ERP would take some time, they wanted to use that time to introduce an IT culture in the company. After the successful implementation of this system, the IT set-up faced some problems during the first Diwali after the introduction of the messaging system. This happened because of huge number of greeting messages and card attachments. This prompted the company to introduce a new greetings system on the lines of Bluemountain.com. They opened up a car4.809 cmd’s library system and asked the users to go to the card library and select a card and send it across. By this, no attachment would go, but only the link. After this they were able to avoid a considerable amount of traffic. And users were quite excited about having a card application. People started enjoying the use of IT applications. Subsequently, the company put up an intranet and workflow applications.

ERP IMPLEMENTATION The next move was to implement ERP in order to integrate various functions and control its operations. The company went live with SAP R3 on February 1, 2001. It uses modules like production, materials, finance, marketing, assets, quality sales and distribution. Siemens Information Systems was the implementation partner for this rollout. The ERP implementation presented a high level of data integration. “ERP has helped the company immensely. Today nobody asks any other department for information. One can log in and see reports online,” says Mukesh Malhotra, deputy general manager, Hero Honda Motors. They were able to implement better cost control measures. This had helped them in calculating the cost of consumables, tool inventory cost, power and fuel costs, and plant overheads. Because of this they also became ready for future SCM and CRM implementations.

SAP’S ROLE

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HHML evaluated BAaN and Oracle. The overwhelming presence of SAP in the automotive sector was one of the important reasons for selection. The customer references spoke strongly about SAPs ability to address the needs. The project took off with a great start. It imparted one-day awareness training sessions to around 135 managers and key users explaining the project and roles of core team members and users. There were hiccups in between because of staff turnover at the implementation partners’ end because of which the project had to be extended by a month. However, they kept various activities on schedule. They were one week behind at the last stage of Go-Live preparation but made that up in the last month. The Steering Committee played a useful role and wherever some policy issues could not be decided, the CEO intervened to resolve. End users were involved at various stages and hence they adapted to the new systems well. The first few days saw several problems but the help desk (available 24 hrs) attended to them promptly. Every day thereafter saw lesser problems and the operations got streamlined in 15 days. The yearly closing ended on the 31st March 2001, (2 months from Go Live) and was completed in 24 days. Year closing for the following year was achieved in 11 days and HHML was the second company in India to declare results. This indicated the stability of systems and the efficiencies achieved.

IMPLEMENTATION PARTNERS Siemens Information Systems Ltd (SISL) were the implementation partners. They imparted initial training to the users and core team members. They also helped in redefining various processes based on their experience. They gave valuable suggestions for improvement at various stages. In the Steering Committee meetings they clarified various issues and helped in convincing the management to make various changes.

RECORD-BREAKING IMPLEMENTATION TIME Hero Honda also profited from services delivered remotely by SAP consultants in Singapore and software developers in Walldorf, Germany. This international approach ensured that any issues were dealt with rapidly and effectively. The speed with which technical issues were resolved was impressing. In some cases, SAP’s German developers found answers overnight. Thanks to close collaboration between SAP and Hero Honda, the project was completed in a record three months. Implementing the latest mySAP SRM and mySAP CRM capabilities in such a tight time frame was an ambitious goal

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SUPPLIER & CUSTOMER RELATIONSHIP MANAGEMENT Automotive – Motorcycles

Processing Orders Manually They have a large supply chain and they needed accuracy and speed in the deliveries of raw material and components. Their suppliers were given a plan for the month but changes are often necessitated by market conditions – like changes in the mix of models and colors. And there could also be increase or decrease in demand. They wanted the ability to respond to these changes by aligning the production plan, supply schedule of components, and other resources to handle this efficiently. Hero Honda had already been using the mySAP™ ERP solution for its core applications but until January of 2004, the company continued to enter its customer orders manually – using a portal to communicate with suppliers. They used to receive orders from dealers in the form of spreadsheets, e-mail, and phone calls. It took a few days to bring in the customer orders and consolidate them. Then they would get our material requirements plan from the ERP [enterprise resource planning] system and post the information on their portal. This was done through periodic updates – twice a day – and hence did not consistently give the latest information to their partners. They had no visibility of materials in transit and a lot of time was wasted on follow-ups. They also had to deal with incorrect deliveries from vendors when they sent either less or more than the scheduled quantity. For example, they might have ordered 100 units but the supplier delivered 110. This kind of error would slow down the receiving station while their people would seek approval for receiving the extra quantity. Also, mismatches like this meant that either they carried more inventory than needed or caused production holdups if the quantity supplied was less than ordered.

Automating Supplier Transactions In February 2004, Hero Honda began a pilot test, bringing in mySAP Supplier Relationship Management (mySAP SRM) as well as mySAP Customer Relationship Management (mySAP CRM), both solutions in the mySAP Business Suite family of business solutions. For the rollout of its supplier portal, Hero Honda chose its top 125 suppliers – together, they account for 95% of the company’s supplies. Most of these suppliers now perform their transactions with Hero Honda through the Web-based self-service portal, in real time. Suppliers can now see the status of their orders, shipments, and invoices, and they can see new delivery schedules as soon as they’re processed by the Hero Honda production plan. They can also use the portal to make confirmations along the way – for

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example, to confirm that they can handle a certain variation and to confirm that they’ll meet the delivery schedule.

SAP® Consulting It took three months to complete the rollout. Helping Hero Honda speed up the process – and helping implement some of the newest features in mySAP SRM – was SAP® Consulting. mySAP SRM experts, from both the Asia-Pacific region and SAP headquarters in Walldorf, Germany, worked on the project and helped Hero Honda develop some of its most complicated direct materials processes. They assisted them during the entire implementation process and transferred knowledge to them. Also, they unlocked some software features that were not known even to be existing by people at HHML. For instance, they helped them implement instant messaging, which was helpful in contacting the suppliers quickly in the event of a production scheduling change – say, one that might occur because of an upcoming holiday. SAP Consulting and the Asia-Pacific solutions team also helped Hero Honda integrate a bar code– reading function into the system, according to Balasubramanian. The bar code feature is used by those local suppliers who make just-in-time deliveries several times each day. For them, it’s faster and easier to process their deliveries via a bar code reader on the delivery dock than it is to make constant updates to the self-service portal.

End-to-End Process Integration Hero Honda also implemented a customer portal, as a feature of mySAP CRM. With the two portals now in place, the company benefits from end-to-end process integration. “Our dealers place their orders once a month,” he says. “Typically, a dealer might order several hundred motorcycles, as well as spare parts. So every Friday we get our orders in, we consolidate them on Saturday, and on Monday morning our suppliers are all receiving our delivery schedules, directly from our production planning system.” Because the ordering process is now fully automated, Hero Honda saves approximately three days over the time it used to take to complete this process. That translates into an inventory savings of about 10%, which in turn translates into a substantial cost savings. The automation also increases Hero Honda’s own ability to be responsive to its dealers. Even though dealers normally place their orders on a monthly basis, there are many times when they want to revise an order that’s already in process. They might do this to account for a sudden change in customer demand – for instance, their customers might start asking for a new color or a different model. “For these revisions, we can get the change in on Friday and be pretty sure that the entire shipment will go out, as scheduled, the following

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week,” says Balasubramanian. The customers appreciate this kind of responsiveness and it’s just what they, and they, need in order to continue to take advantage of this fast growing market.” The system’s end-to-end integration pays dividends in maximizing order accuracy, as well. They’ve greatly reduced the chances of mismatched orders too. For one thing, it’s easier for suppliers to check their orders on the portal and they know that the portal’s information is both accurate and up to the minute. Since the advance shipping notification created by the supplier is derived from the purchase order, the chance of a delivery mismatch with the order is almost zero.”

eHR IMPLEMENTATION With technology touching all aspects of today’s business, there is increasing usage of IT and Internet technologies in a company’s HR department. Suddenly HR managers are finding themselves in a whirlwind of technological changes, with adoption of IT (both as process and tool) becoming a necessity for them. The past one year has seen IT playing a key role in the Personnel/ People Development/ HR departments of companies, which are trying to make the best use of their systems for storing, organising or disseminating information to their employees. All this has resulted in HR professionals doing away with costly, time-consuming and redundant processes and opting for IT-enabled HR systems, which according to industry experts, marks the beginning of a new era in the functioning of HR professionals Hero Honda has opted for a SAP HR module. S K Balasubramaniam, vice president-information systems, Hero Honda, informs that the company is in the process of starting an ESS system which will enable employees to assess all information about their salary, tax, leave loan, etc. For its knowledge management requirements, the company is planning to set up a portal where employees can access information, exchange ideas freely and read articles compiled by the HR department and all employees. Later, they also plan to use the intranet for external and internal recruitment, assessment and appraisal purposes

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Information and IT Security Management Enterprise security may not be as critical in a manufacturing organisation as in the banking, financial services and insurance (BFSI) sector. Nonetheless, it is important, especially when it comes to a manufacturing company like Hero Honda, which is extremely dependent on its computer systems and networks for its operations. A disruption in IT infrastructure could spell disruption in business operations. Taking all this into consideration, the company has been constantly evolving its information security set-up to keep pace with its expanding IT infrastructure. Today enterprise security at Hero Honda has reached one of the most critical junctures as the bike major has recently created a comprehensive information security policy. Enterprise security at Hero Honda goes beyond IT security to encompass complete information security. The company identified the need for complete information security with IT security as one of the aspects within this whole concept. IT security will take care of only some intrusions. But for any organisation there is a need to have a clear identification of authorisations through information classification. The need was to find out what type of information was there, who should access it and who should not in order to ensure complete data integrity Along with business growth, Hero Honda has also grown on all fronts. It has set up two manufacturing facilities at Dharuhera and Gurgaon in Haryana. These facilities now churn out over 3.5 million motorbikes per year. This growth is also applicable to the company’s employees and their business needs. As is the case with any other large organization, Hero Honda has nearly 1,600 desktop users. Email is a backbone of today’s business and justifying that the company has created approximately 2,000 email ids for its users.

Security set-up so far The year 1999 was the inflection point for the entire IT set-up at Hero Honda, including information security. The company undertook a complete revamp of its IT infrastructure with a new architecture, expansion of its network, IT assets and applications. The security approach has been evolutionary, in line with these growing requirements. Connecting the entire organisation during 1999, the company put its mailing system into place. This, however also led to the import of viruses into the system, thereby warranting the need for a complete anti-virus solution. Before this, there was anti-virus software installed only on a few 12

desktops. The company chose McAfee for its comprehensive features and good installed base. Hero Honda has now implemented the complete suite, covering the desktop, servers and mail gateway. The company first deployed the Total Virus Defence (TVD) system, which was later upgraded to the Active Virus Defence (AVD) system around two years ago. Under AVD, Hero Honda is using Group Shield for Lotus Notes mailing system, Netshield for NT and Window 2000 servers and Virus Scan for end-user desktops. The AVD works under the ePolicy Orchestrator agent, which is an agent installed on each and every desktop and delivers the means to control the anti-virus applications. According to Balasubramanian, it gives the company power to enforce its anti-virus policy, to update the policy on end-user desktops and to monitor update progress through graphical reports. ePolicy has made it easier to enforce any anti-virus policy in the company in just two hours in all the offices. As part of the AVD architecture, Hero Honda has three AVD servers at the head office in Delhi, and the Gurgaon and Dharuhera plant. The AVD server at Delhi takes care of all head office-based servers, desktops and all zonal and area office desktops. Likewise, with the Gurgaon and the Dharuhera AVD servers. All the three servers are connected to the McAfee Internet site through the Net. As a result, whenever McAfee releases any new anti-virus DAT files, all three AVD servers get synchronised with McAfee server and download the DAT file (incremented) immediately, which are then distributed to all the servers and desktops. In case of a virus attack on any of the servers and desktops, the ePolicy agent updates the AVD server about this new virus.

CORE CRISIS Messaging systems form the frontline for any organization. The external mail server forwards corporate mail to the internal mail server that is deployed on our LAN over SMTP. The internal mail server is a central mail repository from where all the employees pop their individual mails. All the employees based in New Delhi, Dharuhera and Gurgaon plant, POP their mails from the local mail server. They have ISP level security which consists of a firewall, spam filter and antivirus. However, they soon realized that ISP level security was inadequate for the task at hand. The company was facing difficulties vis-à-vis messaging and there were Internet access and security issues related to spam, online and spam-related malware attacks and choked bandwidth. Moreover, the company wanted to filter Web access.

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The company receives an average of 26,000 e-mail messages per day, which translates to almost 1 GB of storage space. Of these at least 70 percent were spam. That used to work out to around 18,500 pieces of spam per day. The ISP was able to filter out about 50 percent of this. Still, almost 9,000 messages hit our internal mail server everyday. They tried out a few standalone, software-based spam filters with little success. Apart from a vast number of employees, HHML also has a vast chain of dealers and service stations spread across the country. So mails exchanged between these offices often got lost in the maze of spam and the business suffered. Often business correspondence was incorrectly classified as spam, a case of false positives, and deleted while spam continued to pour in. Mailboxes were clogged with spam. Having close to 9,000 spam messages hitting the local mail server on a daily basis was something that was not acceptable as, downloading legitimate mail along with the torrent of spam that dodged the ISP’s filters from the external mail server to the local one was a painfully slow and, quite often, frustrating process. Emphasizing another side of this crisis, Bandwidth consumption did not just increase, it shot through the roof and to keep adding bandwidth was not a viable solution. Once the messages reached an individual’s mailboxes, they had to be checked and deleted manually. Many a times the recipients were tempted to read the spam and the mail processing time kept increasing at the cost of productivity. Legitimate e-mail messages were often lost in the maze of spam. The management began questioning the IT department regarding the extent of spam, which was mostly unanswerable, despite the IT team’s best efforts. Employees stationed at remote locations such as Gurgaon and Dharuhera were worst hit. For them, the mail was first downloaded to the local mail server and then had to be POPped to their remote individual mail boxes. The download time of an individual message was very high and this was particularly frustrating since at least 50 percent of the mail was spam.

Need for firewall The need for further beefing up the security set-up beyond an anti-virus solution was felt as the company further opened up its systems to external access. Around a year-and-a-half ago, apart from providing Internet access through the proxy server, the company also decided to provide connectivity with dealers and vendors for information sharing, i.e. they could directly log in to the Web server. This required the deployment of a firewall to guard the systems from possible hackers and virus attacks. This was the first time that they were really connected to their partners. Earlier they only had a mail gateway through which they exchanged mail. So, there really wasn’t a need for a firewall at that time. But now, since they are 14

allowing people to log in and with people accessing the Internet there is the need for a firewall. Firewalls deployed at Comsat Max: Hero Honda has a perimeter firewall that serves as the Internet gateway for both the plants and head office. It has chosen Checkpoint as its firewall, which runs on a Nokia box and is managed and monitored by the service provider, Comsat Max. The company’s IT security architecture divides the network into zones, based on the function of the infrastructure contained therein. The zones created are: • • • • • • •

DMZ zone Third-party zone Application servers zone Critical servers zone Security management zone Network and system management zone LAN & WAN zone

Unauthorised Internet access Restriction of access to unauthorised sites is taken care through the proxy server, which was deployed around two years ago for Internet access to internal users. The rules for access control have been defined in the server itself. It defines factors like which PCs have access to the Internet, the sites that can be accessed, time period during which only certain users can access the Internet, etc. The company has taken various measures to ensure data integrity during internal access as well. It has deployed PGP software on the critical desktops and notebooks within the organisation for encrypting data. While the software was deployed around two-and-a-half years ago, it keeps on identifying and adding critical notebooks and desktops. The information on the desktops and notebooks is kept in a folder and is encrypted, which requires a user name and password to access it. Furthermore, Hero Honda has built in integrity in the application itself, which is well documented with profiles for each user. Depending on his/her profile, the user gets the rights for accessing the data. The authentication is done through passwords.

And the answer was…

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The spam included a good smidgen of Phishing which slipped through the primary security layer at the ISP’s end. Malware entering through the messages and Internet browsing was also a major source of concern. Several messages contained a malicious payload of viruses, spyware and Trojans. Once these entered the network, they promptly began consuming bandwidth and causing system crashes. Unprotected and unrestricted Internet browsing also left gaping security holes. The lack of filters on browsing left the organization wide open to attack from malware, tracking cookies, spyware and keyloggers. Digvijaysinh Chudasama, Vice President, Sales, Cyberoam said that Enterprises are replacing best-of-breed security solutions in their networks with Unified Threat Management solutions. Cyberoam’s all-in-one security platform aids the transition without compromising the feature granularity of standalone solutions. Cyberoam’s identity-based security empowers administrators to proactively defend the enterprise network against both internal and external threats.” While considering the core problem and sensitivity of the issue for Hero Honda, Tarak Technologies, business partner of Cyberoam, suggested a plan to secure the company’s e-mail. Jose Kurian, COO of Tarak Technologies said after examining the problem they understood that response time was crucial. The messaging application cannot go down for a long period of time at a company such as Hero Honda. They offered them Cyberoam’s anti-spam software. Rather than going out for point-to-point solutions we suggested that the company go in for Unified Threat Management (UTM).” Kurian added that the Cyberoam UTM solution sits at the gateway level. It is an appliance through which mail gets routed, filtered and forwarded to the local mail server. In the absence of Web filtering and access accountability, the little bandwidth that was left was consumed through unrestricted surfing. This proved detrimental to organizational productivity. Lack of Internet usage accountability led to malicious sites being surfed, which in turn infected the network with a host of spyware. As a remedy to slow browsing and other bandwidth problems, the company was forced to upgrade its initial 64 Kbps Internet connection to a 4 Mbps pipe. Yet, the complaints persisted even after this quantum leap in bandwidth availability. They purchased four Cyberoam appliances, three 250is and one 100i. One 250i appliance is deployed at our corporate office in New Delhi, and one each at production plants in Dharuhera and Gurgaon. A 100i appliance is deployed at their upcoming facility at Haridwar. All Cyberoam appliances have been deployed in bridge mode. The entire mail and Web traffic passes through Cyberoam.

The changed scenario 16

Post-implementation, Internet access is productively focused. This is amply reflected in the bandwidth usage. Once insufficient, bandwidth availability is now quite satisfactory. Total bandwidth consumption fell sharply and the ISP bills also took a nose dive. A clean network, safe and responsible surfing and spam free mail boxes have all culminated in a drastic reduction in calls to the IT helpdesk.

Information security policy While the company had some documented policies relating to various aspects, including IT security post-1999, they were not comprehensive enough to cover all areas. Increasingly expanding connectivity warranted the need for a complete policy, defining the security issues both from within and outside the organisation. The company’s plans for connectivity with business partners included rolling out the second phase of its supply chain solution, allowing dealers and vendors to interactively do transactions with the company on the Net. (It already provides dealers and vendors one-way access to the Web server). Furthermore, it is also trying to allow employees access to applications like instant messaging and SAP, especially for field staff and mobile workers. In such a scenario, which required opening up its systems to partners, the need for a robust policy was imminent. A few months ago, Hero Honda started working on its new information security policy with HCL Comnet as the consultant. The policy broadly covers around 17 domains. These domains include networking and telecommunication, back-up, software purchase, use and maintenance, incident management, e-mail, Internet, access control, password control, anti-virus, notebooks, information disposal, acceptable use, system development, desktop, information classification, training and physical security. HCL Comnet carried out the vulnerability assessments and outlined the areas requiring improvement. These included recommendations for patch upgradation on various operating systems and for networking devices as well as physical security—specifically for the server room. The consultant also recommended the removal of modems provided to users for directly accessing the Net from their PCs. Though the connections had been removed, the modems were left behind, which, the consultants pointed out, created vulnerability as the users could plug them in and start using them. According to Balasubramanian, based on the recommendations of the consultants, the company fixed up the loopholes in its security set-up, including some recommendations regarding the firewalls and the protection of servers. The company has already carried out pre-vulnerability assessments, fixed the vulnerabilities and then conducted post-vulnerability assessments. On the other side, Hero Honda also worked on the information classification part of its information security policy, which didn’t exist earlier. This involves

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participation from the top management with user representation from all the functional areas. The present exercise of classification of information is being done depending on confidentiality, criticality and availability. Apart from information classification, the access rights to various classes of people are also being defined in the policy. The functional heads are made responsible for their departments and endorse the classification of information being done.

The RoI Factor According to Avnesh Jain, “The Cyberoam UTM has maximized return on investment. It exceeded our expectations before the implementation.” The antispam feature effectively stops around 9,000 bits of spam each and every day. Employees were pleasantly surprised to find spam-free inboxes. However, we also saved time and our legitimate e-mail was no longer buried under. As spam disappeared, inter-office connectivity benefited greatly. Employees at the remote site no longer have to wait indefinitely for their e-mail to be downloaded. Bandwidth used to connect remote offices was also saved. Cyberoam’s anti-spam solution not only blocked spam, but also proved effective against any type of mailbased threat. The solution used Recurrent Pattern Detection technology. It is content-agnostic and equally effective against image based spam. Pattern detection technology ensured a minimal window of vulnerability, providing zero hour protection to the HHML network. The cost involved in getting Cyberoam’s UTM solution at Hero Honda was around Rs 12 lakhs. It took almost a year to deploy this solution at all locations because they went in for a pilot and gradually scaled up from there. However, the actual deployment time was very less. Cyberoam’s anti-virus solution scans SMTP, IMAP, POP3 mail traffic and HTTP and FTP activity as well, leaving no security gaps unattended. As all the Webbased traffic is scanned for spyware and malware, clean and secure Web surfing has become a reality. Cyberoam’s identity-based Web filtering ensures employee accountability, which in turn leads to a reduction in unproductive surfing. The IT department has created groups and assigned Internet access rights based on their business profile in HHML. Cyberoam’s HTTP client is used to authenticate the user. As the Web filtering rules are implemented on the user’s identity and not just on the IP address, IP spoofing has been curbed.

FUTURE PLANS

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Now that Hero Honda is readying itself for the second phase of its supply chain initiative of connecting with dealers and vendors, it is planning to build more components on top of its existing security set-up. While in the first phase, the company had allowed dealers and vendors only one-way access, in the second phase it will allow them to interactively do transactions with the company on the Net. Once the second phase starts rolling out in April next year, the company plans to deploy additional features like an intrusion detection system, user authentication and single-user sign-on. As part of the new information security policy, the company will be outsourcing the monitoring of all its external access, hacking and intrusions to third-party service providers with SLAs. “We will outsource primarily because the third-party service providers have the expertise and resources to monitor 24x7,” explains Balasubramanian. Also, as a policy, Hero Honda will initiate regular half-yearly audits to check compliance with the security policy and also to check whether the policy needs a change.

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BENEFITS TO HHML ERP helped in improving quality, access and usage of transactional data and suitably eliminated multiple entries. Besides, there was no need for manual reconciliation any more and operational processes were improved at various stages. Order processing was Standardized across all functions. And real-time information on product cost, profitability analysis, and dispatch and production status was made available too. One of the main reasons for the success of their SAP project was that the project was perceived as a business project, and not as an IT project. And different functional heads and module leaders were also involved in the project. Apart from this, the deployment of relational databases like Oracle and Ingres helped in consolidating data at one place and made it accessible to all authorised users

GREATER RESPONSIVENESS, FEWER ERRORS Following go-live in June 2004, Hero Honda immediately saw marked improvements. On-line interaction enhanced order execution efficiency thereby improving the responsiveness. Their old sales orders process was very timeconsuming. Now dealers enter orders directly into the system. This accelerates deliveries – preventing loss of business due to delays. Hero Honda has also streamlined its transactions with suppliers, making for better inventory planning and reduced inventory carrying costs. Improved information exchange guarantees that the right goods are delivered at the right time. The company has also significantly reduced error-prone, manual data entry. Suppliers now create advanced shipping notifications in the system, and when the shipment reaches Hero Honda, the company’s employees simply have to confirm receipt.

AMBITIOUS PLANS FOR THE FUTURE Building on the success of the project, Hero Honda is now planning a range of new SAP initiatives. These include adding additional mySAP SRM and mySAP CRM functionality, implementing the SAP Strategic Enterprise Management application of mySAP ERP Financials and integrating it with SAP Business Information Warehouse (SAP BW), and rolling out SAP Enterprise Portal (SAP EP) to all users. The SAP BW component is provided in SAP Business Intelligence (SAP BI). SAP BI and SAP EP are components of the SAP NetWeaver™ platform. “Our new SAP solutions have enhanced our competitive edge. We are confident that we’re on the right track for continued success,” 20

concludes Bala. HHML is in the process of making continuous improvements and changing configuration to add more functionality to the existing systems. They have implemented the ‘Plant Maintenance’ module in Sept, 2002 and are implementing the ‘Human Resource’ (including India Payroll) module. The Supply Chain Management project is about to take off too. Proposed future applications are CRM, BW, SAP Portals and ESS. HHML has upgraded from 4.6 B to 4.6 C. They are also putting in organised archiving of data on SAP and deploying live reorganization of database using a ‘Quest’ tool. They have implemented the Solution Manager and are now looking for certification as a customer competence center.

Coming Next: Improved Collaboration, Analytics As valuable as Hero Honda’s supply chain automation is, in many ways the new system represents only the tip of a much larger iceberg. They have just upgraded to a later version of mySAP SRM and this will usher in added functionality. It’ll help them to do more strategic sourcing by evaluating the suppliers and forming strategic partnerships. They’ll also implement self-service procurement for indirect materials and will extend the supplier portal by implementing a vendor-managed inventory function, as well as improved analytics through the data warehousing capabilities of SAP Business Intelligence. Hero Honda expects steady growth in motorcycle demand in the future, as well as a steady increase in the complexities of manufacturing the two-wheelers. The motorcycle market in India continues to be strong. For one thing, many people who used to ride scooters now prefer motorcycles. For another, that the economy is strong and financing is readily available. Balasubramanian points out that the spectrum of motorcycle models and colors is also growing. His company averages about three new models each year and, with the current selection of models and colors, Hero Honda is responsible for producing about 150 variations of motorcycle – not including accessories. But now they’re well equipped to handle the growing market and product mix and at the same time, they’re more responsive than ever before to dealers and other customers, thanks to mySAP SRM and mySAP CRM.”

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BOTTLENECKS Till date, the IS department has not faced any major bottlenecks. “With a proper plan and proper implementation of those plans, we have overcome all hurdles,” comments Balasubramanian. The only major problem the IS team has faced till date was management perception of ERP. They were of the opinion that ERP implementations were mainly failures. Many felt that instead of going in for ERP they should implement an e-business solution. Balasubramanian had to tell the management that one could not run e-business without a stable information systems structure within the organisation. “Today, IT has taken off very well, especially with support from management. There has also been very good user support, which helped us in experimenting with new technologies,” says Balasubramanian. “Thanks to the stable IT infrastructure the company’s business analysis has become very sound and credible,” he adds. The company is now one of the reference sites for SAP, and only one of ten companies in the Asia Pacific region selected by SAP for this honour.

IN THE IT PIPLINE In the near future the company is planning to introduce videoconferencing facilities and bar coding systems at the assembly section and store. Balasubramanian also has plans to implement some more modules of ERP like HR and production management. For dealers and distributors, Hero Honda has plans for Web-based standard connectivity. The company is also is planning to connect some of its vendors through a process called direct online. By this the vendors will supply directly to the stores and there will no quality check, rather it will be self-assuring.The whole idea is to make things completely automated.

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Snapshot of Hero Honda’s IT set-up • • • •

Number of servers – Over 35 servers (All IBM) Proxy server – For providing Internet access to internal users. Web server – For providing access to dealers and vendors. Wide Area Network

Between Gurgaon plant and Dharuhera plant – Primary link is a 2 Mbps leased line from Bharti with RF and VSAT being secondary back-up links. Between Gurgaon plant and Delhi head office – 2 Mbps leased line as a primary link. Another 2 Mbps link from Gurgaon plant to Comsat Max and then to the head office is a secondary link. •

Connectivity for marketing offices with plants and head offices – VPN connectivity between 20 locations through 64 Kbps leased line with ISDN as a back-up.

Internet connectivity through leased line from Comsat Max

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SUMMARY Faced with growing market demand and inefficiencies in its supplier order processes, Hero Honda – the world’s largest two-wheeler manufacturer – chose the mySAP™ Supplier Relationship Management (mySAP SRM) solution to integrate and automate its large and complex supply chain.

Key Challenges • Supplier order processing not well synchronized with production planning • Proprietary supplier portal provided no transactions, only information

Project Objectives • Speed up and automate supplier order processing • Synchronize customer orders with supplier schedules

Solutions and Services • mySAP SRM • mySAP Customer Relationship Management (mySAP CRM) solution

Why SAP® Solution Ability to integrate the new supplier portal with the existing mySAP ERP Solution

AT A GLANCE Implementation Highlights • Three-month initial rollout covered 15 of the top 125 strategic suppliers; over 50 suppliers have since been covered • Implementation included training Hero Honda suppliers as well as buyers Key Benefits • Faster supply chain order processing – cut three days from old schedule • Improved accuracy of deliveries from 98% to 100% • Better responsiveness to customer changes • Online communication with suppliers integrated and traceable • Inventory planning improved – 10% reduction in inventory carrying cost • Transaction costs reduced because of fewer discrepancies to handle • Overall lower process and transaction costs Implementation Partner: SAP® Consulting 24

Existing Environment: mySAP ERP Database: Oracle Hardware: IBM Operating System: AIX

BIBLIOGRAPHY WEBSITE ADDRESS http://www.expresscomputeronline.com/20031124/appsspecial10.shtml http://www.networkmagazineindia.com/200412/coverstory04.shtml http://www.networkmagazineindia.com/200410/coverstory01.shtml http://www.expressitpeople.com/20020415/cover1.shtml http://www.expresscomputeronline.com/20070917/management01.shtml http://www.tceworld.co.in/index_files/tmm/kma/hr/pm/HR_pm_0511.htm http://www.expresscomputeronline.com/20020701/ebiz2.shtml

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