INDIA’S DEPARTMENT OF POSTS (DOP) SET TO SPEND $1 B ON IT REVAMP

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INDIA's department of posts (DoP) is set to spend up to $1 billion on its IT-led business revamp over the next five years with top tech firms like IBM, TCS, Infosys and Wipro pursuing several outsourcing contracts for helping the postal department automate and integrate its business processes with a standard software solution.

   DoP, which has already short-listed Accenture, Ernst &Young, KPMG, McKinsey and PwC as potential consultants for this project, will be announcing one of them as partner for selecting a tech vendor and also defining the scope of 3-5 year IT revamp by end of this month. DoP will select different vendors for system integration, software, data centres and network management.

   "We plan to select a consultant by the month end, flesh out budget by March next year, and start rolling out the project from April,” said a senior DoP official on conditions of anonymity. “Initially we were only looking at an IT revamp, but the scope is much bigger now with business process reengineering becoming a significant part of this entire exercise,” he added. The department was allocated around Rs 2,000 crore under the eleventh plan by India’s Planning Commission recently for different IT investments.

   DoP’s IT revamp is a classic example of old, legacy systems and software applications being unable to cope with rising operational pressures and newer business models. The department has been using software applications such as Meghdoot developed in-house for over a decade. With the government seeking to evolve DoP as a well diversified services provider offering postal, insurance and financial solutions across remote parts of the country, there is a need to upgrade the systems.

   "Our Meghdoot software for instance, is not yet upgraded to work in a wide area network (WAN) environment. We will need to take a call about whether we should upgrade the existing software or go for a new packaged application from a company such as SAP, Oracle,” the DoP official added. The department will also need a new corebanking software solution. “We currently use Sanchay Post developed internally, but it has lived its life."

   A consultant, to be finalised by this month end, will help India Post decide whether to continue upgrading its in-house developed software applications such as Meghdoot or switch to more sophisticated software platform from SAP or Oracle. An enterprise resource planning (ERP) software from SAP or Oracle will help the department standardise its different business processes without having to dedicate internal resources for deployment and maintenance.

   Apart from several outsourcing, system integration projects, the department will also need to invest in procuring computer hardware systems for modernisation of around 1.55 lakh post offices across the country. “The government is now looking at post offices as a vehicle for distribution for different services, and therefore, it’s critical for us to upgrade the infrastructure,” said another government official involved with India’s National Rural Employment Guarantee Act (NREGA).

   At a time when India’s government departments and state-owned enterprises such as BSNL, ONGC and other ministries are seeking to become more efficient with the help of technology, vendors such as IBM, TCS, Infosys and Wipro are seeing newer opportunities emerge even during a global slowdown in software spending.

   According to the experts tracking this sector, Indian government organisations such as India Post, Indian Railways and other departments including LIC will spend around $2 billion on information technology this year, as the government’s share of total IT spend in India is set to cross 10% over next two years.

   "The government has changed its buying strategy-now the tenders are talking about revenuedriven models,” said HR Binod, head of Infosys’ India business unit, which was established in November 2007. “We are also approaching these opportunities with a business solution and not merely a technology solution," he added.

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