Strategic IT Investment To Expedite India's Power Reforms

IT market for power Transmission and Distribution (T&D) companies in India is estimated at around US$305 million in 2010, and is forecast to reach US$569 million by 2013, growing at a Compounded Annual Growth Rate (CAGR) of 22.6% from 2009-2013, says the latest report ‘IT in India’s Power Sector’ from Springboard Research.

The attempts to transform the sector are presenting challenges that can only be addressed by implementing IT, and thus the important role of IT is finally being acknowledged and the necessary funds allotted.

“Power sector organisations in India have now realised that they need to be more efficient, effective, productive and profitable. Effective application of IT comes up as a solution to overcome most of the challenges,” said Nilotpal Chakravarti, Manager, Vertical Industries, Springboard Research.

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“Moreover, the government and utilities have also started responding with greater attention and increased funding. The US$2 billion commitment to IT initiatives in the restructured cccelerated power development reforms program (R-APDRP) underscores this awareness,” added Chakravarti.

Managed Services are Most Preferred Outsourcing Model for Power Companies

According to the survey conducted by Springboard, 20% of respondents reported to opt for a managed services model in the future. The report further notes that most T&D companies prefer the model as it is a cost-effective way to implement IT projects that support strategic initiatives. It also reduces dependency on third-parties and allows the company to focus on core business rather than on IT-related areas.

Commercial Management and ERP are Top Focus Areas for Investment

Springboard’s survey results confirmed that Commercial Management is the top focus area for strategic IT investments in India’s power sector, as reported by 77% of the respondents, while ERP stands at 67%.

Springboard concludes that IT has the potential to contribute significantly to the power reform process, particularly in the key areas such as business process automation, revenue and commercial management, distribution system automation, CRM and ATC loss reduction. However, there are some challenges that need to be tackled to optimise the utilisation of IT.

The report further observed that a large number of IT vendors are now targeting the power sector as the industry is rapidly gaining momentum. The survey named SAP, Oracle and IBM as the perceived leading IT vendors in the space.

“While the T&D companies look to invest in IT to streamline operations, IT vendors should act as an enabler and change agent in the evolving business dynamics. Furthermore, for IT investments to succeed, discoms must devise a proper IT roadmap, and IT solution providers must guide their clients toward adopting a holistic IT framework, which will help them align their business with IT,” said Chakravarti.