201

TATA HOME
FINANCE LTD. (A
Comprehensive
Case Study on
MIS)
Tata Home Finance Ltd. (THF) is located at Shivajinagar, Pune-411 004, India . THF was
established in the year 1999 to serve the home market need of funds for buying a new house or
to improve the existing house. In addition to head office in Pune, THF has branches at Mumbai,
New Delhi, Bangalore, Ahmedabad, Hyderabad and Chennai. THF's well-trained personnel
assist the customer in offering a Total Home Solution that is right from funding to helping the
customer to build a dream home. The personnel are trained to answer all kinds of questions,
doubts across the table.
The total funds disbursed since inception is Rs.500 million against the total number of over
1000 accounts. Total Employee strength is a little over hundred today and is planned to grow to
200 in next two or three years.
THF right now is in home finance products business but has plans to diversify into other
products and services in Insurance, Deposits, Credit Cards, Mutual Funds, Customer Durables,
and Property Advisory Services. It is estimated the total housing shortage in urban Indian is to
the tune of 6.6 millions. The housing finance market is Rs. 250 million and is expected to grow
at 10 to 12% per annum. Because of Government initiatives on a number of fronts such as
modification of rent control act, increase in the interest exemption to Rs. 150000, 40% tax
depreciation on housing investments by corporate and many more; the market for housing is
expected grow at the rate of 30% annually.

THF therefore feels strongly that there is perceptible shift towards fonnal funding sources and
THF could be an additional player in the Home Finance Market. The competitors of THF are
HDFC, ICICI, LIC housing, and all banks. These organizations are already established and they
enjoy brand image and loyalty from their existing customers. The present Home Finance Market
is a buyer's market, therefore the competition is well placed in this market and THF has a
challenge to become successful in a short duration. The challenge is accepted on the strategy of
leveraging on 'TATA' strong brand equity reflecting Trust, Stability, and Integrity, the values
home owner respects most.
The Mission Statement of THF is
'To be the first choice in fulfilling the needs for a home, by providing financial and other
value added services through personalized and world class service at competitive rates '.

1. BUSINESS INFRASTRUCTURE

The business infrastructure is small today but is planned to grow rapidly in next one year. The
Infrastructure Business Model is given in Fig. 1.1.
The infrastructure scope is so determined that customer can get all services at single window
for building a dream home. The structure is designed to reach anybody anywhere also caters to
all kinds of customers, namely Corporate, Group Housing, Family and Individuals, who wish to
go for Housing complex, Apartments, Flats, Plots and bungalows.
THF has its own infrastructure of alliances and partners working in building and construction
industry to meet multi dimensional needs of the customers, spreads across the society.
2. BUSINESS

THF, besides offering initial services to build confidence in the customer, has several innovative
products carefully built for all types and kinds of customers. The products currently offered and
their business in percentage is given in Table 1.1.
The business is obtained through several channels. Each branch deals with Walk-in
customers and helps them to run through a process of request for loan, starting from
Assessment, Requirement, Application Submitting, Sizing and Costing, Technical and Legal
guidance, Facilitation, Processing and Disbursement.

Next important business sourcing is through Builders and Real Estate Developers through
Project Tie-ups. The personal approach to customers is through DSAs.

DSA visits prospects and solicits business. The corporate business is brought through Sales
Manager who interacts with CEO and MD of the organization.
The breakup of business by channels is shown in the Table below:

CHANNELS PERCENTAGE OF BUSINESS

Branch 80

Builders -
DSAs 5
Sales Mangers 15
Total 100
 3. THF ENTERPRISE MODEL

THF organization structure is flat, built over five levels .The structuring principles are single
window service concept, Dual approval, segregation of competencies, select jobs multi-skilled.

4.CURRENT SYSTEMS AND TECHNOLOGY.

The Current Uses

• Business software Loan Management Solution (LMS) for Front End Loan Management
operation

*0 Accounting Software: Tally - for Financial Accounting

*1 An Integrated Software for Loan Management and Accounting with interface to back end
Financial Accounting Software
THF has realized the need of a better system to overcome the problems faced due to current
software application systems. Besides non availability of on-line real time information for
operations and decision making, following difficulties are encountered in the information
management:
*2 Open separate set of books for each branch.
*3 Make accounting entries separately for each branch.
• Consolidate manually the accounts for each branch and then at head office.

To overcome these problems the information management strategy is evolved. It has

components:
*4 ERP Systems.
*5 For centralized accounting for branches and head office.
*6 Loan Management System.
*7 Front End Customer Interaction System.
*8 For handling queries, assisting customers in proposal building, proposal
Application Processing and decision making.
As a step towards implementation of this strategy, THF evaluated number of ERP packages
most suited for Finance/management industry and have signed for ORACLE-Financials.
It is also working with a local software company to build integrated loan management system
for front end interaction and back end integration with provision to go on web a year later.
5. MIS REPORTS CURRENTLY IN USE

Since THF has started operations very recently the management feels that MIS needs
improvement for effective business operations achieve customer satisfaction.
THF generates 11 reports through present MIS. The 11 reports can be classified in the
following category.

6. MOVING THF TO INFORMATION DRIVEN ORGANISATION

The management of THF has taken a bold step to modernize the business processes in line
with the mission statement and with the objective of cutting cost of business operations and
maximizing the gains to shareholders. THF approached the problem systematically using Life
Cycle Model of system development and using the increment model of development.

6.1 Business Analysis and Strategy

THF faces competition from established organization such as HDFC, ICICI, LIC Housing and
some leading banks. Since, all players are attacking the same market segments; the
prospective customer can be won over only through creation of broad image of a trusted fund
provider with the difference. The Strategy is to attract the prospects to THF by providing broad
band of services at competitive rates.
 THF is now riding the growth phase in Sigmoid or S curve after just coming out from the
phase of Introduction. It would therefore need business strategies that will accelerate the pace of
growth in next year or two. To build business strategy for rapid growth THF has focused on
customer and customer services that would bring rapid growth and attain a position of strength
in the Home finance market.
The strategy is built on the following four factors.

*0 Products to meet most sought requirements of customer

*1 Cost benefit ratio attractive to the customer.
*2 Service excellence through effective response.
• Total solution assistance to build a dream home.

THF has 11 different home finance products meeting the needs of individuals, groups and
corporate for new home, home improvements, plots and bungalow. The products are so
designed that they can be customized to specific requirements of the customer. The product
design is such that if information is complete and correct, the funds can be sanctioned and
disbursed in less than 48 hours.

THF product and service strategy is such, that the benefits the customer gets are significant
compared to cost of loan servicing. The strategy is backed by wide range of techno-
commercial information support for quick and better decision making.

THF has taken care for providing excellent service across all stages of home finance servicing.
It has a information rich web site giving information on products, facilities and answers to
frequently asked questions. It has a four tier organization infrastructure where customer can
find a service provider of his choice. The service and interaction is possible through web site,
direct sales agents (DSA), branch offices, regional offices, builder partners, franchisees and
will snit network or reputed manufactures, traders, specialists and consultants in home making
industry. This kind of support base creates confidence and comfort in the mind of customer to
come under the umbrella of THF All this support provides reach, knovrteoge, funds and
assistance at every stage of home building.

The fourth strategy is to provide total solution to the customer, through offer of funds at the
least cost, technical and legal assistance to complete the home fast, beyond home construction
and offer services through THF partners at attractive discounts to make a beautiful home. THF
has now competed strategy' build up and they are operative in most of the regions of the
country.
6.2 Effectiveness of Business Strategies
All the four strategies and critical resource management that is funds, empowered, people,
products, Business partners, systems and solutions. While THF has good resource
management skills, it is necessary to manage them cost effectively to achieve dual objective of
performance excellence and highest customer satisfaction. This is possible through continuous
monitoring and mending of strategies and evaluating the business performance against these
strategies~ THF recognizes that this can be achieved through information support to customer
as well as to THF personnel at any level, when needed anywhere.
THF therefore has gone into detail requirement study of information needs required to manage
the following
*3 Customer servicing
*4 Customer performance monitoring
*5 THF performance evaluation
*6 Cost control; Finance and operations
*7 Credit appraisal
*8 Risk assessment
*9 Adherence to service standards, evaluation and monitoring
*10 Proposal processing: entry to disbursement to collection and recovery

THF has identified following business processes as mission critical applications:

*11 Loan application processing system
*12 Credit risk appraisal system
*13 Customer relations management system
*14 Funds management system

All other functional systems such as Accounting, HR, Purchase etc. are important but do not
have direct impact on the business of THE All such systems will be either integrated or
interfaced with mainly the business system mentioned above through suitable system
architecture.

6.3 Information Management Strategy (IMS) Objective

*15 Provide access to information from anywhere any time.
*16 Customer access to the proposal for status monitoring and tracking.
Near “Paperless” transaction processing to cut and control cost of customer servicing
through reduction in processing time, overheads defaulters and bad debts.
*17 Do additional business to the tune of 30% within same manpower through quick
decisions and better control on cost and performance, resource.
*18 Create a business management database/data warehouse that is useful to
customer, DSAs, Sales Managers and Marketing Managers.
*19 Besides real time on line systems develop data mining application for strategic
management of business.
Scope of New System
The scope covers broad band of systems and applications with emphasis on the following.
*20 Customer Interaction
*21 Customer Relations
*22 Resource Management
*23 Marketing and Sales
*24 Product Design and evaluation
*25 Credit appraisal and Risk Assessment
*26 Proposal Processing
*27 Building Support and dedicated database for designing innovative products
*28 Accounting and Finance Management
*29 Customer Servicing
*30 Strategic Management
*31 E-training and Learning

6.4 Information System Architecture

THF Business Function Systems Architecture
The Business System Architecture required for business strategy implementation is shown in
the figure. It has main functions namely:
*0 Customer Relations MGT
*1 Disbursement Management
*2 Loan Management System
*3 Marketing and Sales
*4 Resource Management
*5 Training
Relationship Model
*6 The business model is executed through relations management between major
partners in home financing business. THF considers home financing as a 'people to
people' business where trust, integrity and service are held in high esteem. Relationship
Model is shown in Fig. 1.6.
*7 The core business functions model is given in Fig. 1.7. This business functions is
fundamental of T!IF business operation.
6.5 Technology Platform for IMS Strategy
Keeping in view the dynamic nature of business and need of satisfying the requirement of
information at anytime and anywhere, THF has chosen following technology platform.
*8 Operating system platform: NT 4.0 Unix
*9 Network: Internet/IntemalJExtranet/LAN
*10 Application Technology: Client/Server, Web Enabled applications.
*11 Application Solution: Oracle 8 i, Oracle Financials, Oracle Applications-II i.
*12 Front End: VB, lIS 4.0
*13 Back End: Database server, Application server, Microsoft transaction server, web
server
*14 Security: Firewall servers and Proxy server '.

6.6 Application System Architectur9

Four-pronged business strategy is supported by state of the art technology based information
Management solution. the solution is designed for THF enterprise as a business solution
supporting information needs for Operations management, Business Management and Strategic
Management of Resource and Product.
The solution is designed for supporting the following.
*15 Continuous Innovative Product Management.
*16 Fastest Service delivery.
The solution is expected to build THF towards:
*0First choice of customer for all home finance requirements and offer value added
services.
*1World class services provider at competitive rates.

The solution is made of 17 different applications systems, comprising ERP system, Legacy
systems; Groupware Applications, CRM and data warehousing systems.
Each application is designed with following characteristic.
*2No data redundancy.
*3Business policy, rules and guidelines embedded in the application.
*4Layered approval systems with technology application of work group and work flow.
*5Access to information processing to meet just in time need of decision making.
*6Capable of information processing analysis and decision making as a support for all
personnel across the organization.
Figure 1.9 shows application systems architecture
10. Management Information System (MIS)

With full implementation of this application system architecture, present MIS will be undergoing a
sea change. Besides normal status reporting it will provide following additional reports for
managers operating at various levels.
1. Project Status Report
2. Rejected Loan Applications
3. Turn Around Time Report
4. Demographic Details Report
5. Refinance Claim Report
6. Rural Housing Loans Disbursed
7. Repayment Reports
New MIS will strengthen decision making and is expected to improve management of the follow-
ing.
*0Resource
*1Risk
*2 Recovery
This will also enable effective control on the following
*3Cost
*4Credit
*5 Customer choice
All this will result into a truly world class service company offering a basket of products through
single window creating a THF brand loyalty confirming trust, stability and integrity in Tata Home
Finance.