Developing Business Competence: A model based on Viable Systems

Seminar on “Organisational Restructuring of SEBs” D.V. Ramana
higher management to concentrate on the strategic and larger issues affecting the company and
the sector as a whole.
To enable Cesco operate as a viable system, it is necessary to recognise the importance of
information system. VSM recognises that information is the true cement holding organisation
together 14 . As per the requirement of the OERA, Cesco is required to file Annual Revenue
Requirement (ARR), Tariff Application, and Annual Audited Accounts with the Commission.
The System 2 and 3 can handle this particular job efficiently. For this purpose, System 3 in
association with System 2 can develop the following information systems:
• Capital Expenditure Information System (CEIS)
• Cash Management Information System (CMIS)
• Statutory Financial Information System (SFIS)
The top management can also use this information base for reviewing the performance of the
divisions and use the same for taking various management decisions.
Recently the Commission had asked all licensees to submit a five-year business plan. Such
forecasting of the business and developing acceptable business scenario requires an in-depth
understanding of the business and the changes that are affecting the sector. Such capability can be
developed through the System-4.
The very fact that at present, the annual accounts of Cesco are not ready for the year ending 99
and the company is not having a robust business plan shows that Systems 2-5 are not functioning
effectively .
Now let us turn over attention to the field units i.e. divisions and sub-divisions. Are divisions
operating efficiently? The answer is definitely not ‘yes’. Only 40-45% of the division are earning
positive gross margin, most of the divisions are billing less than 50% of the input, and very few
divisions are collecting more than 70% of the billing. Some of the causes for such a precarious
performance are as follows:
• No effective information at a local or company level;
• No uniform customer information and billing system;
• No reliance could be placed on meter readings;
• No credit control mechanisms;
• No mechanism to fix accountability;
• No effective performance measures; and
• No mechanism to involve the local stakeholders.
Though these problems have been identified in the early stages of reforms, even after the change
in ownership they still remain unsolved. So it is necessary to make these divisions viable to make
Cesco viable. VSM provides the mechanism for addressing these issues by stressing the concept
of strong and effective sub-systems.
Since, each division is generally consists of three to four sub-division which can be treated as
System-1s, it is necessary to have System –2 to 5 to coordinate with the sub-divisions and also be
in touch with the overall organisation. Though the present structure has sub-division, it does not
represent the features of System-1. They are created to facilitate administration rather than
developing them as a viable system. Figure-III shows division as a viable system.
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