Tuesday, August 14, 2007


Business India, September 15 – 28, 2003

E-com on the rails

A subsidiary of the railways serves up reservations on the Net

Shivanand Kanavi

Have you heard of Aluva, Allapuzha, Haldwani, Kollam, Palakkad, or Thrissur? Even if you had, definitely not as hot beds of ecommerce. Well, the data that Amitabh Pandey, GM (IT services) at IRCTC (Indian Railways Catering and Tourism Corporation) dishes out from his desktop would teach a thing or two to many Internet gurus.

IRCTC has been providing online ticketing for Indian Railways for the last year. In this short time it has come to be the largest e-commerce site in India, booking over 50,000 tickets per month. Some might say that Railways sell over 500,000 tickets a day, and hence this is “just peanuts”. Sure it is.But what’s important is the trend. The convenience of booking a ticket online using a credit card without standing in any queue, and then having the tickets delivered home by courier, is drawing people by the droves into it.

“It’s not just the metros which have been active but as soon as we add a new town on our system, they start getting active with hardly any advertisement,” adds Pandey. “You can see from the July 2003 data that clearly Mumbai (11,107), Delhi (7,504), Chennai (6,141), and Bangalore (4,430) lead. But a fairly large number of bookings are coming from Anand, Allahabad, Baroda, Bhopal, Bhubaneswar, Coimbatore, Dehradun, Faridabad, Ghaziabad, Guwahati, Indore, Jaipur, Jabalpur, Kanpur, Kochi, Kozhikode, Ludhiana, Nagpur, Patna, Rajkot, Silvassa, Surat, Vapi, Varanasi, and Visakhapatnam as well,” he adds.

Pandey has become an evangelist for e-commerce. “Despite the fact that Internet spread is very limited, it is spreading very fast. I just came from Kumaon last week — in a tahsil town like Ranikhet there is Internet access. The telecom revolution has come to India. I remember when I was in Jhansi the only reliable telephone was the railway’s telephone at the station. Today I see my parents in their 1970s chatting on AOL. In fact a majority of users of online booking are above 30, breaking another myth that Internet commerce is basically a youth phenomenon.
The middle class is conscious of the Internet and its possibilities. It may be small compared to the volumes in India, but it has come to stay and is growing very fast. The opportunities are immense.
This is not rocket science; the idea has been around for a long time even in the Railways. After IRCTC was set up to mainly improve catering and hospitality associated with Railways, we went to the Railways and said this too could be done quickly by us. The ministry was totally with us. It took us only one presentation to convince the board. It was a simple presentation and the board asked us some questions. We assured them that the existing passenger reservation system would not be disturbed and they said, go ahead.”

With his enthusiasm for technology one would think Pandey is a techie. But he is not. A product of the Delhi School of Economics, Pandey taught in Delhi University colleges for a few years before joining Railway Traffic Services in 1982. Traffic services involve operations (train planning, running, traffic planning, etc), associated commercial activities, and safety monitoring.
Pandey’s 15 years in operations took him to Bombay,Nagpur, Bhusawal, Jhansi, etc. Then the Railways started to corporatise catering and set up IRCTC, which started operations in 2001.

Historically, the Indian Railways have played a major role in popularising computers in India. Reservations were computerised in the 1980s by CMC and immediately brought relief to consumers in terms of efficiency and time saved. The Railways set up the Centre of Railway Information Systems (CRIS) in 1986 to be an umbrella for all computer activities of Indian
Railways so that different divisions did not carry on incompatible IT activities. They also entrusted it with the task of design, development, and implementation of the Freight Operations Information Systems, along with its associated communications infrastructure.

CRIS improved the reservation system and also networked it so that any one could book any ticket from any terminal in India and improved the system further. This service, enjoyed by millions, contributed greatly to changing the image of computers as job-stealers into enhancers of productivity.

Of the 11 million passengers who travel in 8,520 trains each day, about 550,000 have reserved accommodations. The challenge is to provide a reservation system that can support such a huge scale of operations — regardless of whether it’s measured by kilometers, passenger numbers, routing complexity, or simply the sheer scale of India. The Passenger Reservation System (PRS) started in 1985 as a pilot project in New Delhi. It has distributed databases at Mumbai, Delhi, Kolkata, Chennai, and Secunderabad. These five centres are networked with leased lines and different towns are connected in turn to one of these centres. It is a robust system, selling nearly 200 million tickets a year, and no one wants to disturb it even if its technology is obviously two decades old. That is the reason the IRCTC team went to great lengths to assure the Railway Board that they would not touch the existing system in any way. IRCTC would need just an entry point into PRS, where the queries coming from its Internet customers would be converted into an appropriate form understandable to PRS. The Railways treated IRCTC as any other ticket window, hence IRCTC had to pay them in advance and collect the money later from its customers through credit card payments.

“Though we have secure servers, people are still hesitant to give credit card information on the net. Hence we are increasingly connecting it to the payment gateways of banks providing Net banking so that the money can be deducted from their bank accounts directly,” says Pandey. The number of banks joining in this direct debit is increasing by the day — ICICI Bank, HDFC Bank, IDBI Bank, Citibank, Bank of Punjab, Global Trust Bank, UTI Bank, and Centurion Bank are already on board. The recent addition of State Bank of India is expected to increase the reach of this system.

“Direct debit transactions have increased greatly after we hooked up with IRCTC,” says C.N. Ram, IT head at HDFC Bank. But Pandey continues to innovate. “We are looking at bookings on the phone through call centres as well as through mobile commerce, where service providers take up the collection risk.” The volumes of online booking are still small. In the last year they have amounted to only Rs57 crore, but as the number cities and towns serviced by IRCTC increases and as payment options increase, the volumes are also bound to rise. Why should towns be added to an Internet booking service? After all, the Net is accessible from anywhere in the globe. Well, the limitation comes from the courier service since the tickets can be booked from anywhere but the delivery is still physical. Of course, one way to sort this out is to take the e-ticket route, where the ticket is sent by email to the customers as many airlines do in the US.

Pandey and his team are of course ironing out any wrinkles in the system for example a common complaint from customers in Mumbai is that when a customer books a return ticket, inexplicably he gets a ticket terminating at Kalyan or Borivli, which are outlying stations. The reason is that Mumbai is not one station. Several fall in the area: Kalyan, Kurla, Dadar (Central), Dadar (Western), Borivli, Bandra, and Mumbai Central. When the customer does not give the right station code understood by PRS, the system assumes the outermost station in the cluster and goes ahead. “This is in fact the challenge in our system. PRS is an interactive system, which is operated by trained railway personnel the way airline reservations are done by travel agents, whereas Internet bookings are done by customers who are not accustomed to codes, etc, and need a self-help portal. We are working constantly to improve it,” says Pandey.

Clearly the “death of distance” vision of the dot.com era had substance which got buried in the hype. Now with greater Internet and PC penetration, along with improved telecom infrastructure, some glimpses of that future are here.

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