Digital Transformation at L&T (A)

Indian School of Business
ISB271
July 23, 2021
S. Ramnarayan | Sunita Mehta
DIGITAL TRANSFORMATION AT L&T (A)

On a balmy evening in March 2018, Sekharipuram Narayanan Subrahmanyan (SNS), Chief Executive
Officer and Managing Director of the engineering and construction conglomerate Larsen & Toubro
(L&T), flew back to Mumbai from Vadodara where he had been reviewing progress on the construction
of the world’s tallest statue, “The statue of unity”.1 It had been a hectic, yet deeply satisfying day. The
statue was to be inaugurated in October 2018, and from his visit to the site, he was confident that it
would be completed well before the expected date. As he recollected his conversations at the site and
the artefacts and solution demos he had seen there, he was pleased to see the fruits of digitalization
in the form of several digital solutions that had contributed meaningfully to the project.
L&T Construction, the group’s largest business, had embarked on its digitalization journey in early
2016. Over the next two years, it developed and deployed a large number of solutions across hundreds
of project sites. With implementations and deployments at L&T Construction moving along at a pretty
pace, SNS felt that the need now was to increase adoption, instill a data driven decision-making culture
among operating managers, and systematically track benefit realization from digitalization. He also
thought that the time was ripe to spread the digitalization effort to the other businesses within the
L&T group. SNS made a mental note to speak to his Chief Digital Officer (CDO) about the best way to
press forward with L&T’s digital transformation.
BACKGROUND OF LARSEN & TOUBRO (L&T)
L&T was an Indian multinational engineering and construction company with a presence in over 30
countries. Founded in 1938, the company was headquartered in Mumbai, India. With businesses in
basic and heavy engineering, construction, realty, manufacturing of capital goods, information
technology (IT) and financial services, it was one of India’s largest private sector companies.
1 The “Statue of Unity” is a statue of Sardar Vallabhbhai Patel, an independence activist, who was also the first Deputy
Prime Minister and Home Minster of independent India. The statue is located on the Narmada River in the state of Gujarat
and is the world's tallest statue at 182 metres (597 feet) in height.
Professor S. Ramnarayan and Sunita Mehta prepared this case solely as a basis for class discussion. This case is not intended
to serve as an endorsement, a source of primary data, or an illustration of effective or ineffective management. The authors
would like to acknowledge the support provided by Anantha Sayana, Chief Digital Officer and his colleagues at L&T, in the
writing of this case. This case was developed under the aegis of the Centre for Learning and Management Practice, ISB.
Copyright @ 2021 Indian School of Business. The publication may not be digitised, photocopied, or otherwise reproduced,
posted or transmitted, without the permission of the Indian School of Business.
This document is authorized for use only in Prof. Manojit Chattopadhyay, Prof, Sumeet Gupta & Prof. Venkatesh Krishnamurthy's MIS Term II PGP 2022-24 batch at Indian Institute of
Management - Raipur from Sep 2022 to Mar 2023.
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It had attained and sustained a leadership position in all its major lines of business largely due to its
customer-focused approach and continuous quest for world-class quality. In 2018, the L&T group
comprised of 93 subsidiaries, eight associates, 34 joint ventures and 33 joint operations companies
with a total of 44,800 employees worldwide, revenue of USD 20 billion and operating income of USD
2.3 billion (see Exhibit 1).
WHY DIGITAL TRANSFORMATION AT L&T?
In 2015, SNS, then the CEO designate, had visited the US and was involved in work related to L&T
Infotech (LTI), an L&T subsidiary providing IT services and solutions. He witnessed how digital
technology was profoundly changing businesses across different industries and creating a huge impact
on profit, productivity, and performance. He felt strongly that a traditional organization like L&T
should utilize the transformative potential of digital technologies to compete at a global level. SNS
stated:
“The world is fast going digital and is throwing up huge opportunities for companies
like ours. Every aspect of our business has the potential to be more efficient,
productive, competent, competitive, and profitable through digitalization. L&T was
performing well as an organization, but if we wanted to move further, we needed to
do something about using digital technologies.”
The digitalization agenda was also emphasized in the five-year strategic plan (called Lakshya). Every
five years, L&T formulated Lakshya after an intense exercise that involved top management
consultants. In the 2016-21 strategic plan, consulting firms McKinsey and Bain, after environmental
scanning and engaging with all the business leaders, emphasized the need for L&T to use digital
technologies to enhance its global competitiveness. Following up on this strategic planning exercise,
in 2016, SNS, who had been appointed CEO of L&T, decided to initiate the digitalization process first
at L&T Construction, L&T’s largest business with revenue of around USD 11 billion. L&T Construction
operated in multiple sectors, including power transmission, distribution, water, and heavy civil
infrastructure, which involved building metros and nuclear plants, and each sector had its unique
concerns. SNS believed that to have a significant impact, digitalization at L&T had to be pervasive. He
said, “It has to touch everybody. It has to touch every function and every site. It must be seen as
something that is going to be transformative.”
INITIAL STEPS
In 2018, L&T Construction ranked among the world’s top 15 contractors and accounted for around
70% of the engineering giant’s revenue. The company’s capabilities spanned the entire construction
spectrum from civil and mechanical to electrical and instrumentation engineering. Its services
extended to eight businesses: buildings and factories, transportation infrastructure, heavy civil
infrastructure, power transmission and distribution, renewable energy, water and effluent treatment,
and smart world and communication. It operated from around 400 project sites.
A study of the state of digitalization revealed that the construction industry was ranked very low in
terms of digital technology investments (see Exhibit 2). This indicated that L&T Construction would
have to embark on its digitalization journey with few, if any, existing models and benchmarks. SNS
invited Anantha Sayana (Anantha) to steer the transformation. With 25 years at L&T, Anantha had
Digital Transformation at L&T (A) | 2
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most recently served as Head of Information Systems Audit and Head of Corporate IT and Program
Management for Sales Excellence at LTI in the US. He was designated Head of Digital in 2016.
L&T had been an early adopter of IT solutions and had invested heavily in IT. The organization had
implemented enterprise resource planning (ERP) in all its business units from 1999 to 2001 and used
IT in the areas of finance, accounting, purchase, and procurement. The IT solutions were created in-
house using the services of group companies LTI and L&T Technology Services (LTTS). However,
recognizing that digital was different from IT, the company made a strategic decision to create a
separate digital department called the Digital Hub. Anantha stated, “Information technology is used
to provide solutions to existing problems. Digital is used not only to solve existing problems but also
to exploit opportunities created by new technologies.”
While the Digital Hub focused on new technologies, the IT department continued to be responsible
for technological initiatives. Anantha said:
“Initially, the IT people were anxious about their role and involvement. They also felt
insecure about the attention and funding being given to the new department. We
used our position in the organization to influence them and clarified that IT would
remain the foundation for digital.”
DIGITAL HUB
The Digital Hub was responsible for the conceptualization, ideation, creation, technology selection,
technology development and architecture of digital solutions. Anantha was tasked to build the Digital
Hub team. The team occupied a different floor and was a combination of business domain experts and
technology experts. Anantha recalled:
“The construction business had eight verticals, and we asked each of the business
heads to nominate a Digital Officer who became a part of the Digital team. The
nominated person had to be less than 35 years old and employed at L&T for 5-6 years.
They did not need to have digital experience, but they had to be enthusiastic
engineers with the right attitude.”
The Digital Officers had domain knowledge and were involved in creating digital solutions. The other
team members with the requisite IT background were all under 35 years of age. Four senior managers
with rich experience in digital technologies joined the team as lateral hires. However, none of them
had any experience in the construction business. With the necessary expertise thus organized in
house, the Digital Hub did not need to depend on external agencies for conceptualization and solution
architecture. Anantha said:
“Though the Digital Hub is a separate department, we are deeply connected with the
business. The team has no qualms about being mentored by the business leaders on
various business concerns. This is done before working on a solution. As we are a part
of the organization, the business leaders readily accepted us and were open in sharing
their ideas and concerns.”
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WHERE TO BEGIN?
Anantha’s research found that the impact of digitalization on most businesses was the highest at the
point of customer interface across industries, and next, in improving operational effectiveness. In the
hospitality, airline, insurance, banking, and telecom industries, which had millions of customers and
hundreds of touch points, digital’s predominant impact was on customer interface. L&T Construction
did not deal with millions of customers, so the primary goal of digital in its case was to improve
operational effectiveness to optimize resource utilization, save costs, improve productivity and
efficiency, reduce execution time, maintain quality, and ensure safe operations. SNS said, “Digital will
provide us with opportunities to open up new ways of working and move business operations from
tedious, manual compilations of data to acting on data captured in real time, provide insights, and be
available online in visually rich and intuitive dashboards.”
SNS believed that for an organization as large as L&T Construction, digital should not be just about
pilot projects or proofs of concepts. Solutions needed to move very quickly from these stages to
massive implementations and deployments that touched all project sites and their people. His
approach was to launch digital initiatives at scale and across every project site, impacting every facet
of operation. He felt that the digital initiative should also permeate the entire value chain of
construction – project bidding, engineering, material procurement, construction, handing over,
operations, and maintenance. Given that L&T Construction operated at speed and scale, SNS extended
the same mandate to the Digital Hub team. But what should be their approach to implementation?
Anantha said that execution did not follow the copybook approach:
“We did not conduct meetings of various business leaders across cities, do town halls,
involve people across levels and functions, hold discussions on what digital means,
and ask them where we can go digital, collect ideas, and spend many months figuring
out what the business wants. We did none of these things. Having worked in
technology across the L&T group for 25 years, I understood the business and did not
want to speak about digital without having any impactful solution to offer. We
believed that digital would be understood by our people only when they started to
see it. As we had about 35,000 pieces of equipment and machinery that were the key
elements in construction, we asked ourselves what digital can do to improve asset
utilization and performance.”
The focus of the Digital Hub team’s first initiative was on connecting assets using the Internet of Things
(IoT) to optimize equipment and machinery utilization. Instead of holding dialogues with many people,
they took inputs from the Digital Officers. Anantha interacted with experts from LTI and LTTS and a
few startups to seek new ways to build solutions. The initial focus was to connect all the assets and
build a dashboard that could be seen by the operating staff and monitored centrally at the Digital Hub.
Anantha said, “In about six months, we were able to connect 1,000 machines. We also started
conducting digital seminars where people started experiencing the impact of digital. When we shared
real-time machine utilization data, people were taken aback.”
There were stray pockets of resistance from the people at the operations level at project sites.
Anantha elaborated:
“We were not getting data from a few sites. On further investigation, we found that
in some cases, wires connecting the gateway to the sensors had been clipped with a
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pair of scissors. In other cases, people were resentful that machine utilization data
had become transparent; they sent us data to prove that the information on our
dashboards was wrong.”
IoT technology was complicated, and it took the Digital Hub over six months to fix all the bugs and
provide accurate and consistent data on machine utilization. At two or three sites, machine utilization
was manually recorded. This data was tallied with the information on the dashboards for a few weeks
to ensure that people could rely on the dashboard for detailed information on the utilization of
machines, for instance, the amount of concrete produced by a particular concrete batching plant in a
day, the machine start time, average production of concrete in the previous month, amount of fuel
consumed, etc. (see Exhibit 3). To gain the buy-in of people at the site, the Digital Hub team
emphasized that it was just providing information and that the business managers were the experts
in their respective domains. Therefore, they had the freedom to infer whether the machine’s
performance was good or bad. Anantha added:
“We did not talk about the potential of digital or ask people to change. The dashboard
provided people at a particular site information on not only their machine utilization
but also the best and average operating times of those machines across all sites for
the same project. When people started looking at the information provided on the
dashboard, the need to change and improve utilization became automatic. This
started a dialogue process. Then we worked with the business verticals to help
translate these insights into optimal asset utilization.”
The Digital Hub team regularly met with the people involved in core business activities and sought
their feedback on the machine utilization program. As a result, the solution went through several
iterations before it was rolled out across locations. During these interactions, the team was asked
what digital could do to improve labor productivity, materials management, worker safety, etc. From
these demands, the team identified seven or eight fronts on which it could initiate digital initiatives.
Anantha said, “Their adoption of the other initiatives was better and their interactions with us were
positive because they saw the impact of one significant change. They saw us as a bunch of people who
could deliver.”
Changing Roles and Processes
When the machine utilization program was implemented, the user-friendly dashboard provided
information on machine utilization, optimal utilization provided by the manufacturer, average
utilization of the machine across various L&T project sites, and alerts regarding temperature, pressure
and other parameters specific to the machine. These data were made available to the operating
manager at the site, the plant and machinery (P&M) head, the business head, and the CEO. The P&M
head, whose sole concern thus far had been to make a serviceable machine available, began thinking
about utilization too. With this information becoming widely available, there was a marked change in
roles and responsibilities. Anantha elaborated:
“The P&M head, operations manager, project controller and project manager got
together to have a conversation based on this information. How much work was that
machine doing? Is it operating at the intended capacity? How much fuel was being
consumed? Can’t we use the machine more? What can we do to make our machine
utilization better? Today the P&M heads conduct their reviews based on the output
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delivered by these machines, and this change has emerged as a by-product of
conversations that were initiated because of the program.”
The machine utilization program had significantly impacted machine usage. Inefficiencies related to
diesel consumption were monitored and controlled. Managers redeployed machines from one site to
another instead of procuring new machines. The process of machine procurement changed; new
machine purchases were not approved unless the business unit scrutinized the utilization data of the
whole population of that particular machine. Also, improving machine utilization was not just a simple
matter of making a machine work for a longer time; rather, the entire ecosystem had to gear up to
facilitate the additional work. This involved ensuring that material was available near the machine,
engineering drawings were approved, fronts and labor were available, etc. Thus, machine productivity
and utilization had put pressure on all the other functions to be more effective.
OTHER DIGITAL INITIATIVES
With the success of its machine utilization solution, the Digital Hub accelerated digitalization at sites
and offices, employing a variety of solutions to enhance efficiency and transparency in processes to
gain tangible and intangible benefits. The team developed and deployed three types of solutions in
active consultation with the business verticals: (1) Solutions that were common across multiple
businesses (generic solutions), for example, connecting machines using IoT; it didn't matter whether
the machine was in a factory or at a site, the technology architecture was the same. These were rolled
out across the organization. (2) Solutions that were specific to individual businesses. These were rolled
out for the business across sites. (3) Project specific solutions that were developed to address
problems or issues related to a particular project. L&T built around 40+ such solutions to ensure that
people appreciated the power of digital.
Key digital initiatives (see Exhibit 4) using various digital technologies (see Exhibit 5) included the
following:
• Optimal utilization of manpower: At any given point of time, L&T Construction had around
200,000 workers at different sites with varying skill sets. The challenge was to find a worker with
the required skill set at a particular location. The Digital Hub developed the Workmen Induction
and Skills Application (WISA) to build a database of workers containing information on their skills,
qualifications, levels of expertise, training, and a record of their work experience (project sites,
specialized work, etc.). With this wealth of information, it was possible to nurture workmen,
enhance their skills, and consequently improve their productivity.2 The team also developed a
worker mobilization app, whereby if a project site required a certain number and type of worker,
the app sent out a message to all the sub-contractors in that region who were enrolled in the
database to provide workers.
• Material management: Material costs constituted over 60% of construction costs. The digital
team implemented material tracking solutions for all critical and special components, and these
“carried” technology in the form of bar codes, radio-frequency identification (RFID)3, or sensors
that communicated what the component was and where was it stored, along with its expiry date,
if any. This information was available to the materials manager and the project execution team,
2
L&T Infotech. https://www.lntinfotech.com
3Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags
attached to objects.
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allowing them to see and track materials at a site on a real-time and paperless basis. For 4
instance, this digital initiative was very helpful in building the Statue of Unity, which required
over 6,000 bronze panels for the outer facade. It was a challenge to identify which panel
belonged to which part of the statue. RFID tags were used to locate and fit the right panels in the
right position.
• Project monitoring and controlling. Information about the activities completed and quantities of
materials consumed at a site in real-time was essential for effective project monitoring and
management. The digital team developed the Procube project monitoring app to capture these
details directly from the site. Site engineers punched in information on progress of the project at
the end of every day. The app made these real-time reports available to people both at and
outside the site.
• Human Resources (HR) digitalization: HR also leveraged the benefits of digitalization by drawing
out an HR digitalization plan for talent acquisition, performance management, and learning and
development. Initiatives included introducing artificial intelligence (AI) / machine learning (ML)
for parsing and shortlisting of resumes; anytime performance conversation for continuous
development; gamification and micro-learning; Workplace by Facebook for communication,
collaboration and community building; and a reward and recognition portal named Hi5 for
employee engagement.
• Building a safe workplace: Workplace and people’s safety was a top priority for L&T. Therefore,
the digital team built mobile app-based solutions to digitize several safety processes. For
instance, worker training on safety was digitized using virtual reality and augmented reality. The
two-three-minute-long films gave workers an immersive experience of what it meant to abide by
the safety precautions. Technologies such as RFID were used to identify the location of workers
to ensure that their movements were restricted to their designated areas of operation.
• Enhancing quality: Digital solutions, in general, helped the organization manage operations more
efficiently, thus improving the quality of the final product.
• Creating digital geography: The Digital Hub deployed geospatial5 solutions using drones and
other geographic information system (GIS) technologies to survey areas, measure stockpiles, and
monitor obstructions on a geo map. Since accuracy was critical in the construction business,
there were initial concerns about the accuracy of the data provided by geospatial technologies.
This created some resistance to using these technologies across levels and from senior leaders at
L&T Construction. SNS strongly believed that the issue was not with the technology itself but its
application. He said, “The power of geospatial technologies was immense. There was a need to
master it and use it throughout the organization, making it part of corporate digital initiatives so
as to serve all the independent companies (ICs).”
Dr. Y Pari, Head – Geospatial Technologies, added, “We are really pushing the pedal on it. As is the
case with the adoption of any new technology, there is a learning curve; only in this case, it has
been a steep one!”
The team was eventually able to address the various concerns around the technology and get
several project sites across L&T Construction to embrace the geospatial solutions. These
4
L&T Infotech. https://www.lntinfotech.com
5Geospatial technologies include a range of modern tools contributing to the geographic mapping and analysis of the Earth
and human societies.
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technologies made life easier for surveyors by equipping them with quick and accurate data with
far less effort and much more economically.
• Generating insights: Implementing digital solutions in all the above areas generated vast
amounts of data. This data was stored in a data warehouse called “Alchemy”, signifying the
potential to mine gold from the data. The company created a strong analytics team to generate
insights from the data for various business decisions. These insights were used to develop
analytical models using AI to do natural language processing, image recognition, etc. For instance,
these analytical models were used to identify trends in the causes for failing a quality inspection,
non-conformance in safety, etc. These insights were provided to people at the operating levels to
address a range of issues.
INITIATIVES TO SUPPORT TRANSFORMATION
SNS spoke about the need for digitalization at every opportunity and used every forum and platform
available to drive home this message. He even viewed regular business reviews as an opportunity to
monitor progress on digitalization. Anantha added, “This was very powerful as the word got around
that if you want SNS’s attention, speak about digital.”
L&T Construction took many other initiatives to facilitate its digital journey. These included:
Hiring the right people: L&T Construction typically recruited fresh talent from the best institutions in
the country. However, as a brick-and-mortar company, L&T had to rebrand itself to attract candidates
with a digital background who would have otherwise preferred to join software companies. Dr. C.
Jayakumar, Head of Human Resources, said, “We projected ourselves as a tech-savvy company using
high-end technology. As we built the digital team, everybody who joined the team looked at it as an
opportunity to explore unchartered territory and have the freedom to do a lot of things.”
The digital team was cross-functional, with expertise in the areas of construction, IoT, mobility, cloud,
radio frequency, virtual reality, data science, and industrial automation. Generally, 60% of the hiring
was from internal sources and 40% were lateral recruits. The team was young, with an average age of
28.
Bridging the business and technology gap: The senior leaders knew it was important for the digital
team to appreciate the problems faced by people working on site and not allow themselves to be led
by “technology arrogance” in pushing a solution. Anantha said:
“We repeatedly emphasize to the digital team the importance of having tremendous
respect for the people working at the sites. They are the ones who work in difficult
weather conditions and deliver projects. As technologists, we use the power of
technology to help them do their jobs with a little more finesse and a little less
drudgery. It is important to communicate with empathy and translate that empathy
into a solution that makes a difference in their work practices.”
Upskilling programs: To build the organization’s digital capability, corporate HR conducted upskilling
programs for people at multiple levels. Digital became a very significant part of the curricula of all the
training programs. HR introduced digital interventions in the one-year First-Level Leadership Program
(FLLP) for frontline high potentials, grouping participants into teams to work on digital projects. After
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returning to their work locations, they worked on a problem for three months to find a solution. The
teams presented their solutions to Anantha and the senior team at Digital Hub, who assessed the
solutions and provided feedback. The Digital Hub built on those ideas and converted them into
workable solutions, and these were rolled out across L&T.
Hub-and-spoke digital organization structure (see Exhibit 6): The central Digital Hub, comprising over
60 people, was involved in digital strategy, solution conceptualization, architecture, technology
choice, partner selection and solution implementation. Every business vertical had a digital office and
a team of digital officers, drawn from the business and involved in demand generation, engagement
with business stakeholders and solution implementation. Every project site had site digital champions
who reported to a digital officer at the vertical, who in turn was guided by the digital officers at the
central Digital Hub. As of 2018, 65 people at the central digital hub and over 50 people across L&T
Construction’s eight business verticals were working full time on digital initiatives — understanding
site needs and collaborating with digital officers to choose the right solution for implementation.
Building a new competency framework: When L&T started its digitalization journey, it established the
digital mindset as a new competency across levels. When the digitalization journey stabilized, the
competency framework changed. HR head Jayakumar said:
“We reviewed our competency framework across organizational levels and felt the
need to integrate the digital mindset with different competencies at the lower levels.
For instance, for a competency like customer service, we need to assess how we can
leverage the digital platform to provide instant and optimal services. Similarly, for a
competency like execution excellence, we need to understand how the incumbent is
leveraging the digital platform to deliver results. On the other hand, at the top level,
a digital mindset is a critical competency for senior executives, and hence, there
should be a special focus on inculcating or enhancing that competency. We are
evaluating the competencies in an assessment center where employees from
different domains and locations are given a variety of tasks that have to be completed
within a specified time limit. We are also offering employees suitable training
programs as per their individual development plans to enhance a specific
competency.”
HR, in consultation with the digital hub, designed a leadership program for developing digital
capabilities, which included analytical capability and the ability to handle and derive insights from
data. This was made a compulsory program for people who aspired to take on senior leadership
positions.
Employee empowerment: Digital technologies had brought in greater transparency at all levels of the
organization; this empowered frontline workers to make independent and faster decisions. The checks
in the system ensured that norms were not flouted.
Doing multiple projects simultaneously: The digital team worked on a variety of solutions in different
areas and projects. Anantha said:
“We worked on multiple fronts because there were projects that got to success very
quickly and others that took a very long time to reach a certain level of success. If we
had worked in only one area and hit a bottleneck, we would have been demoralized.
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Whenever something was successful, we brought some of the relevant learnings to
the other not-so-successful projects. This enabled us to persevere and succeed in
those areas.”
Agile methodology: Agile methodology was used throughout the software development lifecycle of
the project. The eight business verticals within L&T Construction had teams of their own developing
digital solutions and creating a minimal viable product (MVP). Every week the team at the Digital Hub
reviewed the MVP, made changes, and within two weeks, delivered the product with some of the
essential functions that the end user wanted and the necessary security features. The agile
development of the product based on user feedback, built people’s trust in digital technologies to
improve the quality of their work.
Building a vibrant partner ecosystem: L&T was aware that attempting to acquire internal expertise in
all the technologies would be both unrealistic and inefficient. Therefore, it partnered with over 45
micro, small and medium enterprises (MSMEs) and startups within India and overseas to develop
various solutions using different technologies. Anantha said:
“We partnered with startups or established companies and brought them in on a

particular project. It was a win-win for both of us. We learned from them, and they
were also interested to see the application of the technology in our business.”
Rewards: Every year, the MD and CEO recognized and awarded the best digital site, the best digital
project and the best innovative digital solution.
Benefit realization program: The digital team was careful to ensure that any new technology it
delivered was used for the purpose for which it was deployed. The solution was designed with a clear
focus on its benefit. According to Anantha:
“We think through the technology to understand what problem this solution is going
to solve. Unless the team is sure that a particular solution is going to provide a certain
benefit, it is not deployed. Once the solution is implemented and used, the benefit
from the solution becomes automatic and it scales up as it is deployed across units.”
A structured benefit realization program was also implemented in collaboration with McKinsey to
make sure that the solutions that were implemented and utilized at L&T sites raised the benchmark
and created value in the form of savings, reduction in cycle time, optimized material consumption,
etc. An independent team tracked and monitored the value realization from the various digital
implementations.
WHAT NEXT: SCALING UP DIGITALIZATION
The digitalization effort at L&T Construction was a mammoth exercise and executed at speed and
scale. As of 2018, more than 50 digital solutions were in production and were widely used by
thousands of operating staff at hundreds of project sites. Digitalization had enhanced operational
efficiency, safety of personnel, and the digital skills of employees.
Now that the digital transformation program had achieved a reasonable stage of maturity, acceptance,
and adoption at L&T Construction, SNS felt it was time to spread the digitalization effort to other
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businesses of the group. The question was how to design digital teams across the other businesses.
How should the businesses organize themselves so that they could pursue solutions most relevant to
themselves and also benefit from the solutions that had already been deployed at L&T Construction?
What were the appropriate methods to coordinate and synergize the digital efforts across the
different businesses? How could they improve adoption and move towards data-driven decision
making and systematic tracking of benefit realization?
Apart from the structural aspects of scaling up digitalization, SNS was also mindful of its cultural
aspects. Though people were becoming increasingly open to new ideas, developing an experimental
mindset, and exhibiting a keenness to collaborate, it was important to find ways to sustain these
behaviors in a traditional organization. The rate at which technology trends were evolving could be
daunting to most people, and the only way to stay on top of the latest trends and knowledge was to
never stop learning. It would be important to think of ways and means to consolidate and strengthen
the new behaviors. SNS decided to meet Anantha and his senior colleagues to brainstorm this issue
and plan the way forward for the next phase of digitalization at L&T.
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Exhibit 1
Revenue of Various L&T Segments in 2018-19
Segment Businesses/Subsidiaries % Revenue Total
from Revenue
International (Million
operations USD)
Infrastructure • Metallurgical and Material Handling 26% 10,961
• Building and Factories
• Heavy Civil Infrastructure
• Transportation Infrastructure
• Power Transmission & Distribution
• Water Effluent Treatment
• Smart World & Communication
Power • Engineering Procurement and Construction 35% 596
Projects
• Manufacturing
Heavy • Nuclear 47% 376
Engineering • Process Plant
Defence • Defence and Aerospace 9% 576
Engineering • Shipbuilding
Segment • Marine Switchgear
Electrical & • Products 27% 912
Automation • Projects
• Subsidiaries
Hydrocarbon • Offshore 53% 2272
• Onshore
• Construction Services
• Modular Fabrication
• Engineering Services
IT & Technology • Larsen & Toubro Infotech 90% 2179
Services • Larsen & Toubro Technology Services
Financial Services • Rural, Wholesale and Housing Finance - 1892

• Investment and Wealth Management
Developmental • Power projects, Roads, Bridges, Hyderabad - 759
Projects Metro Rail, Power Transmission Line Project
Others • Realty - 888
• Construction and Mining Machinery
• Industrial Machinery
• Products and Valves
Note: USD 1 = INR 66.78 in 2018.
Source: Company documents.
ISB271
Exhibit 2
Digital Penetration in Various Industries
Source: McKinsey and Company. (2016). Imagining construction’s digital future. https://www.mckinsey.com/business-
functions/operations/our-insights/imagining-constructions-digital-future
Exhibit 3
Insights from Assets
ISB271
Exhibit 4
Digital Solutions Covering Various Functions at L&T
Exhibit 5
Digital Technologies used at L&T for Various Digital Solutions
ISB271
Exhibit 6
Hub and Spoke Digital Organization Structure at L&T
Specific Responsibilities
Central Digital Hub: Strategy, conceptualization, technology selection, solution development, program
management, implementation, and change management.
IC Digital Team: A young team drawn from the business for demand generation, engagement with business
stakeholders, and implementation.
Site Digital Champions: Understand site needs; collaborate with digital officers on choosing the right solutions
and implementation.

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Indian School of Business

July 23, 2021

S. Ramnarayan | Sunita Mehta

DIGITAL TRANSFORMATION AT L&T (A)

BACKGROUND OF LARSEN & TOUBRO (L&T)

WHY DIGITAL TRANSFORMATION AT L&T?

Digital Transformation at L&T (A) | 2

Digital Transformation at L&T (A) | 3

Digital Transformation at L&T (A) | 4

Changing Roles and Processes

Digital Transformation at L&T (A) | 5

OTHER DIGITAL INITIATIVES

Digital Transformation at L&T (A) | 6

Digital Transformation at L&T (A) | 7

INITIATIVES TO SUPPORT TRANSFORMATION

Digital Transformation at L&T (A) | 8

Digital Transformation at L&T (A) | 9

“We partnered with startups or established companies and brought them in on a

WHAT NEXT: SCALING UP DIGITALIZATION

Digital Transformation at L&T (A) | 10

Digital Transformation at L&T (A) | 11

Financial Services • Rural, Wholesale and Housing Finance - 1892

Note: USD 1 = INR 66.78 in 2018.

Source: Company documents.

Digital Transformation at L&T (A) | 12

Source: Company documents.

Digital Transformation at L&T (A) | 13

Source: Company documents.

Source: Company documents.

Digital Transformation at L&T (A) | 14

Hub and Spoke Digital Organization Structure at L&T

Source: Company documents.

Digital Transformation at L&T (A) | 15

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