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Serving the small
14th April 2008, The Times of India, Bangalore
As the economy faces a slowdown there is one area of growth IT companies
are targeting to keep their revenues moving. This is the four million small
and medium businesses in India (SMBs). Some estimate that many segments of
SMBs are growing at the rate of 50% year-on-year.
There are small auto ancillary businesses, for instance, having around 50
employees and a turnover of Rs 1 to 5 crores that are aspiring to increase
their businesses and reach global customers. In order to achieve that goal
those companies need to create transparency in operations, faster systems,
manage its cash flows and working capital, their material information and
communication on a daily basis with all its offices located in different
parts of the country or the world. This is, in fact, a problem faced by the
majority of SMBs in India, which form 80 % of the country's total
businesses, contributing nearly 50% of the GDP and 33% of total exports.
The two most significant verticals in this segment are retail (41 % of
total SMB units) and manufacturing (17%). These 5MBs also have employment
growth rates that are higher than those of larger firms.
Only 33 % of SMBs are estimated to have personal computers, a basic
requirement of any firm. This gives an insight into the kind of untapped
opportunity that exists in the country: Given their growing ambitions, many
5MBs are seen to be keen to invest in technology. "SMBs are seeing growth
in their business volumes, with nearly 50% experiencing a need to scale
operations. Additionally 41 % have reported a need to increase efficiency
of business operations, suggesting that awareness to adopt IT is definitely
on the rise," says Rajesh Kumar, head of marketing - SMB in Microsoft
India.
Typically SMBs go through three distinctive phases of IT deployment from
building infrastructure to deploying connectivity solutions and ultimately
enterprise solutions for extending their business reach with their remote
locations, customers and business partners. Kumar says, "Internet adoption
is quite healthy at over 60% penetration; however a lot remains to be done
to enhance IT infrastructure in terms of website, broadband and secu¬rity
modules."
After the basic infrastructure ,SMBs normally invest in applications such
as ERP, VPN (virtual private network) and firewall. A recent study suggests
that SMBs are also now looking at hosted applications. "To move to the next
level, SMBs are faced with the challenge of increasing pricing pressure and
managing customer expectations," says Kumar. Speaking about the next round
of innovations, Nagaraj Bhargava, VP¬ Marketing, SAP India, says, "We will
see a lot of innovation happening around business process platform (BPP)
which is a unified environment implemented by customers to create business
processes quickly across the business network. With BPP, customers can
adapt the solution to their exact needs. Every company has its own
differentiating capabilities, and the BPP would enable customers to
innovate to maintain their differentiation."
Most IT companies are now giving a suite of solutions that are affordable
and smaller in sizes in terms of storage and server capacity. These
solutions provide an all-in-one service, giving options of scalability.
"One of the strategies to reach out to the vast SMB market is to work with
channel partners (the system integrators, value added resellers and
independent service vendors) to offer end-to-end solutions, as per
requirement," says Durgadutt Nedungadi, Director, marketing & alliances,
HP India Sales. ,-Nitin Paranjape, general manager (sales) Oracle India.
"We now see a huge traction in this mid market segment. To cater to this
huge demand we now have solutions for multiple domains like real estate,
engineering, construction, financial services, manufacturing and IT /
ITES," said Paranjape. Oracle works with several implementation and
consulting partners including Wipro, KPMG, PWC, Sonata Software, Polaris
apart from hardware vendor HP. "Our focus is to provide this segment easily
adoptable, preconfigured, bundled services and solutions comprising
hardware, software and other services," said Paranjape. Oracle currently
has 4,500 SME customers in India of its total customer base of 7,000 here.
Oracle has Accelerate Solutions for SMEs which has modules for
manufacturing, supply chain, planning, product life cycle management,
purchasing, inventory, distribution. "We work on per user revenue model
with SMEs so that they will not incur any upfront investment costs towards
technology upgradation. We provide a basketful of solutions that can be
used for logistics and transportation, warehousing, cloth¬ing, jewelry and
manufacturing."
Big Blue too has a key focus on small firms. It currently works with 1,700
SMEs in the country. Interestingly, during calendar 2007 alone IBM could
acquire 1,000 additional SMB customers.
Praveen Cherian, CEO, Network Solutions (an IBM company) said,
"We have a multi-pronged approach to grow SMB space. Acquiring Network Solutions was primarily meant to growth our SMB base. Another acquisition we made
globally help us focus on security management for SME segment. These are
pre-priced, pre-packaged services for email security, modular data centre
and security audit."IBM's recently introduced NOC-I (Network Operations Centre-Inside) a set of tool that can generate reports at the click of a button is finding
increased acceptance among small enterprises. Given out on an opex
(operational expense) model, 50 Indian SMEs are currently using NOC.
"NOC-i is a simple interface repository that supports service desk for
physical and IT asset management. It manages workflow uptime and it
functions as a dashboard that tell you how your systems and servers are
running, “said Cherian.
Howard S Elias, president. (global services & resource management software
group) said, "Till recently we did not have any product for SME segment.
Last year we have put a special strategy in place for SMBs. With the recent
acquisition of Iomega, we now have a brand and distribution network
dedicated to SMB sector. We expect a great traction happening in SMB market
in India. "It was to boost its small business offering that EMC bought over
Iomega last week in an all cash deal of $213 million. Iomega's technology,
products, and partner ecosystem is expected to form the core of EMC's SME
platform. There is also the emergence of the model of IT outsourcing of
applications, such as ERP.
"Companies having Rs 1 to 2 crores turnover cannot afford to invest in
so¬lutions that cost Rs 10-15lakh, " says V Thiagaraj of the Valliappa
Group. Paying about Rs 10,000 per month for outsourced services, however,
is within the capacities of these companies. Thiagaraj says there are firms
that send scanned documents daily to the outsourcing firms, who then key
all the information in and keep the records online for the firm to access
at any point. Outsourced options for accounts payables and receivables,
document management, payroll operations, taxation, disaster recovery,
business continuity, administrative functions and remote infrastructure
management can be a money saving proposition for companies that are into
manufacturing, retail, textiles and plantations. "These companies can do
away with investments in IT manpower to drive IT adoption and deployment in
their organization. They can focus solely on their core competences," says
Chocko Valliappa, founder & CEO of Vee Technologies, a company providing IT
outsourcing solutions.
Another major pain-point for SMBs is the adoption of emerging technologies
- availability of solutions in the area of web services, which can
drastically reduce upfront costs and take away the complexity of managing
IT infrastructure in-house.
One such solution that companies can look into is the Windows Office Live
Workplace provided free of cost on the Web. Companies can share documents
and Power point presentations across different geographical locations and
also among customers. These can be accessed through a common website rather
than sending documents as attachments.
Says Niraj Jaipuria, CEO of Source Code International,
"Using Office Live
Workplace, I can communicate with employees as well as customers globally
without having to invest in additional IT infrastructure. Also during
collaborative sessions I can share and view others' desktops and even have
the capability to make changes in documents on someone else's document in
real-time." |
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