Vendors Attract SMEs With Innovative Models Of IT Adoption

Small and medium enterprises in India are expected to ride in the next wave of economic growth for the country. Despite limited resources at their disposal, Indian SMEs are trying to bring efficiencies to their businesses through various IT initiatives. According to AMI’s latest Overview study, the Indian small business universe comprises 3.94 million small businesses (SBs), of which a little more than one-third have adopted computers.

Vendors Shift Focus to SME Market

Due to the rising SME preference for technology investments, leading vendors today see a great potential for growth in this segment and also recognise the need to offer innovative products to SMEs to give them a competitive edge in a rapidly evolving market environment. As far as serving large enterprises is concerned, these same leading vendors have reached a point of saturation.

Validating this trend, R ‘Ray’ Wang, principal analyst, Forrester Research, says, “The large enterprise market is already tapped, while the SMB market is showing a great potential at this point. Companies in this segment are currently displaying more IT spend than any large enterprise”. Pramod Menon, senior VP, India and SAARC, Cisco Systems, echoes Wang’s opinion, “There is a large number of SMBs, which are seeing the benefits of IT adoption. This trend in itself represents a very large market, which no IT vendor can choose to ignore’.

Meeting Business Expectations With IT Solutions

The prime reason behind the SME interest in IT lies in the fact that SMEs are now venturing into the extremely competitive and global market space. They have realised that IT can help them to achieve the efficiency and productivity required to survive in a cut-throat environment. Konkan Spices and Curry Makers, a Mumbai-based company, which specialises in spice blends, provides a good example of how SMEs are leveraging IT to sustain rapid growth. The company, which started in a single kitchen, today boasts an annual turnover of Rs 2.5 crore and has operations spanning the globe. CEO Sydney Pinto elaborates, “IT has been fundamental to our growth. We have not met a lot of the people we conduct business with in person; however, the Internet and other IT tools have allowed us to bag several international orders while simultaneously helping us curb travel costs”. The company has also developed an Excel programme to manage its 200 different varieties of spice blends. Post the implementation of this programme, the company experienced huge savings in time and efforts required to process orders coming in from various locations.

IT adoption has helped SMEs to take corrective as well as innovative measures to improve their business processes. Felix Christian, senior manager – IT, Themis Medicare, shares his company’s experience, ‘Previously all our functions revolved around paper work. Our directors soon realised the significant role IT can play in restoration of key transaction information as well as in quick retrieval of all kinds of data”. Themis Medicare, a Mumbai-based midsize company, is currently implementing an in-house developed Sales Force Automation (SFA) tool to connect its medical representatives. This will not only help the company to increase the efficiency of its representatives but will also translate into more business leads for the organisation.

Lack Of IT Staff – A Major Challenge

The above examples clearly illustrate the rising interest of SMBs in new technology solutions that cater to varied business needs. However, SMEs often don’t have pockets large enough to invest in high-end systems, leading to various internal challenges. “Small businesses are now increasingly operating in a very large global context, so there is clearly a need for them to integrate with the IT framework in that space,” stresses Menon. The integration with a global network also leads to the issue of security threats, which is often a result of lack of awareness on the part of small organisations. According to Menon, SMEs should look for security products, which can protect them from all kinds of attacks. They can consider products ranging from simple spyware prevention to anti-virus and intrusion prevention.

Besides, small companies do not have sufficient IT staff to support new implementations. Wang says, “The solutions offered to SMEs should be simple, however, they should not compromise on functionality.”

Innovative Models Promote IT Adoption

In order to address the specific issues and challenges faced by small organisations, vendors are going the extra mile to develop unique and customised solutions. “In the recent past, vendors have changed their approach towards SMB customers. The key factors to cater to this segment have now shifted to rapid implementation, effective User Interface (UI) design and ease-of-use in terms of tools,” explains Wang.

According to Menon, SMBs do not have an ability to spend a large amount of capital expenditure. And hence, solutions that offer value-for-money make more sense for SMEs. Citing an example, he says, “Instead of buying five boxes, which can do different functions, SME customers will find tremendous value in purchasing one box, which can integrate a number of critical technologies and then mask them with a very simple User Interface’. Vendors seem to understand this quite well. Cisco recently launched a Unified Communications and collaboration solution in the Indian market, for which it has pooled several offerings like IP telephony, mobility, security, switching, WAN connectivity into one small box.

Technologies like Web2.0 and Software-as-a-Service (SaaS) are also gaining significance among small enterprises due to the fewer hassles involved in their maintenance. Menon elaborates, ‘The beauty of this model is that the customer does not have to buy very expensive software. They can adopt solutions through a ‘pay-per-use’ model, as per which they are billed only for the actual minutes of collaboration. This makes software both affordable and accessible”.

IT Outsourcing - A Practical Remedy

Given the fact that SMEs may not be able to manage all integral operations in-house, IT outsourcing is increasingly being looked at as a feasible option among this segment. Owing to its limited resources, Konkan Spices is finding it difficult to handle its IT activities in-house and is considering outsourcing of the same. The company feels that this will allow its employees to concentrate better on their primary function of product development. Menon claims that managed services will play a major role in cracking the SME market as they just cannot invest in people like large enterprises.

However, outsourcing has still to gain momentum among small enterprises, even though it has found favour among the medium-sized ones. According to V Ravi, CFO, Mahindra Finance, small scale has not even started outsourcing. “They are still not convinced by the cost-benefit analysis of outsourcing and are a bit apprehensive about dealing with large service providers.”

The Future

Indian SMBs are still in the IT infrastructure build-up phase. As per the AMI Overview report, a significantly large allocation of total IT spending by SMEs goes towards ownership of basic technologies like computing, Internet and networking. SMEs are only now implementing technologies that were available to enterprises almost a decade ago, however, were simply not consumable by them. “Today SMEs are consuming many enterprise applications. So terms like ERP and CRM, which were only related to large enterprises 10 years ago, have now become SMB terms,” informs Peter Alexander, VP, SMB Marketing, Cisco Systems.

To conclude, we can say that SMEs are adopting IT in several innovative ways and are making themselves IT savvy in the true sense of the word, which will surely give them a sharp global edge in the months to come.