Web-based application platforms open up a new world for the software entrepreneur to conquer
Director of Academics, Devendra Pathak had a problem. Every year, hundreds of students would apply at his college, the Delhi Business School and he had to struggle to keep up with the recruitment process.
|We are mainly targeting the Rs 10 or 50 crore companies. |
“We get applications from all corners of the country,” says he, “I had to call up the heads of each department to find out what was happening. Each department would then send their information separately. Every time I wanted an update, this had to be repeated.”
Pathak, therefore, looked for a software to help him manage recruitment at the 700-student institute. “Quite a few companies made presentations. But most wanted us to buy a whole package that contained a lot of things we did not need. However, we found one vendor who offered to give us only what we wanted. As a result, the price they offered was also very competitive compared to the others,” Pathak says.
a2zApplications, the company that Pathak chose, is a good example of how a new generation of software companies is rewriting the rules of the software industry.
a2z, like a few others in the business offers software on rent. So, instead of buying the products at one go, you pay a fixed ‘rent’ for using it. Besides, you don’t have to take the entire product on rent, only the parts you need. In Pathak’s case, for example, companies were offering to sell him an entire enterprise resource planning or ERP software whereas he just wanted something to keep track of the admissions process.-
“Our basic ERP offering starts from Rs 25,000 per month, for three users. If you were to buy and install it on your premises, you would have to shell out Rs 10 to 15 lacs immediately. Besides, you would also need to hire an ERP professional to manage the application,” points out Srikant Rao, President and CEO of Bangalore-based Affordable Business Solutions (ABS). Interestingly, Srikant competes directly with Microsoft’s business of selling such software by renting out the same software ‘in bits and pieces’. The Microsoft ERP software that Srikant ‘rents out’ is the same product that its maker sells for the full price.
It is still early days in the business. From a vendor perspective, Indian companies are yet to make themselves heard, examples like a2z notwithstanding. Indian SaaS companies are few and far between. Even global biggies like the customer relationship management service vendor salesforce.com first looked at India out of necessity rather than choice.
|The challenge for us platform developers is to maintain this balance between ease of development and power. |
“We first looked at India because a lot of our customers from the US also had offices in India,” says Aaron Katz, VP with salesforce.com, which has 47,000 companies worldwide as its customers. “Now, we are processing about 1000 leads a month in the country.”
Hard numbers are difficult to come by in this nascent industry. According to market research firm Springboard Research, the SaaS market in India is growing at an average rate of 77% and will reach $ 165 million (Rs 700 crore) by 2010. By that time, the Asian market will have expanded to around $ 1.16 billion (Rs 5,000 crore), comprising 15% of the total enterprise software market.
Those in the business see an even more significant impact. “Right now, people talk of the SaaS wave,” says Srikant of ABS, “but by the end of three years, 60 to 70 percent of all enterprise software sold would be as service, not as a product.”
Kiran Datar, MD of WebEx, which provides on demand, web based video-conferencing services says. “Earlier, we used to look at IT as a cost. The CIO’s department was a cost centre. Today, he has become more important. He has become a business enabler, a revenue enabler. From being just a necessity, he is now a key player in ensuring the organization’s competitiveness,” he points out.
The early adopters of the technology so far have been the small businesses, typically those who have not already invested in buying software. And it’s very early days yet.
“Most of our customers are still struggling with Excel and Word,” says Kantanu Kundu, CEO of a2zApplications, who has a distinctly SMB focus to his offering. “A large number of SMEs, even those with Rs 100 crore turnover in a year don’t know what an ERP (enterprise resource planning) software is. I have seen companies with Rs 50 crore turnover doing all their accounting on complicated Excel sheets,” he adds.
He further adds, “We don’t try to educate them about ERP or ask them to install it. If it’s a college that wants to monitor its students’ progress, we provide a service that does that. We do not try to sell them something they don’t want. We charge for very specific benefits that we offer.” a2zApplication have clients from publishing houses to hospitals to educational institutes.
Srikant of ABS, the company that is both a competitor and a partner to Microsoft, says the service-based approach is very much focused on the ‘S’ part of the SME pie. “Of course, Microsoft itself is trying to sell those software as a product, so in a way, we are competing with them. But what I point out to them is that we are mainly targeting the Rs 10 or 50 crore companies. These are companies that would normally not deploy ERP software, such as the ones Microsoft, SAP and Oracle sell. At the same time, by making their products available to these companies through the service model, we are enlarging the pie for everyone.”
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