BANGALORE, INDIA: "Indian SMBs are gradually waking up to the fact that IT is the backbone of their business processes and a successful implementation of IT will facilitate economic progress. In the years to come, Indian SMBs are likely to spend more on networking (e.g. wireless LAN and networking hardware), web-services, storage and security," says Dev Chakravarty, Senior Analyst at AMI-Partners.

In an exclusive interview, Chakravarty tells us how Indian SMBs are are increasingly spending on mobile telephony and telecom services.

Excerpts:

CIOL: According to a recent AMI report, Indian SMBs are expected to spend more than US$6.4 billion this year on telecom equipment and services. What are the reasons for this increased investment?

Dev Chakravarty: Indian SMBs are increasingly spending on mobile telephony as a key means of communications that is the key growth driver. This is being boosted by positive trends like introduction of newer innovative features and value added services at a lower cost by mobile manufacturers, entry of global players followed by acquisition, expansion into Tier-II and III cities, etc. There have been increasing demand for higher-end smart phones and also PDAs that offer increasingly versatile facilities in terms of both business and entertainment-related features - the latest development in the market is the advent of the iPhone.

Indian SMBs being constantly 'on-the-move', cellular phone is a vital tool for mobility. Mobile instant messaging has already become near-ubiquitous; however there has been an increasing growth of other services like mobile Internet and e-mails. Although the cellular tariffs and call rates are dropping down rapidly due to 'price-wars' among cellular vendors who look for a piece of the cake, yet it is more than being offset by increasing usage leading to greater average spend per user - the net effect being an expansion in the market.

Future trends indicate a likely opening up of the 3G spectrum in the near future that will further open up the market. However, the fixed telephony market is likely to remain more or less stagnant or at the most, show a marginal growth.

CIOL: Indian SMBs are set to adopt unified communications (UC) in a big way? Are UC solutions and devices affordable by small businesses?

DC: Uinified Communications is still at an embryonic phase within Indian SMBs; SMBs are still not aware of the intrinsic benefits of UC. Hence price is likely to be a major deterrent against adoption. However, with passage of time, the UC products and services are likely to become more affordable - moreover the extent of awareness and knowledge level of SMBs about UC is likely to increase. A major advantage of UC is overall lower total cost of ownership (TCO) - once SMBs are aware of this, they are likely to adopt UC even at higher prices since the long-term savings will be more.

CIOL: What's the scene among vendors who are going all out to woo SMBs in UC?
DC: UC vendors are gradually realizing the potential of the latent SMB segment in UC adoption. Accordingly, they have taken steps to bring out a customized version of unified communications suitable for SMBs. Some vendors are also thinking of introducing financial schemes for SMBs that will make these technologies more affordable.

CIOL: How open are Indian SMBs when it comes to using video and web conferencing that helps in the overall growth of the business? Can you give us a comparison between Indian SMBs and those in the US/APAC region?

DC: In terms of conferencing, audio conferencing still has the highest penetration within Indian SMBs - followed by video and web conferencing. Indian SMBs are still not open to that extent about video and web conferencing and the penetrations are still embryonic; as expected the usage is substantially larger for medium businesses compare to small businesses. However, the picture is likely to change for the better with the introduction of affordable broadband services. India SMB usage for video and web conferencing lags far behind that of USA; however the gap is not so pronounced in case of most of its APAC neighbors. Increased globalization, expansion beyond national boundaries and increase in number of business partners are some of the key factors boosting videoconferencing; and also web conferencing.

CIOL: Are Indian SMBs robust enough in their IT infrastructure, part of which caters to communication requirements as well?

DC: The communication requirements are mainly catered to by the Internet and broadband infrastructure. Medium businesses have a much better infrastructure at present and are approaching saturation in terms of adoption of Internet & broadband - whereas small businesses still have a long way to go.

CIOL: The spend on telecom equipment and services by SMBs was up by 7 percent last year. Of the total spending this year, you see an increased spending in equipments or services?

DC: Telecom services comprise a huge majority (over 90 %) of the overall telecom spending. The rest is accounted for by telecom equipment. A year-over-year growth rate analysis indicates that telecom services are anticipated to rise at a larger growth rate compared to telecom equipment.

CIOL: In your view, what should the vendors and telecom service providers look at while catering to the requirements of Indian SMBs?

DC: Vendors and telecom service providers should try to understand the real needs of India SMBs in terms of communication and offer services accordingly. There is no need to bundle in a whole lot of value-added-services if they are unproductive - since they simply add to the cost. Attention must be also paid to after-sales-service support and assistance during installation - this is because SMBs are not at all well-developed in terms of having a technology infrastructure and they need considerable hand-holding, at least at the initial stages. The vendors also may need to educate SMBs about what should be the appropriate technology for them. Depending on the extent of technology usage by customers, the customer base can be segmented in order to devise specialized customer handling methods for separate customer groups - e.g. providing priority queuing or special call handling for select customers.

CIOL: How will Indian SMBs position themselves five years down the line in terms of adopting latest IT infrastructure?

DC: Indian SMBs are moving ahead in terms of adopting the latest technologies related to IT as they are gradually waking up to the fact that IT is the backbone of their business processes and a successful implementation of IT will facilitate the economic progress of SMBs and assist their growth and expansion path - SBs to MBs and MBs to LBs. Talking of five-years down the line, some of the IT areas that will show a greater spending by SMBs include networking (e.g. wireless LAN and networking hardware), web-services related spending on web-development & hosting, advanced and versatile servers and finally - storage and security.