| Comments |
| “Cost plays a major role for SMBs to adopt the on-demand model” |
| - Sabapathy N, Manager – Marketing, Aspire Systems |
| There's a huge awareness of on-demand software among the SMBs and this has resulted in a big opportunity for on-demand services. In an interview with Usha Prasad of CIOL, Sabathy N, Manager-Marketing, Apspire Systems says that availability of on-demand services is going to really expand the market with about 7 million SMBs in India having started to use IT.
Excerpts from an interview: CIOL: What is the overall scene as regards the on-demand software market in India? Sabapathy N: On-demand software market with subscription as its base is a good proposition for small and medium businesses (SMBs). No hardware, no software, no maintenance and probably no integration either. Add to this, only fixed commitment with fixed financial outlay makes it easier for SMBs to adopt this model. We are talking about 7 million SMBs in India that have just started to use IT and is a huge opportunity for on-demand services. Availability of on-demand services is going to really expand the market, but the only factor that might influence otherwise would be non-availability of Indian on-demand vendors.The dominant ones are global players like Salesforce, WebEx, Rightnow, Oracle and Netsuite. The general feeling of lower costs towards on-demand services, though will be a factor, would be overshadowed by ease-of-use and business benefits that on-demand offers. IDC and Gartner predict that 30 percent of new software and application purchases will be software as a service (SaaS)-based.
SN: There is a huge awareness of on-demand software among the SMBs but is not matched by the usage due to low penetration of software application usage in this segment. There have been large networks in the form of garment industry, diamond-polishing industry, automobiles component industry and unorganized retail sector, which put together add up to $ 75 billion in revenues. Assuming that the addressable market is one percent, it adds up to $ 750 million opportunity. These really have not been viable markets for traditional software applications due to the license model, and on-demand looks the right choice for this opportunity. The opportunity that it provides an Indian vendor providing on-demand services is the ability to cater to international customers through this model, over and above tapping the market opportunity in India. SN: CRM, Web conferencing and collaboration are currently the dominant segments in terms of on-demand acceptance. The other segments that appear poised for strong SaaS advances are ERP, SCM and HR applications. We feel that educational institutions, retail shops and logistics companies will hugely benefit from on-demand software. The sectors that would benefit mainly from this initiative would be the government and add to that banking, financial companies, call centers, airlines and railways. We are already witnessing the market expansion in airline sector and railways, and this is attributed to the availability of information online though the revenue in this case is not derived by selling licenses and is consumer focused. CIOL: What are the security concerns that any SMB would come across while going in for on-demand software? Does cost and security aspects play a major role? SN: Earlier, everybody would have data security concerns. Nowadays, data security concerns are minimal due to improved awareness, software and hardware sophistication, legal obligations of the service provider, etc. However, Indian users would be concerned with respect to infrastructure - they would also be worried if the SLAs of the service provider would guarantee high availability. Several factors can influence availability and cost of higher bandwidth, stability and availability of internet connection to wider spectrum of users, etc. Overall, we would like to think that there shouldn't be any security concerns for SMBs when they adopt this model. Through the usage of this model, the kind of savings that SMBs can look towards getting would be in the range of 5-55 percent with a majority being in the range of 25-35 percent. Cost definitely plays a major role in any SMB's decision to adopt the on-demand model. CIOL: Which industry segments among SMBs are going in for on-demand software and for what specific applications? SN: Retail outlets - Accounting, Inventory management Educational institutions - Course/Content delivery, Testing, Student management Logistics - Customer service, Tracking trucks and goods Each of these industries is growing at a faster pace and has a huge demand for SaaS applications. |
CIOL: What are the factors responsible for growth of on-demand software by SMBs?