Indian SMBs demonstrate significant potential to adopt IT

BANGALORE, INDIA: Indian Small and Medium Businesses (SMB) need to grow efficiently, scale up and expand is driving the technology adoption and it has enhanced the total addressable market.

The addressable market for technology adoption in the growing SMB market in India is likely to increase from 10 million in 2012 to 11 million by 2015, forecasts a study by Zinnov.

The study said that the largest verticals among addressable SMBs are reatil and professional services would grow at a rate of 22 percent and 20 percent respectively.

Manufacturing, Food and Entertainment and Education are sectors with growing potential for technology adoption. More than 5 million SMBs have PCs, around 2 million are connected to the internet and half a million have websites, said the study.

Accounting Solutions has accounted for 45 percent of technology adoption currently, Order Processing (39 percent) and Design (32 percent) followed by Optimization (30 percent), People Management (24 percent), Procurement (23 percent) and Customer Acquisition (22 percent), added the report.

The Zinnov study revealed that Indian SMBs are demonstrating significant potential to adopt technology, led by the need to be more efficient, improve ecosystem connect and to keep pace with the growing mobile workforce, apart from aiding payments/collections.

"Professional services, is the most mature vertical for technology adoption. SMBs in this space demonstrate high PC adoption, upward mobility and an understanding of the possibilities that IT presents for business. On the other end of the spectrum, Retail is the laggard in this aspect, where technology is primarily seen as an enabler in reducing operational costs," said the study.

The study further added. "These SMBs are characterized by low PC adoption and manual processes, with the owners being old and traditional. Their motivation to adopt technology includes the high level of flexibility and customization offered by technology vendors, and is influenced by their peer group and partners."

The SMB market, however, does present some challenges for technology vendors. The Zinnov study found that unclear return on investments, cluttered product portfolios, connectivity without continuity and data security fears are some barriers to adoption. High costs of support and market linkages also need to be addressed.

Further, in the manufacturing sector, which has more than 2,000 clusters in India, intervention is required to identify and create positive role models in the form of early adopters.

Kishan Bhat, Engagement Manager, Zinnov, said, "We have entered the era of the connected enterprise, or 'Enterprise+', where large organizations are leveraging efficiencies gained through tighter integration with partners and the ecosystem.

This is driving smaller and mid-sized partners to also embrace IT, and technology companies that operate at the intersections of this connect stand to gain.

While savvy and sophisticated SMBs on one end of the pyramid are keen to evolve as an enterprise and have well-defined business processes, there is great potential to influence the remaining 83% of SMBs in India who are in the unorganized and traditional sectors."

The study has also suggested a few best practices for technology companies to address the Indian SMB market:

* Tier I cities: SMBs in tier-I cities demonstrate high awareness and adoption of technology, and can be approached through direct sales, self-fulfillment (online) and through channel partners.

* Tier II cities: Affordability and awareness are high, but availability of technology solutions does not match this. At the same time, these SMBs show higher technology readiness since PC penetration and connectivity are good. Technology firms must build a strong channel sales structure with skilled feet-on-street, and leverage influencers such as accountants, IT resellers and website builders.

* Tier III cities and towns: SMBs in these locations demonstrate very low awareness and adoption and the recommended approach is to partner with telecom operators, device OEMs and technology resellers.

Source: Voice & Data