Technology for Indian SMBs are addressable, says Zinnov study

1 Author : November 30, 2012 0

BANGALORE, INDIA: A latest study on ‘Automating the Indian SMB’, by Zinnov, a leading Globalization and Market Expansion Advisory firm,
which analyses the opportunities and challenges in technology adoption in the growing SMB sector in India. The study found that there is an addressable opportunity in 10 million small and medium businesses in the country as on date, and further identified leaders and laggards in the technology adoption lifecycle among SMBs in India. It says, this addressable opportunity is expected to reach 11 million by 2015, with 22% in the retail sector and 20% in professional services. Manufacturing, Food and Entertainment and Education are sectors with growing potential for technology adoption.

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.Today, Accounting Solutions (45%), Order Processing (39%) and Design (32%) are the biggest areas where technology is being used, followed by Optimization (30%), People Management (24%), Procurement (23%) and Customer Acquisition (22%).

Few quick facts from the survey:

a) 55% of Indian SMBs are in the unorganized sector, where the business is run for subsistence by first-generation owners with few defined business processes
b) Excluding rural businesses, mom-and-pop stores and organizations without fixed premises or hired employees, the total addressable market size in India is 10 million in 2012. This is expected to reach 11 million by 2015
c) Retail and professional services are the largest verticals among addressable SMBs
d) 94% of the total addressable SMBs have fewer than 10 employees
e) While more than 5 million SMBs have PCs, around 2 million are connected to the internet and half a million have websites

Many SMBs are characterized by low PC adoption and manual processes, as the owners are being old and traditional. SMBs need to be educated about how technology has been primarily seen as an enabler in reducing operational costs. 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. Owners who are young and energitic, the present generation are influenced by the needs of technology adoption.

 

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.

Mr. 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.”

About Zinnov – meaning Zeal in Innovation – is a leading Globalization and Market Expansion Advisory firm, with specialization in areas like Global Sourcing, Emerging Markets Expansion, Human Capital Optimization, Small & Medium Businesses, Innovation, Cloud Computing and Enterprise Mobility.

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