Core value proposition is to lower TCO: Microsoft

BANGALORE: The economic crisis is serious enough to rattle the strongest and largest of organisations. Yet, Microsoft is seeing enough opportunities to plough through without hurting itself too much from either flat IT budgets or the threat of cheaper options such as Opensource. The software maker is treating the recession as an opportunity for its virtualisation and Unified Communication products. Tarun Gulati, general manager, Marketing & Operations, Microsoft India talks to Sigi Achappa of CIOL about Microsoft's plans and strategies going forward. 

Excerpts.

CIOL: How is the IT landscape changing?

Tarun Gulati: As you see the recent trends kicked out from third quarter of last year, we noticed that not just in India but the world, each organization is thinking aggressively about the top line coming down, reducing costs in every spectrum, infrastructure, headcount. All organizations had this one point agenda – rein in costs. We were excited because our core value proposition is to lower TCO. But we thought that we have an unique opportunity  to leverage our R&D investment to facilitate our customers in doing that. Especially in India, we said we have this good platform with low TCO, on top of which you can build some specific solutions. Over the past two years, we have invested in Unified Communications (UC) and virtualisation which lead to direct cost savings. We see the pendulum shifting a little bit though, while earlier – it was more capacity and functionalities now, there is a change trend – companies will continue to invest in IT but to reduce costs.

CIOL: What are the top technologies that are helping businesses / enterprises save costs?

TG: There is no appetite for new functionalities – it will be anything that can save costs for them.

Customers don’t mind making investments but the focus is on obtaining RoI in the short term. The horizon for ROI has reduced. Going forward, the following trends are likely to prevail in the market for the cost optimization that they deliver:

       Virtualization: Virtualization makes it possible to run more than one operating system on a single machine, which can help companies reduce costs by enabling them to use more of the computing power that they already own. Virtualization also presents opportunities to consolidate the number of server companies own and use.

       •Unified Communications: Cutting back on plane trips and hotel stays is one of the most obvious ways for companies to save money, but that must be balanced against the value of person-to-person interaction. Today, video conferencing and new collaboration tools are making virtual meetings much more like face-to-face interaction and companies are finding that in many cases, information sharing and collaboration can be accomplished more efficiently and for much less cost when done virtually.

       •Reduced PC energy consumption: There are incredible power management tools in software today that help companies more effectively manage energy consumption. Companies should make sure they are taking advantage of all power management tools in today’s software.

       •Cloud Computing: Many companies are beginning to consider the benefits of a Software as a Service model for their IT environments as a potential cost saving strategy, which provides the flexibility and options customers to help them make educated decisions. To save costs - customers will now start exploring options to see how they can manage and access software – whether it’s online, on-premises or both.

       •Business Intelligence: Business intelligence delivers on a simple promise: to improve business performance by driving better decision making throughout your organization. BI helps you make better and quicker fact based decisions, enables all types of decision making in the organization– operational, tactical or strategic, lowers TCO, gets deployed fast and scales with your requirement and enables decision making at all levels of the organization– personal, team or organization wide.

       •CRM solutions: CRM offers a robust suite of sales, marketing, and service capabilities, it offers businesses of all sizes a fast, flexible, and affordable solution for finding, winning, and growing profitable customer relationships. Lilliput Retail, a retail company specializing in kids wear has in fact seen a 60 percent increase in efficiencies of warehouses.

CIOL: What are the technologies enterprises are looking to invest in right now?

TG: There are ten solutions that we have identified – developer tools, BI, knowledge management, Sharepoint – which will drive more efficiency and lower costs. We have been very clear on saving money – we are seeing a lot of traction on this—this is not a short term play—it is a long term play. In 3 - 4  years every organization is going to look to technology to save costs.

CIOL: What is the traction on cloud computing?

TG: Cloud computing is starting to pick up- its a $50 million market in India. Among the SMBs, we are seeing a greater uptake of hosted based services such as hosted CRM , and hosted exchange and ERP. We've been seeing not so much of it in the enterprise space but among SMBs. So eventually, every one will gravitate to a mix of on-premise on cloud and it will vary. Among enterprises we are seeing traction on non-mission critical applications. Companies are reluctant to move large amounts of data. Its not as much about cost savings as to not having to make the initial investment. One of the reasons why cloud computing will take off is because it saves cost, saves the  initial investment and you get solutions out of a box. SMBs are migrating faster because their needs are smaller and does not make economic sense and they don't have liquidity to make infrastructure. 70 percent  of small organizations are on hosted e-mail.

CIOL: What has been the impact of the slowdown on business strategy and changing customer needs?

TG: At Microsoft we see the times as an opportunity to engage in richer conversations with customers around how we can help them manage their costs by bringing enhanced levels of efficiencies and effectiveness by optimal use of IT. One significant development that we have experienced from our recent engagements with customers is their increased focus on cost control. We are seeing this translate into companies investing in solutions and processes that enable them to deliver immediate productivity and drive cost efficiencies. Not only has it become more focused on rapid RoI, but it is also increasingly taking place in the boardroom.

IT vendors, such as Microsoft, must also come to terms with this change and adapt themselves to tighter budgets, higher scrutiny and therefore increased time lines for purchase decisions. We believe this is an opportunity for us to deliver value - to work with customers and partners to help Indian enterprise to unlock the value IT can offer - to eventually support customer business goals in these tough times. To this end we will re-energize our efforts to reach out to customers across all levels, tailoring our efforts to suit each segment. For the SMB segment in particular - we will continue to strengthen our geo-expansion plans - not only adding more offices to the current 15 we have across India - but also bolster each of these operations with the support necessary to help them penetrate the local markets. Like any other business, our focus is re-aligning cost structures and remaining competitive and continuing to offer innovative products and solutions to our customers. We believe this is the time to walk the extra mile for our customers and partners through significant engagement and offering them more choice.

CIOL: How has slowdown affected  the market?

TG: With the slowdown kicking in - there has been a significant shift of focus on improving operational efficiencies through optimal use of IT to deliver on their business priorities. The parameters used to make IT purchase decisions have changed - with focus now shifting to the ROI, relevant timeframe, and overall TCO.Therefore, as a strongly emerging trend, we are seeing that customers are no longer looking at IT as an expense and have in fact, narrowed the window of RoI to relook at IT as an investment for long term business benefits. 

Another trend is the evolving role of the CIO – into ‘CIO plus’. With a growing portfolio of responsibilities – the presence of CIOs in boardroom discussions is growing. Sectors such as BFSI, Telecom, IT & ITeS and Retailing are already reflecting this change! These are sectors where technology penetration defined as ‘ICT spends as a percentage of total turnovers’ is high and the strategic or compliance related role is critical. Businesses are clearly starting to acknowledge the contribution of CIOs to their larger business plans.