New generation SIs are more of MSPs

With the changing times, where product companies are moving into services play, a lot of developments have also taken place in System Integration (SI), and among the enablers. They have now also taken the role of managed services providers.

SWAFE, a Bangalore-based business process management company is one such example of next-generation system integration company.

Speaking to Akanksha Prasad of CIOL, Shalendra Vashisth, managing director, SWAFE Business Process Management Pvt Ltd, talked about the evolving role of system integration and their unique business model with focus on energy and the customers.

Could you tell us a few details about your company? What was the whole idea behind starting SWAFE?

SWAFE is an abbreviation of five forces of nature i.e. Sky, Water, Air, Fire and Earth. Like these elements are critical to life line, SWAFE provides solution, services and products critical for customer’s business life line. There was a key objective while forming SWAFE - to look at customer's challenges and see how we can bring down their costs. We spoke to more than a hundred CIOs and CTOs in India and abroad to understand this and found out that energy efficiency was one of the key thing.

There are two to three imperatives that we felt the customers had. One of them was how to go about energy efficiency in the existing or new environment. So we came up with a business model where we had two key functions - one was global servicing and system integration and the other was technology services.

The unique factor in our business model is that we look at the entire organization with one unified view to provide end-to-end energy efficiency from power to IT and also implementation from what we offer from InteInfra service, network on-demand and printing on-demand. Printing on-demand is already talked about from per page use, but we talk about per kilo volt ampere (KVA) use, which is our difference.

Could you elaborate more on the energy audit? How does that function? You mentioned about InteInfra On-demand services. Are you planning to enhance the offering?

One of the business lines under the SWAFE global services is the energy audit. In this we talk about power, IT and network audit. In this we start from the the transformers, go till the last plug point of the customer and look through the loopholes and area of improving efficiency. Many companies today use more than 35 per cent of the harmonics for a minimal use, we therefore help them save about 20-22 per cent by rightsizing the usage.

From the network side we look at the network down time, improve the patch panels, the switches etc, then comes the IT side. Here we talk about server virtualization or moving from desktop to thin clients, provide them consolidated review that could save up to 40 per cent of the costs.

InteInfra On-demand service is integrated infrastructure service. This is a flagship offering by Swafe. It is having on-demand power, network and IT infrastructure, where we build, design, implement and operate the entire entire data center facility and the customers pay per KVA used than the infrastructure deployment, on a monthly basis. Customers can upgrade or even relocate on-demand, and in case the system is down, the customers are not billed for that period.

What is your focus market? In terms of verticals, which are more yielding?

In terms of market, I believe the trend will first catch up in the large enterprises and then move down to the small and medium enterprises (SME). An SME has a 4-6 servers environment, while in a large enterprise it is much higher; hence the savings from seven to ten racks to five servers is more accountable than five servers to one. Having said that, we are sure the SME will follow the trend in faster rate.

Our focus market is the mid-size market. Our focus is on the BFSI, logistics and manufacturing verticals. We are on a very advanced level of discussions with a company called Diebold, wherein we are talking about a business model where they can charge the customer on the basis of the transaction per day. It will include infrastructure with network and power.

Similarly, we are also talking to various color dispensing companies like Euro, where again the bill is generated on per KVA, per usage on demand methodology. In the next year, our focus is going to be very strong on the government and telecom sector, because these verticals will see moving towards energy efficiency.

You take a unique stand on being customer-centric than vendor-centric, how does that work?

A. We look at what is important for the customers and their requirement. We are highly respected in the market for being vendor-neutral. We do not say that we are specialized partner for any particular vendor. And we offer both the models to the customer, one is Capex model and the InteInfra on-demand model.

Our belief is that this strengthens the relationship with the customers. We talk from our side and not any particular vendor. If we see that any solution needs a certain brand products, we approach that brand company.

Delta, for example, is a company with worldwide presence, so we as partners know the problem and the solution, while a Delta-specialized partner, may not approach these customers.

No single vendor would have a true highly efficient end-to-end solution, which it can claim as the best offering in town but a mix of all. And that is the reason why we do not have any hard strings attached; the only thing that we loose on is the leads. But when the company and customers start talking about you, the leads come in themselves.

The prominent members of SWAFE have been in the industry for more than a decade and have been working with various system integrators. How do you see the role of an SI changing from past years?

In the past, people were more product-centric. This trend has moved in the past few years from product centric to solution centric. Now, time is changing and has become more of services changing. In this era, the system integration companies are more focused on providing not only capex deployment but also the managed services.

Today the system integrators charge their customers on the basis of the utilization and the deployment of the infrastructure - like IBM and HP do strategic outsourcing deals, where they manage the IT... so they choose on what has to be deployed, how and when.

In the coming days it will further move towards manging IT through the system integrators than giving it to a team of experts and monitoring how it is getting managed.

What are the challenges for SIs, especially for small and medium or the fresh start-ups like SWAFE? With large and established SIs looking at domestic market, do you feel any threat to your survival?

We see that there are two-three challenges for the SIs. The major of them is technology adoptions and changing the mindset of the SI firms to move from product-selling to solution and to services, because it is more about concept selling.

Most of the SIs today claim to be service sellers but they still pitch for products. Similarly, some of them continue with solution-selling, although they say they are service-seller. So this change is very challenging and difficult.

Third challenge is the right set of people and the manpower. For every company it is very crucial to attract and hold back the right talent. Another challenge is scaling up. The more agile you are, much easier it is for you to get the market.

I see large SIs as an opportunity than as a challenge. They have presence in wider base and if a smaller one talks about the concept selling and innovative solutions then there are fair chances of partnering them than becoming competition.

It is still a buzz that big SIs are looking at mid-size markets, but if that is so we will have to compete. But since, we do not have those large overhead like other large SIs, we will be more competitive and this will work towards our advantage.

Looking forward, what are your plans for the company and how would you take it forward?

We are about a year-old company, with a turnover of around one million USD; but we we aim to reach to the five to six million mark by the end of the year. We would go for both organic and inorganic growth options for achieving this. We are looking at acquiring two to three small companies, in Ahmedabad and Delhi.

Today, we have more than 35 customers, who are availing our energy efficiency consulting services to save them more than 20 per cent. Headquartered out of Bangalore we have direct presence in Mumbai, Pune, Delhi and Hyderabad and this is the example of true corporate governance.

We are looking at opening up offices in USA, Europe and Asia Pacific. In India, people are not willing to pay that as much amount for the managed services as in other regions. Customers here are not willing to pay for outsourced services, they instead prefer to set up their in-house teams.