– Sudhir Narasimhan, Consulting Editor, Trivone Digital Services
IT spends by the Small and Medium Business (SMB) sector in India continues to grow in double digits and presents a major opportunity for technology solution providers as well as the channels. A joint study by NASSCOM and Frost & Sullivan sometime ago had projected that this segment will witness a year-on-year compounded annual growth of 15% in spends and the market is expect to cross 18.5 billion USD by 2018.
However, selling IT products and solutions to this segment has not been very easy, as many vendors and resellers admit. This is partly due to the fragmented nature of the SMB sector with numerous industry verticals with each vertical having its own unique requirements and the inability of the industry to provide customized solutions.
The other factor that hinders the growth of IT spends are investment constraints of SMBs. SMBs, particularly those who fall in the middle and lower layers of the segment, expect long term technology solutions, where they do not have to keep upgrading their IT infrastructure every time the technology changes. Also SMBs tend to invest in technology in a phased manner.
The channels also almost exclusively service the SMB segment. Realizing the future growth potential in this segment many vendors have recently aligned their SMB go-to-market strategy with channels. While this should help vendors and channels to address the segment in a more organized manner, there is a lot of scope at the channel partners’ level to provide incremental value to customers and in the process increase revenues. Building customized solutions for non-traditional sectors such as plastics or textiles which have their own unique processes is one big opportunity.
The next opportunity is selling cloud based pay-as-you go services. While these seem like an attractive option for SMBs, cloud adoption among SMBs has not been great so far. Cloud vendors like Amazon, Google, TCS among others are yet to penetrate this sector.
The only exception here seems to be Tally. While the accounting software was always popular in this segment, the company has hit pay dirt even with is pay-as-you go services. Clearly, the main reason for this success is the popularity it enjoys in this segment where it has more than 90 per cent share of the market. The other reason for the success of its pay-as-you-go service is the pricing. It is affordable enough for both small and mid sized businesses. This is where other cloud vendors need to do their homework and get their pricing right if they are looking to cash in on the lucrative SMB opportunity. What has been your experience with your SMB customers?
What sort of a feedback have you received from your customers on the `pay-as-you-go’ services? Do share with us. We would love to hear from you.