Big opportunity in small cos

Like in all other eco-systems, the small and the big coexist in business, making each other relevant for each other. Take for instance, the information technology business. While all of us would think that the biggies of the business depend primarily on multinational giants to jack up their top lines, many of them are increasingly turning towards small and medium enterprises for more business. Sample this: Microsoft just launched a new product called Business Essentials which will come at one-fifth the price of a regular ERP package to address a large segment of emerging businesses, which at the moment finds switching to ERP solutions a tad expensive. The package will be a lighter version of a regular ERP package delivering only the essential applications for emerging businesses. "With Business Essentials we are targeting small business upto the range of Rs 50 crore. Small businesses of today will be the large ones of the future," says Rajeev Mittal, group director, Microsoft India. Consumers in this category had to buy a quality ERP package for Rs 10-15 lakh but this one now starts from Rs 2.5-3 lakh along with licensed implementation at the client end by Microsoft partners. The SME market already contributes over 50 per cent to Microsoft's India business. The Indian SMB sector contributes over 60 per cent to Indian GDP, and yet its IT spend is only 30 per cent of the total IT spend of $22 billion by Indian companies, says Zinnov Consulting report. Cisco, the top network equipment maker, has put a multi-pronged strategy in place to ensure that its network follows wherever the emerging businesses go. It has launched an Integrated Services Router (ISR) which combines the benefits of voice, data and video, and does away with diverse sets of hardware.
It's literally an office out of a small box, explains Pramodh Menon, senior vice-president of Cisco India. It has pulled out all stops for its marketing push, with the "Network On Wheels" program, which is the largest marketing programme by Cisco in India. This mobile van visits strategic industrial locations across key tier I, II and III cities and hosts live demonstrations for more than 100 customers per city. The van, which can accommodate up to 10 people at a time, contains equipment and facilities to conduct onsite technical demos of key networking solutions, like IP communications, security, mobility and network management solutions. For this company, whose shares have fallen around 27 per cent a year ago in its home country, Indian SMBs are one of the most lucrative bets. There are around 1,200 SMB clusters across India, and the total number of small businesses would exceed 30 million, according to a recent study by Zinnov Consulting. A study conducted by Access Markets International (AMI) Partners that says Indian emerging businesses are on track to spend $1.26 billion on Internet-related services and products this year, a growth of 35 per cent over similar spends last year by the same businesses. 37 per cent of the businesses surveyed plan a complete overhaul of their Internet related infrastructure. Xerox Corp derives about 55 per cent of its business revenues in India from SMEs and SOHOs. They work with 800 emerging business partners in India, and are giving a long-term savings solution in laser printing. Their new printer model uses solid ink technology and offers colour prints at Rs 2 per page. Mono prints are free for the litime of the printer. "Though the printer costs more, if you do a cost analysis over a year and compare it with a regular colour laser, it offers tremendous savings," explains Princy Bhatnagar, director, Office Group.
The activity is as frenetic with chip companies. "We are targeting all sectors, ranging from automobiles to fashion and apparel," points out Narendra Bhandari, director, Software & Solutions group for APAC region at Intel. The world's largest chipmaker, is pushing for its Business Exchange portal, specifically designed for small businesses and expects a growth of around 24 per cent from this in the current fiscal. This, along with its Atom processor which is a much cheaper version of the Core Duo, are being advertised in smaller towns and cities using roadshows, and other media. A Nasscom report states that nearly 50-60 per cent of IT spend in India is expected from the SMB segment in 2008. India will be among the fastest growing markets in the SMB space, with IT spend set to grow over 20 per cent in 2008 with them spending an extra $1 billion. And so IBM has made emerging businesses its focus by increasing its geographical reach. "Last year, our SMB business grew over 50 per cent," says Shailesh Agarwal, VP, IBM South Asia. IBM is entering more markets, in smaller towns and cities, targeting the burgeoning SMB population there. "We are going to have a geography centric strategy," he says, meaning that the traditional IBM product-centric strategy is history. "We are seeing smaller businesses leapfrogging - they are going straight for full implementation of IT and Net-related needs, from zero installation," he adds, explaining the reason for targeting specific verticals in various sectors. The US-based multinational is now moving fast to achieve its target of being present in fourteen new centers by the year-end.

Source : Indiatimes