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Forecasting Clouds in India

Research firm Zinnov has released an estimate that the cloud computing market within India is expected to reach $1.08 billion by 2015. This would be a ten-fold increase from today's estimated $110 million market. Software as a Service (SaaS) is expected to make up $650 million of that revenue, with Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) solutions making up the rest. "This is indeed a perfect storm.

The only difference is that, this storm is destructive only to companies which are not willing to change, while it is a huge opportunity for others," says Pari Natarajan, CEO of Zinnov.

With close to 8 million Small and medium businesses (SMBs) in India, this market segment presents a huge opportunity for SaaS vendors and solution providers. Since this model of delivering software remote over the Internet offers key benefits such as reduced up front investments, faster time to market, reduced implementation cycles, predictable IT expenditures and the ability to eliminate IT distractions which permits a greater focus on core competencies, it presents a tremendous business opportunity for SMBs.

Small and medium businesses, or companies with up to 999 employees, in India were estimated to spend more than $45 million on hosted business software applications in 2009, according to a prior study by Access Markets International (AMI) Partners. Medium sized businesses, or companies with 100-999 employees, are anticipated to account for over two thirds of the country's total SMB expenditure.

During curtailed economic times India SMBs, which are traditionally a very price-sensitive market, are even more cost conscious than normal. Hosted business software applications require little to no up front financial investment in technology. They also require little allocation of time or resources for software deployment and recurring maintenance. For these reasons hosted applications appear well positioned to compete against licensed on-premise software.

Software application vendors who provide packaged business suites, such as Customer Relationship Management (CRM), payroll, HR, enterprise resource planning (ERP) and collaborative applications are expected to outpace traditional software licensing vendors by nearly 800% in India.

The challenging economic environment is also causing India companies to turn to customer relationship management strategies and software systems in order to improve customer retention. The Customer is always right, and even more so in a downturn. That's why customer related activities, especially customer service, becomes so much more important when business is dull and competition is even greater. A customer driven market automatically elevates the need to have a sound CRM system in place.

Pent Up CRM Software Demand

Further exacerbating the demand for software as a service CRM is the pent up demand resulting from stalled or delayed enterprise software purchases during these times of uncertainty.

According to Gerald Prabhu, Executive Director, Strategic Alliance & Marketing, CDC CRM Solutions, "There were many projects, especially in verticals such as capital markets, wealth management and real estate that shunned their projects. We had at least eight such opportunities (in the contract stage) that didn't materialize in 2009."

Rajendra C Mruthyunjayappa, Managing Director-APAC, Talisma informed us that they had also seen many organizations stall their purchasing process and some postponing CRM projects indefinitely or at least until the time when the market bounces back. "Organizations that don't have a CRM system running usually do have some Excel-based or homegrown mechanism to facilitate customer engagements.

Hence, many of them chose to stay away and continue with what they had until the time sanity was restored on the economic front," said Mruthyunjayappa.

In a bid to respond to the prevailing market conditions and better sell their CRM products, software vendors adopted different sales strategies over the prior 12 to 18 months.

At CDC for example, they positioned a combination of the CRM sales force automation and customer service functionality and built a new core process module called the Collection and Renewals Management System for the insurance industry. Offering wider suites of CRM software systems, as well as industry specific applications, is now being routinely promoted throughout India by vendors such as SAP, Oracle, Microsoft, Sage, Talisma, Amdocs and Impel CRM.

"The idea was to take advantage of the prevailing customer sentiments in the insurance sector where retaining a customer was now more profitable than perhaps acquiring a new one," commented Gerald Prabhu. He added "We positioned the CRM as a sole aggregator of customer information and processes more than as a plain acquisition and retention tool. By positioning it like that we showed customers how other processes can be extended to CRM (thereby avoiding investments in other applications). One such example was the Recruitment and Performance Management application that we had positioned, again for the insurance industry."

Oracle also increased its focus to on-demand CRM in 2009. According to Surya Bhardwaj, Vice President, India Applications, Oracle India, "Our focus was more on capitalizing on the opportunities through the more cost-effective and affordable options such as on-demand CRM.

Our strategy is to offer customers the best possible array of solutions based on the demands of the marketplace."

Another leading enterprise software vendor, Sage, also chose to verticalise its CRM solutions in a bid to better cope up with the lean times. Thomas Abraham, Managing Director for Sage India, said, "As a concept, CRM was understood a lot better in 2009 than in the past.

The components of CRM, namely, Sales Force Automation, Customer Service, Marketing and analytics are well comprehended, which makes positioning a lot easier. In a bid to improve the appeal of our product we decided to position it according to the specific needs of some of the key verticals including brokerage firms, stock exchanges, media, and real estate."

The company also tried to offer it as part of an integrated ERP package and more recently it has been positioning various CRM offerings based on the size of the organization and required complexity.

Salesforce.com has increased its marketing of mobile CRM in India and throughout the Asia Pacific region. India is the world's fastest growing mobile market with over 20 million subscribers added every month. There are also over 500 million people in the middle class in India, many of which leverage their mobile devices for work related access, as well as backup if Internet connectivity is unavailable.

SMB companies account for more than 45% of the manufacturing output and 47% of the total workforce in India. Combine this massive market place with the highest forecasted IT spending growth in the region, by some accounts growing even faster than China, and the software as a service market opportunity can be easily understood as massive.

Expect the CRM software vendors to continue to offer creative packaging, increased industry fit and more aggressive promotions in order to take advantage of customers that have been sitting on the sidelines - and further getting their portion of the next high growth enterprise software market.

Against this context, we at UBM India, are extremely excited to bring the first-ever edition of Cloud Connect in Bengaluru, the Silicon valley of India. The huge interest and enthusiasm for a conference related to cloud computing, was amply reflected in the ‘Call for Papers’ program. This initiative, seeking speaker nominations from cloud experts, practitioners and analysts received an overwhelming response.

We received over 100 submissions from some of the most experienced domain experts, CIOs, CTOs and analysts in the cloud computing space.

We have 3 keynotes, over 60+ speaker sessions, 3 parallel conference sessions, real-world workshops and panel discussions. This is complemented by an exhaustive exhibition where leading cloud vendors will demonstrate their latest technologies. We believe that this is one of the most comprehensive cloud computing conferences in India, and our effort has been to cover almost every possible topic related to the cloud – from Mobile Cloud, Big Data, Social Cloud, issues (legal aspects, security), and several Application Development and Cloud Architecting-related sessions.

We also have presentations from leading companies (Hexaware, Essar, etc) who will showcase in detail how they have gone about adopting the cloud, and their lessons and experiences from the same. We also have sector-based cloud conference sessions (Banking, Media, Telecom and Education).