Is SAAS just hype? Where is business and show me the money!

Software as a service is no more Beta. Even though this grow at a relatively slow pace, SAAS has been considered as a competitive line of business in India.

Availability of potential customers, substantial data to show the money, persistent innovation, interest from global technology giants and venture capitalists made this byproduct of cloud computing, very attractive.

Evolution of Greytip Online - India’s most popular online payroll software , True POS - the leading point of sale tool on SAAS, Freshdesk - the fresh and cute online Help desk software and growing popularity of Salesforce, Trello and Deskaway are giving enough proof that SAAS is viable in India.

As per the article Public cloud gains momentum in India, cxotoday.com finds from Gartner "the biggest segment of the market is Software as a Service (SaaS), having 36 percent of the total cloud service market. Out of the 233 billion INR that will be spent on cloud computing between 2013 and 2017, 89 billion INR will be spent on SaaS"

E-readiness/broadband penetration plays an important role for SAAS. It would be futile to focus on geographical segments, where Internet connectivity is still, a bottleneck.

As published in Track.in, according to 2010 statistics, 10 million broadband subscribers are active in India, of which Maharashtra leads the list with over 1.8 million subscribers followed by Tamilnadu (1.3 million) and Karnataka (1.13 million). Kerala has the highest broadband density with 0.7 million subscribers.

These 15 segments (states) could be ideal destinations to pitch in for SAAS

Small and medium enterprises (SMEs) account for 80-90% of the Indian SAAS business, today. By considering the typical business culture and geography of India, segment specific sales models could augment the acquisition process. If we plan segments based on nature of business, 9 segments could be created across India.

The average selling price and sales model are interdependent as far as sales growth is concerned. When target a large segment with a simple tool, low selling price with self service sales model would be suitable.

 

When target a very small segment, self service sales approach may not be suitable. We may need to adopt transactional sales and if the tool is complex, then enterprise model. However in both the cases, it would be risky to go with low average selling price.

Business support applications may be showcased across segments. However for tools like help desk, point of sale, ecommerce platform etc., service providers may further focus on specific segments

Segment 1	IT, ITeS, KPO, Consulting & eCommerce	1500C	Segment 2	Factories & SSIs	50000C
By considering the huge penetration of software products/ services and technical knowledge of potential buyers, customer acquisition could be relatively effortless here. However exposure to enterprise tools and legacy systems may make them more demanding and quite unrealistic in terms of SAAS offerings. If we achieve 10% of 15,000 units, it would be 1500 customers. Self service sales approach would be appropriate. Engagement is the key and keep the conversation going.			This segment is highly price sensitive.  Biggest challenge could be reaching the potential customer and we can not expect the stakeholders to carry portable gadgets, always and find the SAAS provider via Google search. If we take 10 million SSIs in India, 1 million firms are registered SSIs or SSSBEs. By considering the 1,00,000 factories, the segment can grow further. If we achieve a nominal 5% here, it would be a whopping 50000 customers. A mix of self service and transactional sales approaches would be appropriate. Engagement is the key and keep the conversation going.
Segment 3	Schools, Colleges & Training Centers	10000C	Segment 4	Hospitals & Diagnostic Centers	500C
General perception of education sector as 'non-profit establishment', stakeholders tend to bargain with vendors and pricing is critical here. Approximately 2,00,000 educational institutions could be in India. If we achieve a nominal 5% here, it would be a whopping 10000 customers. A mix of self service and transactional sales approaches would be appropriate. Engagement is the key and keep the conversation going.			This would be another potential segment where software penetration would be negligible except in Super specialty Hospitals. 5000+ units are functioning across India. 10% of this can contribute 500 customers. A mix of self service and transactional sales approaches would be appropriate. Engagement is the key and keep the conversation going.
Segment 5	Hotels, Restaurants & Resorts	250C	Segment 6	Courier, C&F, Packers/Movers, Shipping, Travel & Fleet Services	5000C
This would be another potential segment where software penetration would be negligible except booking or POS. 2500+ units are functioning across India. 10% of this can contribute 250 customers A mix of transactional and enterprise sales approaches would be appropriate. Engagement is the key and keep the conversation going.			This is one of the fast growing segments and SAAS can add value to business here. Reaching customers would be bit difficult by considering the line of business and non-tech savvy audience. There could be 1,00,000 service firms in this segment. If we achieve a nominal 5% here, it would be a whopping 5000 customers. A mix of self service and transactional sales approaches would be appropriate. Engagement is the key and keep the conversation going.
Segment 7	Retail Sector - Food, Apparel, Jewellery & Electronics shops	1000C	Segment 8	Real Estate, Infrastructure & PMC	500C
Branded retail chains and malls would be already running on legacy systems or ERPs. However we can find local super shops, retail chains, jewelries, exclusive garment showrooms, distributors etc. Reaching customers would be a challenge. If we achieve a nominal 10% of 10,000 such units, we would be adding another 1000 customers. A mix of transactional and enterprise sales approaches would be appropriate. Engagement is the key and keep the conversation going.			Small and medium builders, construction companies, architects, interior designers, project management consultants etc. would constitute another potential segment. This segment is vulnerable to market correction, then and there. Price sensitive segment and customer acquisition could be bit difficult. Approximately 5000 such establishments could be there. If we achieve a nominal 10% of this, we would be adding another 500 customers. A mix of transactional and enterprise sales approaches would be appropriate. Engagement is the key and keep the conversation going.
Segment 9	Other Industries	1000C
Outdoor Marketing, Agencies in Sales Promotion, Printing & Publishing, Clubs, Pizza Shops, Farms, Amusement Parks, Cable TV networks, Multiplexes etc. constitute another potential segment.  50000+ units would be functioning across India. If we achieve a nominal 5% of this, we would be adding another 1000 customers. A mix of self service and transactional sales approaches would be appropriate. Engagement is the key and keep the conversation going.

Economies of Scale, Idli for a rupee, Software Service for Re.1...

As quoted in wikipedia, economies of scale are the cost advantages that enterprises obtain due to size, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. Often operational efficiency is also greater with increasing scale, leading to lower variable cost as well

Chennai Corporation’s 100s of budget restaurants run by women self-help groups offer idli for a rupee, sambar rice for Rs.5 and curd rice for Rs.3 Amazing right?

Photo Courtesy : Creative Commons CC BY 2.0 Original work of Leon Brocard

Certainly leadership of the state chief minister and some amount of government subsidy would be hand holding this initiative for some period. However the other element of success is nothing but scalability.

Economies of scale and scope are factors that help to reduce the average cost of a product as the volume of output increases. For example, it could cost approximately Rs.10-15 million to install 100 copies of enterprise payroll software with database and necessary hardware for companies with average manpower size 100. At the same time with Rs.3 -4 million, we could have achieved 100 instances of payroll when we adopt cloud based Software as a Service. The average cost in this case has reduced to 1/5.

Definitely there could be a question? Why should we adopt some features, which are readily available in the tool and compromise the current practice. Being the business owner or person accountable for operations, you have absolute right to seek this. However you should look at the feature, check how many companies are using it (500+ firms can not stick to a wrong a practice, right?) and end of the day evaluate whether to spend and customize it for you or use the global feature.

Traditional enterprise software deployment would be a time consuming activity, too exclusive and going to be a costly affair just like when you get in to a fine dine restaurant for dinner. Book your seat, take order, have starter, serve main course, find some pastry, bill, tips… If you have enough time and money and love to spend, enjoy it !!!

Let's look at the ready-to-eat shops, who offer standard food items (standard menu, quantity, quality and price) with standard service. Here just go, give the order, eat. 5 minutes, 30 minutes or 1 hour, it is up to you. As nobody cook exclusively for you and offer any special service, cost could be 1/10, enjoy it!!! Software as a Service (SAAS) is your ready-to-use shop for software and this delivery mode made software affordable for small business too

For a small and medium enterprise, maintaining the cash flow, expanding the trade horizon, improve the effectiveness and retain talent etc. could be truly business critical. However the most critical differentiators to any business is human resources and nurturing people to stay and contribute makes employee information, communication, time and discipline, compensation, expense claims, document management, report and analytics as equally important and strategic.

When you grow, you should rely on a good tool for automating basic human resources processes like employee information, leave of absence, time tracking, expenses and payroll and statutory. Advanced technology like cloud servers and software as a service made the service delivery, amazingly scalable

Here is the most critical and visible benefits of Software as a Service for Small and Medium Enterprises:

1. CAPEX - Zero capital cost as you do not require heavy duty servers, Tech Resources, Annual Maintenance etc.
2. Highly Flexible – Start up with less people, grow and add up more people on the go, start new units and so on. Whatever it could be no need to break your head for software service. SaaS is simply scalable
3. Access 24x7 - Software as a service is internet based and services can be accessed anywhere in the world
4. Private & Secure - No worries of database crash, data loss etc. Data will be stored in a data center and data will be maintained as per mutually agreed standard terms.
5. Seamless Upgrades - No need to buy additional hardware or further investments on infrastructure. Upgrades will be simple and periodic

*Software service for Re.1 is arrived at by computing the average cost of subscription per employee per day with a per month subscription charge of Rs.2995 for 100 employees