For entrepreneurs, the small- and medium-sized enterprises (SMEs) represent a double-edged sword: SMEs are numerically very large in number, and account for a huge portion of the IT spend; yet, they are hard to reach, and even harder to please! I believe that SMEs represent the next frontier for entrepreneurial IT companies to target and capture. But to carve open the SME market will require efforts from a number of players across a wide spectrum of segments. In the last two columns in this series, I will discuss the set of co-ordinated actions that are needed to increase usage of IT across in SMEs. Think of this as the SME Wheel of Penetration. Each of these presents potential opportunities for visionary entrepreneurs.
1. Affordable Hardware
SMEs need low-cost hardware if they are to provide a computer for every employee and realize the vision of 1:1 Computing. This means thin clients or low-cost, low-configuration desktops. It also means servers in each enterprise, each of which should be pre-loaded with the software, so that the server is an instant-on. In fact, the server can be thought of as software-in-a-box.
India would do well to eliminate all import duties and in fact give tax breaks (for example, 100% depreciation) for SMEs using IT. The paper losses sustained would be more than made up by the increase in individual and industrial productivity.
2. Integrated Software
Software integration needs to happen at two levels: not only does it need to be integrated with the hardware so that SMEs see a single-point solution, but also the various software components need to be integrated among themselves so that information is handled only once. Open-source can be the foundation for many of the software needs for SMEs.
Software providers also needs to recognise that we are now moving to a wireless world, and as much users may want access to their data not just from their desktops but also from their cellphones. Utility pricing of software, which would include updates and upgrades, would also help in speeding up adoption. Local language support in India would also go a long way in ensuring proliferation. There are also some interesting opportunities to create richer desktops be it microcontent clients, web services browsers or next-generation personal information managers.
The link between the hardware and software producers and integrators on the one hand, and the SMEs on the other hand, is the channel. In India, this channel consists of the few thousand assemblers and Genuine Intel Dealers, each of whom has a database of SMEs it caters to. So far, the channel has only sold hardware, peripherals and annual maintenance contracts. Software has been either pirated or not used. The role of the channel needs to change from just being a box-seller, the channel needs to migrate to selling solutions. They also will be called upon to provide the first-level support to SMEs. The channel will thus play an increasingly important role in the SME IT value chain.
There are many small independent software vendors and developers. As the SMEs absorb IT, they will need business applications which cater to their unique industry or business requirements. This is where the ISVs come in. Their domain knowledge can help them create software products which now can find distribution via the value chain to SMEs across wider markets. Platforms like Visual Biz-ic can go a long way in simplifying the development process for ISVs.
5. Training and Education
This has to happen at multiple levels top management of SMEs needs to be made aware of the need for IT, end-users need to be shown how IT can make them more productive in all that they do both at the individual-level and as part of groups, and support staff needs to be trained to provide assistance to the SMEs for the solutions they use. There is an opportunity for SME IT Academies to be set up in every neighbourhood. These points-of-presence can also double as demo centers, showcasing the various IT solutions for SMEs.
Tomorrow: SME Wheel of Penetration (continued)