TECH TALK: Rethinking Enterprise Software: My WishList (contd), The Opportunity

Continuing with my wishlist:

  • Software could be priced at a fraction of what it costs today, at a few hundred rupees per month per person, rather than paying large amounts upfront. The first set of applications which could do with a slashing of the price (but which will not happen) are the Microsoft Office applications, which costs about Rs 15,000 per copy in India. Even if one looks at (an online CRM application), costs start at USD 65 (Rs 3,250) per person per month. Enterprise applications, even the ones targeted at the mid-market, cost lakhs of rupees.

  • I could buy the software that I needed from a few companies, even a single company, so that I wouldnt have to worry about how to integrate the applications together and there would be no finger-pointing when it came to support.

  • The software could scale as my company grew. This way, I could invest increasing amounts (for more functionality) over time, rather than paying for a lot of features I wouldnt be using.

The Opportunity

Enterprise software has become much more complex, but the focus has stayed on the bigger companies in the world who can pay a lot of money. This is the real digital divide. Not only do the smaller companies (especially those in the emerging markets) find it hard to buy software, even the cost of the computers is prohibitive all technology is dollar-denominated. In India, few local software companies have made a mark addressing the domestic market the volumes are just not there, and its much more profitable to deploy the same resources for doing work for international companies.

And yet, there is an unseen, invisible opportunity that lies ahead, serving companies like mine. There are 25 million such small and medium enterprises (SMEs) in the world, which employ over a billion people worldwide. The majority of these SMEs are in the emerging markets of world. They need a solution which costs no more than USD 15-20 per person per month (inclusive of hardware, software, training and support). This is a market of USD 180-240 billion which is largely untapped today.

The barrier to targeting this market is the same faced by the established companies as outlined in Christensens The Innovators Dilemma. The customer base of the Big Software companies does not need the low-cost IT/software solutions we are discussing. They cannot easily drop their software price without disrupting their existing gravy trains and impacting their market capitalisations. (Can you imagine Microsoft making available MS Office for USD 25-50 to the enterprise market?)

Listen to Craig Barrett, Intels CEO: What started happening to mainframes twenty years ago the replacement of monolithic proprietary systems by interoperable, standard components Barrett was speaking in the context of the telecom industry and whats happening to Lucent and Nortel. But he could as well have been speaking about the likes of SAP, Oracle, Microsoft or PeopleSoft. Listen to the phrase again: the replacement of monolithic proprietary systems by interoperable, standard components. Thats exactly the revolution that needs to happen in enterprise software to bring in a whole new market the SMEs in Emerging Markets.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.