TECH TALK: The Coming Age of ASPs: SMEEMs

SMEs in Emerging Markets (SMEEMs) have a twin focus for their business: how do they grow, and how do they ensure that they manage this growth efficiently. Business growth comes from getting new customers and retaining existing customers (and upselling to them). One of the key ways to bring in efficiency in operations comes from automation. Smaller companies are more focused on generating newer business opportunities since they have a greater control on costs. Mid-sized companies need to more focused on ensuring business efficiency they already have business coming in, and that needs to be managed better. So, the basic mantra for SMEEMs can probably be summed up as: automation for growth.

Technology can play a role in helping SMEEMs achieve both the objectives. Business growth can be enhanced via the use of the Web through a website, email newsletters, use of CRM (customer-relationship management) software, and search-engine marketing. Automation can be achieved by streamlining the flow of information across the value chain to complement the flow of products and services, and money. What the right use of information technology can do is to ensure that the right information is available to the right set of people at the right time so that decisions can be made appropriately. In essence, what IT can do is to enable SMEEMs to become event-drive, real-time enterprises.

The problem has been this goal of super-smooth, frictionless information flow rarely happens. Information is locked up either within people or inside closed business applications. As a result, managers do not necessarily have the right information they need to make decisions. At a time of increasing competition and the demand for faster response times, this can be the death-knell for businesses. The right use of IT can make a significant positive impact on SMEEMs. But so far, investing in IT has been largely limited because of lack of appropriate IT personnel within the organization, coupled with the cost of applications and their limited availability. Even the applications available only succeed in creating silos because the cost of integrating different applications can be quite substantial.

It is this world that the next-generation of Application Service Providers need to target. There are many areas of improvement within SMEEMs and across their value chains. By providing the right set of integrated, hosted solutions with a utility-like pricing model, the ASPs can provide three clear benefits to SMEEMs. First, since software is delivered over the Web, there is no need for anything more than a computer connected to the Internet within the enterprise complemented by the mobile phone. Second, a wide variety of integrated applications can ensure that multiple functions can be automated rapidly. This addresses the desirability issue. Third, monthly payment options allows the SMEEMs to link payments to business outcomes, thus addressing not just the affordability issue but also the ability to measure return on investment (RoI). As Ray Lane puts it: I define software as a service as tying supplier revenue to a business outcome: the supplier sees the clients end result, measures its success, and receives revenue based on the results achieved.

Next Week: The Coming Age of ASPs (continued)

TECH TALK The Coming Age of ASPs+T

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.