While India’s SME market at 51 million enterprises is the 2nd largest in the world, it continues to be the Sahara Desert for software! Over 90 percent of this enormous SME market has no software to organize their businesses in Finance, HR, Marketing, CRM and other processes. Instead, every software product and company target the remaining 10 percent of this market. If you look at companies which have captured a large user base like Zoho (4 million users) or Tally (1 million), they are still unable to connect to most of the SME market. On the other hand, software for searches and e-commerce like Google, Amazon and Flipkart are able to interest a large segment of this market for their standard applications.
Old School vs New School approach:
Unfortunately, software companies who sell Sales, HR, Finance and other business process software are not looking at this market with serious intent as it is a hard market to sell to, with very low price points. They still have an old school approach. However, this is not the case with forward thinking companies like Google, Amazon and Reliance. Google, for instance, is looking at engaging 41 million SMEs. At a later stage, once there is greater engagement with their present products, they will look at software to organise these SME businesses by offering them higher end Google products like Adwords, and Analytics. Amazon is expected do something similar by getting this huge market segment engaged for e-commerce and them offer them an up-sell for their storage and servers. Reliance is offering discounts on Kirana stores through Jio coupons. Its a novel approach as Kirana stores hold 88 percent of the 650 billion Indian Retail market. But what if a forward thinking software company wants to connect to this SME market? How do they match the resources of a Google, Amazon or Reliance? That is where thinking out of the box is important. The greatest development of Software in the last decade is that it offers the opportunity for a small company with almost no resources to connect to millions of people and businesses if they solve a pain point for the market
The Game plan:
So how does a small to medium software company think out of the box and connect to the 51 million SME’s in the Indian market? The best clues are in the way technology is changing this market and how the DNA of markets themselves have changed in the last 15 years. The 51 million SME’s have almost 400 million employees in their fold. Considering India’s labour force is around 500 million, SME’s employ 80 percent of the labour force. But the key to approaching them is in their access to email and mobile phones. It is expected that by the end of 2018, India will have 500 million internet and 200 million email users, and for this group understanding the importance of technology to solve pain points in their business is a strong possibility.
Unfortunately, most Software companies have not understood the pain points for an SME’s and are stuck in what I call ‘legacy’ thinking. If, for example, you are in sales, a pre-sales process would have leads, prospects, clients, visits, and other features. Data entry, training and understanding the system is a process in itself. It is even more complicated in HR. If you want to recruit someone, you need a Job Description, job sites skills and various other specialised knowledge. For an SME, these are major obstacles. The owner in an SME is the decision maker who usually multi-tasks and is willing to embrace a mobile based process which makes it easier to manage their business, particularly in todays challenging work environment.
The actual recipe for success:
And that is the first ingredient for success. The starting point should mobile app that is totally interactive and so simple that even a child can do it. It should also be a simplification of the business process for the SME owner. Unfortunately, the opposite is happening! Most companies continue to have a legacy block and have not aligned their products to solve the pain points for the SME market. An SME owner who wants his salesmen to use business processes usually cannot afford the time needed to train employees in software. The quality and motivation of his staff is suspect, and attrition is a major problem. An interactive SaaS mobile system that asks simple but relevant questions and fills in the system with minimal human intervention will be a game changer. Let us look at the HR process itself as an example. If I tell my app that “I want to hire a salesman who has 2 years experience in retail”, it should automatically create a Job Description, search free job sites and blogs, fill out a recruitment system with this data and inform the SME owner on his app. on progress. For a product to do this, there are high levels of automation and elements of IOT involved and software companies want larger billings to enable this effort. This eliminates the majority of the SME market as their price points are low. But a software company that does do this and makes comprehensive and interactive business processes that need no training will easily capture a 100 million user base and, have the opportunity to become a unicorn!
Dr. Joseph Rasquinha is CEO and Co-Founder of Blueleaf Cyberspace.
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