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Transforming IT-SME in downturn


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SMEs are known to face cash flow problems, skill attrition as well as bad debts due to non realization of unfinished projects . In this situation the sentiments are low and hence these problems would be accentuated further. Some of the Challenges of SMEs in Downturn:
• Limited opportunities for Economies of scale
• Increased development cost, low profits
• Loosing customers, repeat order
• Higher cost of marketing

Published in: Business, Technology
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Transforming IT-SME in downturn

  1. 1. 40 th session -Transforming SME –IT companies in the down turn
  2. 2. Transforming SME –IT companies in the down turn Prof S Dubey From Caterpillar to Butterfly
  3. 3. Good News : Every IT giant was once an SME <ul><li>Google, HP and Apple were started in the garage of the founders. </li></ul><ul><li>Infosys was started in a Flat in Bombay with a capital of Rs.10,000 borrowed from the founder’s wife. </li></ul><ul><li>Wipro started as a small vegetable oil company. In fact Wipro stands for Western Indian Vegetable Products Ltd. </li></ul><ul><li>Adobe was started by ex-employees of Xerox and named it after a river that ran by their neighborhood. </li></ul><ul><li>YouTube was founded by 3 ex-employees of Paypal, who had nothing but a creative idea to begin with. </li></ul><ul><li>EBay started as a small venture by Pierre Omidyar and its first sale on the internet was a broken laser pointer. </li></ul>
  4. 4. What made the above organizations so successful? <ul><li>The concept of an efficient search engine was pioneered by Google, which made it a leader in that segment. </li></ul><ul><li>The idea and concept of the Macintosh made Apple a dominant player in the software as well as the electronics market. </li></ul><ul><li>In 1977, India’s socialist government made IBM leave the country. Azim Premji saw this opportunity and made the first Indian made computer and hence began Wipro. </li></ul><ul><li>Most of these organizations, which began as an SME and emerged into a mammoth organization had just one creative/innovation, on which the empire was built on. </li></ul>
  5. 5. Challenges for an SME <ul><li>Limited opportunities for Economies of scale </li></ul><ul><li>Increased development cost, low profits </li></ul><ul><li>Losing customers, repeat order </li></ul><ul><li>Higher cost of marketing </li></ul><ul><li>These challenges can even get worse during a down turn or a crisis. </li></ul>
  6. 6. In bad times Test these four <ul><li>Patience </li></ul><ul><li>Persistence </li></ul><ul><li>Pals </li></ul><ul><li>Partners Dheeraj Dharm Mitra aru nari , aafat kal Parakhiya Chari ___________________________…. Goswami Tulsidas </li></ul>
  7. 7. Some things that should never be done during the downturn <ul><li>Don’t panic </li></ul><ul><li>Don’t let your client/employees/investor panic </li></ul><ul><li>Don’t Believe every thing what you read </li></ul><ul><li>Don’t Brush aside every thing what you hear </li></ul><ul><li>Don’t isolate yourself. A team is more successful than an individual </li></ul>
  8. 8. A few things that must be done: <ul><li>Sustain a day at time, follow the ICU model… (later in the presentation) </li></ul><ul><li>Socialize, serve others and don’t hesitate to collaborate </li></ul><ul><li>Sign up at the first signal of ecosystem change </li></ul><ul><li>Be observant and be quick to notice the changes around you to adapt effectively </li></ul>
  9. 9. Managing the SME business like managing an Intensive care unit* <ul><li>The survival at any cost and rate is mandated by keeping the vital organs functioning. </li></ul><ul><li>The vital organs refers to the key resources, the revenue assurance departments and the stakeholders of the SME. </li></ul><ul><li>The policies of the SME is its heart and soul, which will determine its organizational structure. </li></ul>* Refer Innovation with IT from McGraw Hill education
  10. 10. HLB model Brain = Creativity Heart = Enthusiasm Lungs = Cash flow
  11. 11. Innovating the Business Model by SME IT <ul><li>Tapping revenue from challenging current labor based model to asset and annuity based models and creating an Industry eco system. </li></ul><ul><li>SME’s to try for partnership with already established IT leaders in order to gain visibility, expand business and develop relationships. </li></ul><ul><li>SME’s to work on specializing on a particular domain. Once a domain expertise is achieved, approach bigger organizations for partnerships. </li></ul><ul><li>TCS does passport processing and HCL Driving License preparation at RTO…. You have to find something similar </li></ul><ul><li>Look for security, Mobile space, Nuclear energy, Defense Infrastructure, Social Service… Challenge traditional Industry </li></ul>
  12. 12. Collaboration with innovation Many SMEs collaborated Big competitor
  13. 13. Advantages of Collaboration <ul><li>Many successful ventures have venture partners. SMEs must partner with other SMEs to tackle bigger competitors </li></ul><ul><li>Shared Capital and Lesser expenditure on marketing/sales </li></ul><ul><li>Higher visibility as a bigger unit , you can be More competitive than before </li></ul><ul><li>Combined expertise of all the SMEs integrated into one entity into, Amul experiment or Khadi Gamodyog or Lijjat Papad example. </li></ul><ul><li>Best practices of all the SMEs in one entity, </li></ul><ul><li>Follow a Collaboration model that makes the SMEs ready to adapt changes : if Jet and Kingfisher , Daimler Chrysler , Centurian amd Bank of Punjab, can do it why not you, </li></ul>
  14. 14. Corporate discipline
  15. 15. Time to practice Five S (5S) <ul><li>Sort: Separate what is needed from unneeded </li></ul><ul><li>Straighten: Neatly arrange for everything </li></ul><ul><li>Shine: Clean and wash make it shine. </li></ul><ul><li>Standardize: Establish schedules and methods </li></ul><ul><li>Sustain: Create discipline to perform the first four S </li></ul>
  16. 16. Corporate discipline <ul><li>Manage time, especially your time as CEO more effectively, delegate </li></ul><ul><li>The policies of the SME must be designed in an employee friendly as well as a budgeted manner </li></ul><ul><li>One of the biggest expenses in any organization is the telecom expense. This can be resolved by setting of a telephone password specific to employees, who can account for business/ personal calls made with their personal password. </li></ul><ul><li>Control cost of Energy </li></ul><ul><li>Regulated expense reimbursement of employees in order to curb unnecessary spending. </li></ul>
  17. 17. Flawless Execution Abhinav Bindra, Olympic gold medalist in action
  18. 18. Flawless Execution <ul><li>Why do we all like home food? It is an example of Flawless execution and customized to individual needs . </li></ul><ul><li>An SME must design its organizational processes with a view on the end result. The future business relation with the client is based on the SME’s ability to deliver. You don’t get second chance as you can not hide under the brand equity </li></ul><ul><li>The client saves a lot by getting his work done by an SME than by a big players, all it demands is flawless execution, responsiveness and customization </li></ul><ul><li>However, Please do choose your customer carefully, avoid those who don’ t pay (in time) . </li></ul>
  19. 19. Finally <ul><li>Find a mentor who can help you with the tough times, and all times. </li></ul><ul><li>Regularly bounce ideas , whether you are on the right path. </li></ul><ul><li>Guru Gobind Dono Khare kako Lagu Paun Balihari Guru aapno jo Gobind diyo batye </li></ul>
  20. 20. Thank You for Listening [email_address] 9810506355 Some of these thoughts are elaborated in the forthcoming book by Sanjiva titled Innovation with IT from Mc Grawhill Education