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Digital SMBs
Powering India into the Future…
– January 2015
Conceptualizing a ‘Digital SMB’…
2
‘Digital’ SMB: An SMB leveraging digital technologies across business processes thus dr...
Zinnov leveraged insights gathered from 5000+ SMBs over the last year to assess the digital
opportunity
3
Which SMBs to
ta...
India houses a massive base of tech influenced SMBs across
verticals
4
Which SMBs to
target?
116 Mn
GDP
Contribution
Total...
Nexus of 3 enablers are increasingly driving SMBs towards
digital enablement
5
Why talk about
them now?
Access to Enabling...
Pockets of innovations disrupting four key business SMB
business levers
6
What solutions
do they need?
IOT
Mobility
Analyt...
Digital enablement of Indian SMBs presents a multi-billion dollar
opportunity for tech vendors
7
How big is the
opportunit...
8
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical...
Strategic initiatives required to be set in motion to tap into the
digital SMB opportunity
How to tap the
opportunity?
Eng...
Targeting new-age digital SMBs requires strategic realignment of
channel
10
How to tap the
opportunity?
E
I. Chaotic: Part...
Digital enablement of SMBs would have a multifold impact on
India’s GDP, exports and employment
11
What is the
impact?
Col...
12
Deep Dive
Agenda
13
Nexus of Forces Driving Digital Enablement of
SMBs
Digital Enablement Impacts Key Business Levers
Digital Enable...
Increasing device penetration
Enhancement in internet connectivity
Customer IT adoption
Availability of enterprise grade
s...
Adoption of smart devices in conjunction with enhancement in internet availability, enabling easy
digital access
15
Increa...
16
2 Various SMB relevant solutions and services are available across desktop and mobile platforms
Enterprise grade
soluti...
17
3
Adoption of IT across customers and push from ecosystem stakeholders, fueling SMBs’ digital
journey
Increasing
custom...
Agenda
18
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business
Levers
Digital Enable...
Led by digital enablers, SMBs are witnessing disruptions across four key business levers
19
Social
Mobility
Analytics Clou...
20
Discoverability and
Reach
Access to clients in distant
geographies and create greater
visibility and mindshare among
ta...
Zinnov estimates an opportunity of USD 3.8 Bn in provision of Customer Targeting and Engagement
solutions to Indian SMBs
2...
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Ensuring Efficiency in...
Zinnov estimates an opportunity of USD 2.5 Bn in provision of Operational Excellence solutions to
Indian SMBs
23
Total Ens...
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Talent Sourcing
Usage ...
Zinnov estimates an opportunity of USD 3.1 Bn in provision of workforce enablement solutions to
Indian SMBs
25
Total Talen...
Data security
Counterfeit
protection
Physical security of
assets and resources
Safeguarding against
financial risks
1 2 3 ...
Zinnov estimates an opportunity of USD 2.2 Bn in provision of Risk Management solutions to Indian
SMBs
27
Total Data Secur...
Agenda
28
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business Levers
Digital Enable...
Opportunity Assessment – Manufacturing Vertical
29
Customer
Targeting and
Engagement
Operational
Excellence and
SCM
Workfo...
Opportunity Assessment – Retail Vertical
30
Customer
Targeting and
Engagement
Operational
Excellence and
SCM
Workforce
Ena...
Opportunity Assessment – Travel and Logistics Vertical
31
Customer
Targeting and
Engagement
Operational
Excellence and
SCM...
Opportunity Assessment – Professional Services Vertical
32
Customer
Targeting and
Engagement
Operational
Excellence and
SC...
Opportunity Assessment – Restaurants and Hospitality Vertical
33
Customer
Targeting and
Engagement
Operational
Excellence ...
Agenda
34
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business Levers
Digital Enable...
 Disrupted traditional procurement methods of individual buying at
low scale
 Driving cost efficiencies through aggregat...
 Help Individuals derive value out of their “underutilized assets”
 Companies have created trusted market places for res...
Agenda
37
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business Levers
Digital Enable...
38
Overall Economic Impact of Tech Adoption on
an SMB – 75% of current revenue
Revenue Enhancement –
50%
Cost Optimization...
Digital SMBs would have a multifold impact on India’s GDP, exports and employment
39
Additional* Contribution
of Digitally...
Thank you
40
21, Waterway Ave,
Suite 300
The Woodlands
TX – 77380
PH: +1-281-362-2773
Meilifang Tower 4, Entrance 4,
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Digital SMBs - Powering India into the Future

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Zinnov leveraged insights gathered from 5000+ SMBs over the last year to assess the digital opportunity across geographies and industry verticals. This report studies the key enablers and business segments that will undergo disruption due to the digital revolution. Digitally empowered SMBs will leverage technological advances to enhance efficiency and impact India’s GDP, Growth and Employment.

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Digital SMBs - Powering India into the Future

  1. 1. Digital SMBs Powering India into the Future… – January 2015
  2. 2. Conceptualizing a ‘Digital SMB’… 2 ‘Digital’ SMB: An SMB leveraging digital technologies across business processes thus driving top line growth, maximizing output and deriving cost efficiencies A modern ‘Digital SMB’ is powered by solutions touching multiple business levers Operational Excellence Risk Management Workforce Enablement Customer Acquisition SMB 2. 4.3. 1. Hg Compared to enterprises, SMBs adopt digital technologies differently Digital solutions for SMBs need to reflect 5 key characteristics Op-ex model with immediate payback Cap-ex heavy solutions1 Mobile First solutions Requirement of large IT infrastructure 2 Micro-vertical specific solutions Generic enterprise solutions lacking vertical centricity 3 Enable end-to-end workflow Multiple functional solutions addressing specific workloads 4 Prioritization of ease over features Complex, feature rich solutions with high learning curve 5 SMBs face multiple challenges while adopting solutions typically meant for enterprises Successful Digital SMB Solutions impact multiple business levers and enable end-to-end workflow Discovery platform; Appointment Booking; Practice Management Access to passengers; Automated Payment; Vehicle Tracking Connecting with potential tourists; Booking and schedule management Source – Zinnov Primary Research and Analysis
  3. 3. Zinnov leveraged insights gathered from 5000+ SMBs over the last year to assess the digital opportunity 3 Which SMBs to target? 12 Mn SMBs with high degree of tech influence Why talk about them now? Nexus of enablers driving SMBs to go digital What solutions do they need? Solutions addressing strategic business challenges How big is the opportunity? USD 26 Bn of opportunity across solutions in 2020 How to tap the opportunity? Interventions across product, business model and outreach What is the impact? By 2020, impact of USD 1 Tr on GDP; 126 mn on employment A B C D E F Understanding the Digital SMB Opportunity Source – Zinnov Analysis
  4. 4. India houses a massive base of tech influenced SMBs across verticals 4 Which SMBs to target? 116 Mn GDP Contribution Total Exports Total Employment Collective contribution of India’s SMBs 51Mn strong SMB base in India Micro Enterprises (<10 employees) 96.3% Small Enterprises (10-100 employees) 3.4% Medium Enterprises (100-1000 employees) 0.3% Segmentation of Indian SMBs – by Size Distribution of Tech- influenced SMBs across top 8 verticals 18% Retail 19% Professional Services 4% Auto & Auto Ancillaries 8% Real Estate 9% Education 10% Restaurants & Hospitality 14% Travel & Logistics 14% Manufacturing 38% 40% A Distribution of SMBs by level of tech influence ‘Tech Influenced’ SMBs: 40% 2015 ~90% 2020 L4: 5 Mn L3: 12 Mn L2: 14 Mn L1: 20 Mn L1: Access to digital infrastructure Devices/connectivity L2: Use of consumer centric services Such as messaging, email etc. L4: Business workflow productivity tools Business centric solutions and services L3: Digital discoverability of businesses Company Websites, business listings, etc. Source –MSME, Press Articles, Zinnov Analysis
  5. 5. Nexus of 3 enablers are increasingly driving SMBs towards digital enablement 5 Why talk about them now? Access to Enabling Infrastructure Availability of Solutions & Services Push from Customers & Ecosystem Stakeholders Exploding smartphone usage Availability of low price devices Smartphones & tablets available for as low as $40-80 Easy access to internet Internet adoption in SMBs to grow exponentially <10Mn Users 2014 >30Mn Users 2020 2X increase in average internet speed in 3 years >70% price reduction in average 3G mobile access prices over last 3 years; internet access expected to become free Enterprise grade solutions becoming affordable Basic versions available for free access Google Apps SMBs realizing benefits of Cloud enablement of solutions 50% reduction in ownership cost and deployment time 70-75% cost saving with advantages like scalability, set- up time, etc. Mobile app ecosystem thriving Mobile app downloads in India to increase 100Mn Monthly app downloads 2014 400Mn Monthly app downloads 2020 Easy Mobile App development <3 hours Required to build a functional app 9,000+ Indian Mobile app development companies Consumers spending more time on the internet 140Mn Hours 2014 1500 Mn Hours 2020 Internet aiding customer purchases Growing use of digital medium by SMBs 1,125 Million searches by consumer in FY 2014 Ecosystem stakeholders and government initiatives aiding SMBs 50,000+ SMB sellers on- boarded by top 3 e-commerce players Flipkart, Snapdeal offering easy access to loans for SMBs through partners Easy access to loans Enabling SMBs to sell online Digital India Initiative <10Mn Users 2014 Near universal adoption 2020 High adoption levels Better & affordable services ‘Digital India’ campaign will likely propel Indian govt. spending on IT to $7.2 Bn by 2015 5,000 business tenders added everyday B Source –Akamai, BCG Report, Ericsson Market Insights, Avendus Mobile Internet Report, Flipkart Market Insights, Digital India Insights, Zinnov Analysis
  6. 6. Pockets of innovations disrupting four key business SMB business levers 6 What solutions do they need? IOT Mobility Analytics Cloud Digital SMBs Social Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management Discoverability and Reach Managing Customer Relationships Customer Intelligence Optimizing Sales Motions New Sales Channels Ensuring Efficiency in Operations Optimal Resource Utilization Customer Experience Enhancement Optimization of Inventory and Logistics Partner Identification and Visibility 1 2 3 4 5 Talent Sourcing Productivity Enhancement Skilling 1 2 3 Data security Counterfeit protection Physical security of assets and resources Safeguarding against financial risks 1 2 3 4 1 2 3 4 5 CRM on Mobile SMS-based Website Creation and Management Missed Call Marketing Online Kirana shops Mobile-based Accounting / Book- keeping Solution Cloud-based Production Planning & Control Cloud-based Project Management Solutions Mobile based POS Cloud-based Collaboration Solution Mobile Job Marketplace Online Training & Learning Solutions Online Job Portals Counterfeit Prevention Solutions Cloud-based Backup and Recovery Solutions Cloud-based Invoicing for SMBs Low-cost Security Solutions C Source – News Articles, Company Websites, Zinnov Analysis
  7. 7. Digital enablement of Indian SMBs presents a multi-billion dollar opportunity for tech vendors 7 How big is the opportunity? Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management 306 484 370 467 310 383 431 551 417 462 518 788 421 683 367 658 219 279 199 384 564 783 621 964 Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of solutions providers, MSME, Press Articles, Zinnov Analysis D Opportunity across key verticals (USD Mn) Manufacturing Travel and LogisticsRetail Professional Services Restaurants and Hospitality Others Total Opportunity: USD 11.6 Bn (2015) USD 25.8 Bn (2020) Addressable opportunity by verticals and business areas (USD Mn) XX
  8. 8. 8 Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e- readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – MSME, Planning Commission, State Websites, TRAI, Ministry of Tourism, Census Report, World Bank, Ministry of Road Transport and Highways, Crisil, Zinnov Analysis Key Cities – Mumbai, Pune, Nagpur, Nasik, Aurangabad8.1% Maharashtra Key Cities – Chennai, Coimbatore, Madurai, Tirupur Tamil Nadu Key Cities – Ahmedabad, Vadodara, Surat, Gandhi Nagar Gujarat Key Cities – Lucknow, Kanpur, Meerut, Varanasi, Agra Uttar Pradesh 6.8% 6.5% 6.9% Share in opportunity Share in opportunity Share in opportunity Share in opportunity 1. 2. 3. 4. Key Cities – Hyderabad, Vishakhapatnam, Vijayawada Andhra Pradesh Also includes: Noida, Gurgaon & FaridabadDelhi NCR Key Cities – Mysore, Bengaluru, Hubli, BelgaumKarnataka Key Cities - Thrissur, Kochi, Kozhikode, Thiruvananthapuram Kerala 6.1% 6.1% 6.1% 5.9% 5. 6. 7. 8. How big is the opportunity? Top 8 states constitute over 50% of the overall opportunity in digital enablement of SMBs D Share in opportunity Share in opportunity Share in opportunity Share in opportunity
  9. 9. Strategic initiatives required to be set in motion to tap into the digital SMB opportunity How to tap the opportunity? Engineering Product for SMB use Optimum pricing to ease SMB adoption High Impact outreach enabling large scale Successfully targeting SMBs necessitates 3-pronged approach Vertical specific solutions addressing end to end needs SMBs are receptive to solutions that digitize entire workflow of their vertical Mobile first solutions Given high adoption of smartphones among Indian SMBs, it is imperative for solutions to be fully operable over mobile interface Low set-up time/ready to use SMBs have limited resources to invest in implementation of solutions and hence prefer ones that work out of the box Digitization of entire workflow for a doctor, including, discoverability CRM & operations Op-ex model: Reduction in up-front cost Greatest deterrent to adoption of solutions is requirement of high upfront investment. Need to reduce the burden by offering pay- per use pricing Tiered pricing - Encourage free trial to ensure high initial uptake - Freemium models of engagement to ensure maximum value realization Creation of channel with non-traditional reach Need to almost create FMCG reach of solutions across geographic barriers. Experiment with on-boarding entities such as cyber cafés operators, and ticketing agents, as partners to ensure last mile reach Mass scale evangelization • Need to enhance visibility of products through mass evangelization • Use of viral marketing techniques Enabling easy payments Tie-up with telecom service providers to enable SMB payments through telecom bills 1. 2. 3. E Source – Company Websites, Press Articles, Zinnov Analysis
  10. 10. Targeting new-age digital SMBs requires strategic realignment of channel 10 How to tap the opportunity? E I. Chaotic: Partner strategy in complete chaos, sells any IT products to make ends meet; hasn’t invested in growth and capability II. Reactive: Only fulfils demand generated by principal vendor, no investments into customer relationships, minimal ability to value sell, poor sales team III. Proactive: Has set key accounts and made investments into solutions, limited capabilities to value sell, has growth aspirations yet struggles with scaling sales, may not have competent leadership IV.Invested: High investment into driving product sales; capabilities to build solutions; high growth aspirations supported by strong leadership and ability to scale; have own brand presence Build 2-3 year growth plan per partner Build Individual partner GTM Define individual capability development plan for each partner Segment partners by maturity level Key Impacts of digital SMB solution characteristics on vendor channel operations Off the shelf nature of products Op-ex model of pricing Low Switching costs Focus on product sales instead of professional services Widen funnel, push free trials Accelerate sales cycle Handhold customers into solution usage, high focus on customer engagement Ensure customer loyalty, Derive higher lifetime value (LTV) 1 2 3 4 5  Fulfilment, onboarding and configuration done by customer itself  Software vs. services revenue nearly 1:1  Low upfront income per customer  Recurring revenue from customers  Need to ensure high customer engagement and satisfaction to maximize LTV Sales vs. services revenue # of SMB Customers Length of sales cycle Customer lifetime value Management Commitment Partner Capability Credit and Profit Potential Revenue contribution Strategic realignment of channel to target SMBs Source – Zinnov Analysis Assessment of partner maturity for SMB sales Framework to classify partners by maturity level Strategic Interventions into partner operations
  11. 11. Digital enablement of SMBs would have a multifold impact on India’s GDP, exports and employment 11 What is the impact? Collectively, digital enablement of Indian SMBs will lead to following additional* contribution by 2020 Additional jobs are expected to be created to power incremental output aided by digitization ~168 Mn Additional GDP Additional annual contribution to the GDP due to adoption of digital technologies by SMBs ~$ 1.1 Tr Increase in Exports Increment in SMB contribution to Indian exports ~$ 264 Bn Notes: 1) Based on revenue enhancement and cost optimization effects of digitization of tech addressable SMBS on projected GDP of India in 2020 *Contribution attributable to digital enablement; over and above the expected contribution due to overall Indian GDP growth Incremental Employment Generation Overall Economic Impact of Digital Enablement on an SMB – 75% of current revenue Impact through Revenue Enhancement 50% Impact through Cost Optimization 25% F Source – DNB, MSME, Press Articles, Zinnov Analysis
  12. 12. 12 Deep Dive
  13. 13. Agenda 13 Nexus of Forces Driving Digital Enablement of SMBs Digital Enablement Impacts Key Business Levers Digital Enablement of SMBs Key for India’s Holistic Development Digital Native Solutions Driving SMB Disruptions Opportunity Deep Dive – Vertical and Geo View
  14. 14. Increasing device penetration Enhancement in internet connectivity Customer IT adoption Availability of enterprise grade solutions/services at SMB price points Initiatives from ecosystem stakeholders Thriving app ecosystem Access to Enabling Infrastructure Availability of Solutions & Services Push from Customers & Ecosystem Stakeholders 1 2 3 Nexus of 3 key drivers pushing SMBs to go Digital A B C D E F 14 Increasing propulsion of Indian SMBs toward digital adoption can be attributed to three key drivers… Source – Zinnov Analysis
  15. 15. Adoption of smart devices in conjunction with enhancement in internet availability, enabling easy digital access 15 Increasing device penetration Considerable use of smartphone by SMBs 2015 2020 1 Meanwhile, low cost smartphones & tablets are readily available $40 $60-80 “ Enhancement in internet connectivity High device penetration complemented with Rapid consumerization of IT Almost the same price as feature phones Low cost tablets are available from more than 10 different brands Growing use of Online collaboration services like dropbox, google docs, skype etc. for both personal and professional work Increasing broadband & mobile internet adoption in SMBs ~7 Mn >30Mn 2015 2020 Reducing internet access prices A B ~7-8 Mn Near universal “ “ “ “ “ 2X increase in average internet speed in 3 years 0.9 Mbps 2.0 Mbps 7.0 Mbps 2011 2014 2017 “ “ >70% reduction in 3G mobile prices over the last 2 years Expectation of data services access for free Source – Zinnov Analysis, Akamai, BCG Report, Ericsson Market insights, Avendus Mobile Internet Report
  16. 16. 16 2 Various SMB relevant solutions and services are available across desktop and mobile platforms Enterprise grade solutions/services at SMB Price points Thriving app eco-system 100 Mn 400 Mn 2014 2020 4X Increase of monthly mobile app downloads in India by 2020 Top Business Apps Over 75+Million average downloads per app worldwide Mobile app development is becoming increasingly viable for SMBs“ <3 hours Required to build a functional app 9,000+ Indian Mobile app development companies 45% reduction in prices in 2013; base version available for free 31% reduction in prices in 2014; base version available for free Google Apps Easy affordability of cloud enabled enterprise grade solutions “ “ Cost effectiveness of cloud-based solutions 50% 50% Reduction in cost of ownership Lower deployment time Public cloud infrastructure fit for SMBs 70-75% Advantages like scalability, low management requirement and low set up time C D “ “ “ cost savings with adoption of public cloud Source – Zinnov Analysis, AMI Partners
  17. 17. 17 3 Adoption of IT across customers and push from ecosystem stakeholders, fueling SMBs’ digital journey Increasing customer IT adoption Initiatives from Ecosystem stakeholders Consumers spending more time on the internet Internet aiding purchases across consumer segments “ 1,125 Million searches by consumer in FY 2014 37 Mn ratings and reviews, signifying high engagement Increasing use of digital medium by enterprises “ 5,000 business tenders added everyday 5-6 average leads for SMB/day E-commerce companies helping SMBs to sell on digital platforms 50,000+ SMB sellers on-boarded by top 3 e-commerce players Rapid growth of e-commerce market $13 Bn $70 Bn 2014 2020 “ “ Easy access to loans for SMBs through partners Flipkart, Snapdeal offering easy access to loans for SMBs through partners Government initiatives aligned to help SMBs digital uptake ‘Digital India’ campaign will likely propel Indian govt. spending on IT to $7.2 Bn by 2015 Government launched scheme to promote ICT in MSME sector extending support of basic ICT infrastructure E F 140 Mn Hours 2013 2020 1500 Mn Hours “ “ “ “ Source – Zinnov Analysis, Global WebIndex Wave, Company websites
  18. 18. Agenda 18 Nexus of Forces Driving Digital Enablement of SMBs Digital Enablement Impacts Key Business Levers Digital Enablement of SMBs Key for India’s Holistic Development Digital Native Solutions Driving SMB Disruptions Opportunity Deep Dive – Vertical and Geo View
  19. 19. Led by digital enablers, SMBs are witnessing disruptions across four key business levers 19 Social Mobility Analytics Cloud IOT Digital SMBs  Discoverability and reach  Managing customer relationships  Customer intelligence  Optimizing sales motions  New sales channels Customer Targeting and Engagement A  Efficiency in operations  Customer experience enhancement  Optimal resource utilization  Partner identification and visibility  Optimization of inventory and logistics Operational Excellence B  Sourcing of relevant talent  Tackling attrition  Productivity enhancement  Skilling Workforce Enablement C  Counterfeit protection  Data security  Physical security of assets and resources  Safeguarding against financial risk Risk Management F Four key business Levers impacted by tech adoption Source – Zinnov Analysis
  20. 20. 20 Discoverability and Reach Access to clients in distant geographies and create greater visibility and mindshare among target segments Managing Customer Relationships Ensure efficient management of new and existing customer relationships; personalization in engagement Customer Intelligence Understand customers buying patterns and their requirements to push relevant offerings along with upselling of complementary products Optimizing Sales Motions Gather real time visibility into the existing partner network, measure their performance and effectiveness of campaigns executed New Sales Channels Engage in various online channels like aggregator websites, online marketplaces ,etc. to undergo non- linear growth Illustrative SMB focused Solutions SMB focused CRM available through cloud across web and mobile interfaces Used by ~400k SMBs globally CRM on Mobile Solution categories to enhance customer targeting and engagement 1 2 3 4 5 A Various solutions are available to address SMB needs related to customer targeting and engagement Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Quick website creation – in 13 minutes Website update over SMSs; Auto – SEO SMS-based Website Creation and Management Use of missed calls to generate leads, deliver coupons, run contests etc. High quality leads, positive customer engagement Missed Call Marketing Tie up with local retail SMBs to deliver grocery orders received online Online Kirana shops Source – Zinnov Analysis, Company websites, Press Articles
  21. 21. Zinnov estimates an opportunity of USD 3.8 Bn in provision of Customer Targeting and Engagement solutions to Indian SMBs 21 Total Discoverability and Reach Managing Customer Relationships Customer Intelligence Optimizing Sales Processes New Sales Motions $ 3,800 Mn $ 1,250 Mn $ 550 Mn $ 550 Mn $ 100 Mn $ 1,350 Mn  Avenues to enhance discoverability, such as website creation and portal listings, constitute a large market within SMBs  In addition, enabling SMBs to sell over internet can potentially drive annual revenues in access of a billion dollars for the enabling platforms A Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management FY2015 FY2020 $8.4Bn $3.8Bn Addressable Opportunity in Customer Targeting and Engagement across Tech-influenced SMBs Opportunity Split – by Sub components (2015) Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
  22. 22. Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Ensuring Efficiency in Operations Automation of operations and streamlining of core processes to draw higher execution efficiencies Optimal Resource Utilization Reduction in wastage and optimum utilization of resources, such as raw material, labor, and overheads Customer Experience Enhancement Improvement in customer facing operations to ensure higher customer satisfaction Optimization of Inventory and Logistics Usage of technology to forecast and automate inventory management. Visibility and control over logistics to minimize losses Partner Identification and Visibility Use of portals to identify suitable partners for supply of materials and delivery of finished goods Illustrative SMB focused Solutions Solution categories in Operational Excellence and Supply Chain Management 1 2 3 4 5 Operational Excellence and Supply Chain solutions fall under five key areas 22 Solution called ‘Len Den Khata’ automates the accounting / book-keeping for SMBs with simple, easy-to-use interface Targets kirana shops, chemists, jewelers, milk dairies etc. Mobile-based Accounting / Book- keeping Solution SMB-focused vertical specific resource planning Web-based Resource, Sales, Operation, Demand Planning, Master Production Schedule Cloud-based Production Planning & Control Cloud based solution to track multiple projects, assign/track tasks & milestones Also offers reporting and analytics Cloud-based Project Management Solutions POS solution comprising a lightweight card reader, smartphone and an app Partnered with SBI to deploy 5 lakh POS devices by 2019 Mobile based POS Source – Zinnov Analysis, Company websites, Press Articles
  23. 23. Zinnov estimates an opportunity of USD 2.5 Bn in provision of Operational Excellence solutions to Indian SMBs 23 Total Ensuring efficiency in processes Optimal Resource Utilization Customer Experience Enhancement Optimization of inventory and logistics Partner identification and visibility $ 2,500 Mn $ 950 Mn $ 400 Mn $ 200 Mn $ 800 Mn $ 150 Mn  SMBs require solutions that help address issues around inventory management, efficient logistics and overall efficiency of operations  Overall market for operational excellence solutions is expected to grow at a CAGR of 17% to reach $5.5 Bn by 2020 A Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Opportunity Split – by Sub components (2015)Addressable Opportunity in Operational Excellence across Tech- influenced SMBs FY2015 FY2020 $5.5Bn $2.5Bn Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
  24. 24. Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Talent Sourcing Usage of technology solutions to address workforce shortfall by identifying talent and hire as per requirement Productivity Enhancement Ensuring collaboration amongst employees and enable monitoring to increase employee productivity Skilling Use of web based solutions to provide training to employees across skill categories Illustrative SMB focused Solutions Solution categories in Workforce Enablement 1 2 3 Includes solutions, such as email, calendar, storage, productivity apps delivered over cloud Cost effective – INR 1,500 per person per annum Cloud-based Collaboration Solution Saral Rozgar Card allows users to connect to job market place from mobiles; location based mapping, aiding both “job seekers” and “job providers” 2 Million registered users across 800 cities in just 2 years Saral Rozgar - Mobile Job Marketplace 200+ Courses of professional certification Accredited by 20+ global bodies Over 100,000 professionals trained across 150+ countries Online Training & Learning Solutions Users can apply for jobs across 50+ job boards in one submission Built-in Social Recruiting to take advantage of integrated social network postings Online Job Portals Workforce Enablement solutions solve problems related to talent sourcing, productivity and skill Source – Zinnov Analysis, Company websites, Press Articles
  25. 25. Zinnov estimates an opportunity of USD 3.1 Bn in provision of workforce enablement solutions to Indian SMBs 25 Total Talent Sourcing, tackling attrition, hiring Productivity Enhancement Skilling $ 3,100 Mn $ 2,300 Mn $ 400 Mn $ 400 Mn  Workforce hiring and retention are one of the biggest pain points in SMB. Solutions addressing the same across hierarchy levels have a massive opportunity among SMBs A Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Opportunity Split – by Sub components (2015) Addressable Opportunity in Workforce Enablement across Tech- influenced SMBs FY2015 FY2020 $6.8Bn $3.1Bn Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
  26. 26. Data security Counterfeit protection Physical security of assets and resources Safeguarding against financial risks 1 2 3 4 Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Prevention of leakage of critical business data on finances, customers, operations etc. Adopting mechanisms to help consumers identify a counterfeit product from a real one Use of surveillance, asset control and tracking solutions to ensure physical safety of assets Illustrative SMB focused Solutions Advanced physical layer authentication to prevent counterfeiting Counterfeit Prevention Solutions Integrated backup for offsite data storage and disaster recovery Available as a service delivered over cloud Cloud-based Backup and Recovery Solutions Provides monitoring and reports / analytics on invoicing and payments on a freemium model 5 mn users across 120 countries Cloud-based Invoicing for SMBs Provides CCTV surveillance, Metal detectors, etc. along with electronic security-as-a-service Low-cost Security Solutions Ensure healthy working capital by safeguarding against financial defaults on receivables 26 SMBs can mitigate risks by adopting technology across 4 major areas Risk Management solutions can be categorized in four broad buckets Source – Zinnov Analysis, Company websites, Press Articles
  27. 27. Zinnov estimates an opportunity of USD 2.2 Bn in provision of Risk Management solutions to Indian SMBs 27 Total Data Security Counterfeit protection Physical security of resources Safeguarding against financial risk $ 2,250 Mn $ 610 Mn $ 110 Mn $ 1,030 Mn $ 500 Mn  Safeguarding enterprise data and security of physical assets are critical to SMBs and represent the largest opportunity for providers of relevant solutions A Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management Opportunity Split – by Sub components (2015) Addressable Opportunity in Risk Management across Tech-influenced SMBs FY2015 FY2020 $5.0Bn $2.2Bn Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
  28. 28. Agenda 28 Nexus of Forces Driving Digital Enablement of SMBs Digital Enablement Impacts Key Business Levers Digital Enablement of SMBs Key for India’s Holistic Development Digital Native Solutions Driving SMB Disruptions Opportunity Deep Dive – Vertical and Geo View
  29. 29. Opportunity Assessment – Manufacturing Vertical 29 Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management Total Opportunity USD 1,627 Mn Manufacturing Vertical 306 484 370 467 (USD Mn) Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality Uttar Pradesh Key Cities – Lucknow, Kanpur, Meerut Maharashtra Key Cities - Mumbai, Pune, Aurangabad Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada Karnataka Key Cities - Bangalore, Mysore, Hubli Tamil Nadu Key Cities - Chennai, Coimbatore, Tirupur Rajasthan Key Cities - Kota, Jaipur, Udaipur 4.9% 9.2% 7.1% 6.1% 7.5% 6.4% 6.6% 5.7% Gujarat Key Cities – Ahmedabad, Vadodara, Surat Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e- readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Planning Commission Kerala Key Cities - Thrissur, Kochi, Thiruvananthapuram States with highest contribution to manufacturing opportunity
  30. 30. Opportunity Assessment – Retail Vertical 30 Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management Total Opportunity USD 2,184 Mn Retail Vertical (USD Mn) Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality 417 462 518 788 6.9% 6.5% 7.0% 6.2% 6.2% 7.2% 9.0% 5.8% Uttar Pradesh Key Cities – Lucknow, Kanpur, Varanasi West Bengal Key Cities – Kolkata, Siliguri, Asansol Maharashtra Key Cities - Mumbai, Pune, Nagpur Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada Karnataka Key Cities - Mysore, Bangalore, Belgaum Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai Delhi NCR Includes Noida, Gurgaon, Faridabad Gujarat Key Cities – Ahmedabad, Vadodara, Surat Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e- readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Census, World Bank, Crisil States with highest contribution to retail opportunity
  31. 31. Opportunity Assessment – Travel and Logistics Vertical 31 Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management Total Opportunity USD 1,675 Mn Travel and Logistics Vertical (USD Mn) Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality 310 383 431 551 Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai Kerala Key Cities - Thrissur, Kochi, Thiruvananthapuram 3.9% 4.7% 5.6% 4.5% 6.5% 5.5% 6.6% 5.7% 7.0% Uttar Pradesh Key Cities – Lucknow, Kanpur, Varanasi West Bengal Key Cities – Kolkata, Durgapur, Asansol Maharashtra Key Cities - Mumbai, Nasik, Pune Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada Karnataka Key Cities - Hubli, Bangalore, Mangalore Rajasthan Key Cities – Kota, Jaipur, Udaipur Gujarat Key Cities – Ahmedabad, Gandhinagar, Surat Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e- readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Crisil, Ministry of Road Transport and Highways States with highest contribution to travel and logistics opportunity
  32. 32. Opportunity Assessment – Professional Services Vertical 32 Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management Total Opportunity USD 2,129 Mn Professional Services Vertical (USD Mn) Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality 421 683 367 658 8.3% 6.9% 5.9% 7.0% 8.8% 5.8% 6.6% Uttar Pradesh Key Cities – Lucknow, Kanpur, Varanasi Maharashtra Key Cities - Mumbai, Nagpur, Pune Karnataka Key Cities - Mysore, Bangalore, Belgaum Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai Kerala Key Cities - Kozhikode, Kochi, Thiruvananthapuram Delhi NCR Includes Noida, Gurgaon, Faridabad Gujarat Key Cities – Ahmedabad, Vadodara, Surat Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e- readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Census Report, World Bank 5.4% West Bengal Key Cities – Kolkata, Durgapur, Siliguri States with highest contribution to professional services opportunity
  33. 33. Opportunity Assessment – Restaurants and Hospitality Vertical 33 Customer Targeting and Engagement Operational Excellence and SCM Workforce Enablement Risk Management Total Opportunity USD 1081 Mn Restaurants and Hospitality Vertical (USD Mn) Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality 219 279 199 384 5.7% 6.9% 7.2% 6.8% 7.4% 9.6% 6.6% Uttar Pradesh Key Cities – Agra, Mathura, Varanasi Maharashtra Key Cities - Mumbai, Aurangabad, Pune Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada Karnataka Key Cities - Mysore, Bangalore, Mangalore Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai Delhi NCR Includes Noida, Gurgaon, Faridabad Gujarat Key Cities – Ahmedabad, Junagarh, Surat Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e- readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, World Bank, Ministry of Tourism, Census States with highest contribution to restaurants and hospitality opportunity
  34. 34. Agenda 34 Nexus of Forces Driving Digital Enablement of SMBs Digital Enablement Impacts Key Business Levers Digital Enablement of SMBs Key for India’s Holistic Development Digital Native Solutions Driving SMB Disruptions Opportunity Deep Dive – Vertical and Geo View
  35. 35.  Disrupted traditional procurement methods of individual buying at low scale  Driving cost efficiencies through aggregated demand  Cloud based solution enabling demand aggregation  Collective payment through online channel Enterprise scale procurement for SMBs Digital native solutions driving SMB disruptions (1/2) 35  Operations structured around merely three employees per city which handle thousands of accounts (SMBs)  Made possible due to extensive digitization of operations  Disrupting customer engagement through permission based marketing using missed call (toll free for customers)  Provides actionable leads with serious intent  Easy to use solutions encompassing entire SMB (Doctor) workflow :  Enhancing discoverability by customers  Managing customer relationships  Enabling operational workflow 1 2 3 4  Completely mobile workflow  Ease of operation for both drivers and consumers  Engaging customers through lowest denominator of technological adoption – telephone calls  Digitization of entire workflow on an integrated cloud based platform SMB reach without feet on street Enabling end-to-end vertical specific workflows Non-intrusive customer engagement at scale Source – Zinnov Analysis, Company websites, press articles
  36. 36.  Help Individuals derive value out of their “underutilized assets”  Companies have created trusted market places for respective offerings:  Air BnB – Accommodation  Lyft – Car Ride  Digitally enabled crowd sourcing of user ratings  Ease of execution –fully operational through a mobile app Powering new breed of SMBs Digital native solutions driving SMB disruptions (2/2) 36  Organization of blue collar workforce through saral rozgar card  Registered job seeker base of close to 2 million and reached 1 Lac job openings in March 2014  Used as a medium for both internal (employees) and external (clients) communication  Rapidly emerging as an effective mass marketing tool  End-to end solution to create and manage websites  13 minutes for creation of websites; auto SEO  Ability to manage/update websites over SMS 5 6 7 8  Enablement through mobile phones which have a significant penetration in the target workforce  Mobile only solution with high penetration  Low learning curve; near Zero Cost  Extreme ease in web- presence creation and management Organizing the unorganized Consumer apps for business Web presence made simple Source – Zinnov Analysis, Company websites, press articles
  37. 37. Agenda 37 Nexus of Forces Driving Digital Enablement of SMBs Digital Enablement Impacts Key Business Levers Digital Enablement of SMBs Key for India’s Holistic Development Digital Native Solutions Driving SMB Disruptions Opportunity Deep Dive – Vertical and Geo View
  38. 38. 38 Overall Economic Impact of Tech Adoption on an SMB – 75% of current revenue Revenue Enhancement – 50% Cost Optimization– 25% Notes: 1) Economic impact has been calculated based on 100% adoption of all relevant digital technologies and estimating %age revenue enhancement and cost reduction resulting from tech adoption across each of the 4 business levers Customer Targeting and Engagement, 38% Risk Management, 22% Workforce Enablement, 20% Operational Excellence, 20% 90%, Operational Excellence 10%, Customer targeting and Engagement Zinnov estimates 75% overall enhancement in SMB performance due to technology adoption across 6 key business levers Source – Zinnov Analysis, Company Websites, Press Articles
  39. 39. Digital SMBs would have a multifold impact on India’s GDP, exports and employment 39 Additional* Contribution of Digitally enabled Indian SMBs in 2020 Additional jobs are expected to be created to power incremental output aided by digitization ~168 Mn Additional GDP Additional annual contribution to the GDP due to adoption of digital technologies by SMBs ~$ 1.1 Tr Increase in Exports Increment in SMB contribution to Indian exports~$ 264 Bn Notes: 1) Based on revenue enhancement and cost optimization effects of digitization of tech addressable SMBS on projected GDP of India in 2020 *Contribution attributable to digital enablement; over and above the expected contribution due to overall Indian GDP growth. Incremental Employment Generation Source – DNB, MSME, Press Articles, Zinnov Analysis
  40. 40. Thank you 40 21, Waterway Ave, Suite 300 The Woodlands TX – 77380 PH: +1-281-362-2773 Meilifang Tower 4, Entrance 4, 10/F #1003, 11 Beiyuan Shuangying Road, Chaoyang District, Beijing China 100012 Level 42, Suntec Tower Three 8 Temasek Boulevard Singapore 038988 PH:+65 6829 2123 69 "Prathiba Complex", 4th 'A' Cross, Koramangala Ind. Layout 5th Block, Koramangala Bangalore – 560095 PH: +91-80-41127925/6 First Floor, Plot # 131, Sector - 44, Gurgaon – 122002 PH: +91-124- 4420100 3701 Patrick Henry Dr. Building 7 Santa Clara CA – 95054 PH: +1-408-716-8432 Zinnov Worldwide info@zinnov.com www.zinnov.com @Zinnov

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