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SaaS landscape in India


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SaaS landscape in India

  1. 1. SaaS Landscape in IndiaJuly, 2009 This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the` client organization without prior written approval from Zinnov Zinnov Management Consulting Pvt. Ltd. (Confidential)
  2. 2. Agenda About Zinnov The SaaS Market In India Key Insights Zinnov 2 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  3. 3. Agenda About Zinnov The SaaS Market In India Key Insights Zinnov 3 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  4. 4. Zinnov is a consulting firm that prides itself for having grow through acommitment to excellence in solving business problems of our clients About Us Founded in 2002 Our Typical Engagements • Zinnov was founded in the year 2002 with the • We work with MNC companies ( IT& focus of providing services in the area of Manufacturing) looking to leverage India Globalization Advisory to fortune 1,000 • We work with companies to help them enter companies India as market, leverage India as a talent destination, and India as a R&D hub100 150 80 Client Engagements 150 100 60 40 73 20 43 25 12 2 0 2003 2004 2005 2006 2007 2008 2009(E) Zinnov 4 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  5. 5. Our consulting focus areas follow under 3 heads, all which are focusedon addressing unique business problems faced by clients Consulting Focus Areas Globalization Market Expansion Human Capital Advisory Globalization Strategy Opportunity Assessment Global Talent pool Analysis Globalization Roadmap Customer Insights Workforce planning Partner selection Go-To-Market Strategy Compensation and Benefits Operations Optimization Blue Sky Product Ideation Flexible Work force Tool Zinnov 5 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  6. 6. Our indicative client list speaks volumes about our growth and ourcapabilities in delivering value to our clients Vertical Client Software Products Hi Tech Manufacturing Zinnov 6 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  7. 7. Agenda About Zinnov The SaaS Market In India Key Insights Zinnov 7 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  8. 8. The domestic market for SaaS is estimated to be about USD 50 million and is currently dominated by Collaborative Applications and CRM workloads Workload-wise Distribution of SaaS Market in India, 2009 Total Market: USD 50 - 56 million Workload Total Market in 2009 Collab. Applications* USD 18.9 Mn CRM USD 16.2 Mn ERM USD 4.8 Mn Security USD 1.6 Mn Others USD 7 – 14 Mn The SaaS market in India is extremely nascent with a total market size of USD 50-56 million. Three key workloads, Nascent Market-With Couple Collab. Apps, CRM and ERM together contribute 80 percent of the market. With the market being so nascent, of Early Movers there are a couple of early movers who have cornered a large share of the market. These include and Ramco SystemsNote: Confidence Level for Market Size is 85 – 90 percent, * Collab. Applications – Collaborative Applications include web conferencing, productivity suites etc. Zinnov 8Source: Zinnov analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)
  9. 9. Currently only a handful of the top global SaaS players are focusing on India Market Focus of Top SaaS Index Players on Indian Market, 2009 Company India Focus Company India Focus NetSuite Intuit - Omniture Blackboard RightNow Technologies Concur Technologies - - Constant Contact - DealerTrack Holdings - SuccessFactors DemandTec - Taleo Corporation - Kenexa Corporation The Ultimate Software Group - LoopNet - Vocus -Source : Zinnov Analysis Zinnov 9 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  10. 10. Some of the major challenges that SaaS providers face in India are lack of knowledge about Indian workflows, lack of IT support etc. • Focus of companies in Indian market is • Broadband penetration & reach is relatively new and lacks scale abysmally low. Number of active • Most of these firms don’t have the broadband subscribers in India is 5.52 commitment/money to bank roll and Million as on Dec 2008 scale these experiments Broadband Lack of Penetration Scale • Current pricing model used by • IT talent in non-IT industries is limited. companies is very high compared to The salary differential is extremely high, which is a constraint to IT IT Talent Shortfall Constraints Pricing paying propensity • Availability of pirated software that adoption solves customers business needs Product Localization IT Support • Most MNC’s products in the market • IT support is essential for success of are global products with minimal R&D SaaS. Since the revenues in SaaS are spend for India market requirements. recurring, lack of support affects the None of the Products are mapped to longevity of a customer Indian Work FlowsNote: *Broadband is defined as an internet connection with speed equat to ir greater than 256 kbps Zinnov 10Source: interviews with Company Stakeholders, TRAI, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)
  11. 11. Despite these constraints we believe SaaS is likely to grow in India over the next few years Evolution of Telecom Service Providers into SaaS Carriers Pricing & Drivers for SaaS Growing Support Basic Internet Innovations adoption in India Infrastructure Unique business model Innovations Zinnov 11Source: interviews with Company Stakeholders, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)
  12. 12. Mobile Revolution Mobile revolution and entry of large Telecom players will drive SaaS adoption What does it offer? What does it offer? What does it offer? Looking to enter the SMB market with Airtel plans to offer SaaS to SMBs and is Free branded laptops free with hi- Novatium. Novatium is a Chennai based in talks with Oracle, SAP, Microsoft, speed Internet data card service start up that has launched a netPC and Google and Jamcracker to offer branded Reliance NetConnect provides hosted applications on different applications on a pay-per-use. It has entered into a strategic alliance subscription basis. The service is Airtel aspires to become the CIO in the with leading IT giants Acer, Asus, HCL, currently available for consumers, but cloud. Already tied up with Google Intel, and Lenovo is being launched for SMB’s. Apps for its broad band users The scheme is priced as low as Rs.1500 per month (excluding Service Tax) for two years with no hidden costs. What does it do? What does it do? What does it do? Novatium provides a complete range of BSNL launched 3G in March 2009. Plans Tata Communications, is just one of the services in network computing and to operate 5 million lines spanning all players with plans for WiMax, a super- specialize in delivering customized district headquarters and important speedy version of wireless broadband. solution to enterprises. They offer the towns by end of this year. Investment The plan will cost more than $100 extra edge, ensuring success in every outlay for the same is Rs.2700 crores. It million and span 115 Indian cities. The field of specialization. has tied up with Nokia, Sony and goal: to provide 20 million broadband Samsung to provide handsets that have connections by 2010. Currently selling to consumers and has been priced at Rs.7000 2500 customers pan-IndiaSource: Zinnov Analysis, Secondary Research Zinnov 12 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  13. 13. Mobile Revolution Airtel Cloud computing offering with Net PC, will attract low cost online PC users from SOHO, SMB and Education areas Background and Product Details Other Details Product Launched May, 2009 Technology – Partners Airtel (broadband), Novatium(Hardware), Microsoft (Software) – Windows XP for client customized Accessories 15-inch LCD monitor, keyboard, mouse, companion by Nivio Availability Delhi, Gurgaon and Noida – Linux-based server Product Pricing 7,999 (INR) 24 hours – Companion connector Installation Time Availability Airtel Stores and NEXT Electronic Stores Support – It supports multiple USB peripherals (USB pen drive, USB hard disk, Different Monthly Plans USB printer, digital cameras, etc.), Monthly pricing speakers and microphone Packs Common facilities Differentiating factors (INR) Home 699 MS Office standard Power Consumption – 5 W only 10 GB Space MS Office standard with Admin Professional 3 GB Data Transfer 899 rights Competitive Products – Online Desktop Service MS Office Premium with Admin – BSNL Business 100% Data Security 1199 rights – MTNL Partnerships Access Device Google Apps OS/ MS Office ERP/CRMSource: Company Websites, Novatium Sales , Media Zinnov 13 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  14. 14. Mobile Revolution Nokia is leveraging mobile as an access device to provide CRM solutions on an independent operator model All new orders can be Both the supplier as well as received as a message in the the agent have access to their inbox. The status of the order orders right in their mobile can also be tracked every time One can view his network consisting of first level and second level partners on the mobile Key Features Key Advantages Nokia India is piloting a Share and update product information Mobile CRM of textile Portable access to business data Create and distribute purchase order Less paper work distributors. Such solutions information Less errors that are easy to use and Create and send dispatch details Shorter sales cycle are cost effectively a likely Keep track of orders Secure platform for data storage to be disruptive in the A directory service wherein published company information can be accessed marketSource: Nokia Tej website, Primary Research Zinnov 14 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  15. 15. Growth of Basic IT Increasing IT and internet penetration will also help in increasing the adoption of SaaS solutions in India PC Users in India, 2006-08 (Millions) Active Internet Entities* in India, 2005-08 (Millions) Mobile Phone Subscribers in India, 2006-08 (Millions)Note: Active Internet Entity – Individuals/Establishments with an internet connection Zinnov 15Source: MAIT, TRAI, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)
  16. 16. Growth of Basic IT India is increasingly becoming a global hub for data center services, and this will further drive SaaS adoption in India Indian Data Center Market, Global Perspective, 2009 Vertical Play of Indian Hosting Service Providers & Global Comparison, 2009 India Global • The Indian datacenter market is estimated to be between USD 1 – 1.2 Billion which accounts for about 8% of the global market Data Center Space in India, 2007 – 2011E (Thousand square feet)Note: * Does not include captive data center space (Captive data centers include those being outsourced to system integrators) Zinnov 16Source: Data Monitor, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)
  17. 17. Growth of Basic IT Data center players like Tata Communications and Reliance, have a significant Indian and global play Tata communications, largest player in the market, has 22 data center worldwide with 7 data centers operating in India. It has Tier-3 data centers with 1 million square feet capacity. Services include co-location, managed hosting and storage. The flexible on demand model allows clients to purchase as per capacity and then adjust as their business evolves. Reliance has over 500,000 square feet of hosting space. It has 6 Tier- 3 data centers in India with a customer base of 500. Their hosting services include co-location, application hosting depending on basis of the services required by clients. Sify has 200,000 sq ft of hosting space in 4 Tier-3 data centers. It offers co-location, dedicated and shared hosting services. First in country to deploy Gigabit Switch Routers in its backend infrastructure NetMagic has 5 data centers across India and US and 1 virtual data center in US. It has a customer base of 600. It has close to 100,000 square feet of hosting space Ctrl S’s services include infrastructure services such as co-location, managed services such as managed backup, dedicated hosting, hosted exchange and disaster recovery. First in India to deploy water-cooling technology, which would save 30% of its energy cost annually. It has 30,000 square feet area of hosting Net4’s services include virtual private servers, server colocation, backup and recovery and managed services. It has data centers in 8 different locations. It has a hosting space of about 30,000 square feetSource: Interviews with Company Stakeholders, Company Websites , Zinnov Analysis Zinnov 17 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  18. 18. Business Model InnovationCompanies such as TCS with their ITaaS model are likely to bedisruptive in the market and would increasingly drive adoption What are the benefits of the model ITaaS Stack Stack based business Single L6 Business Intelligence model to deliver IT Stakeholder End to for SMB End enablement to SMB’s Solution L5 Custom Apps – Inventory Stack Management SaaS driven IT on a Tap L4 Business Apps-HRMS model Benefits of Engagement New Model of SMB through ICT L3 Email, Office Apps Lifecycle Remote tech support to L2 Networking Equip. bring down Open source products-low end TCO cost L1 Hardware Business Impact Industry Vertical Focus Anchor Clients, Low Price points • Manufacturing • 18 Anchor clients in manufacturing, have tied up • Health care with Industry associations such as CODIASSIA, AEPC • Education • Retail • Entry price point as low as Rs.500 per user per month. Zinnov 18 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  19. 19. Business Model InnovationSchool mate is another example of a unique business model thatprovide staff augmentation support along with SaaS offerings SchoolMate Model IT + manpower The Lack of IT talent is a major constraint for IT adoption in Schools. Schoolmate with its unique man power supported Parents managed service model is a breakthrough innovation in Information the market Payment What is the Model all about? Uniqueness of the Model Computeriz- Communica- ation of day tion of SaaS + Support + Man power to day activities information to parents Reduces IT Staff requirement The New Schoolmate will deploy a technical person in of SMB Information each school, who will work fulltime on Model covers, health, SchoolMate implementation in the school fees, reports etc Technical Staff for each school who manages Online. On site ICT, and data support model entry Zinnov 19 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  20. 20. Pricing InnovationRamco is an ERP solution provider that has launched disruptivepricing model to drive adoption of its solutions Ramco Model Paying Propensity for ICT solutions in India is limited, and to acquire and grow Payment clients, pricing innovation is essential. Ramco & NIIT provide Payroll solutions to the Indian government and charge them per pay slip Pay Slips generated Hosted Solution • Ramco has an hosted ERP solution that is called Ramco OnDemand • NIIT is its technology partner and they have developed an HR module on top of Pricing Ramco OnDemand Innovation • This solution is hosted on the government managed CDAC data center Driving IT • The solution is being used to generate & manage the government payroll. Adoption Government is charged on the number of pay slips generated and not on the regular model depending on ‘number of users’ Zinnov 20 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  21. 21. Agenda About Zinnov The SaaS Market In India Key Insights Zinnov 21 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  22. 22. There are 4 essential aspects that players need to address beforelooking to grow in the SaaS market in India Product Customization is Sales & Marketing Client Channel Partners are Telecom Players are an Essential Acquisition spend will be essential for achieving scale essential cog in the high in the market ecosystem for growth & client servicing •Indian small businesses do •Globally sales and marketing •Partner eco-system focus is •Telecom players such as not follow global best spend is about 50 percent of essential in India. It has Airtel, Reliance, Idea and practices in business process, the overall budget for key helped initial market leaders BSNL are essential in the eco- and hence global products SaaS players like Ramco systems to build system. Not only do they without customization do not an early mover advantage lead SaaS adoption through fit their needs •In India the MSME has increased broadband identified 1200 •India has a wide business penetration but they can also •Most Indian sales forces manufacturing clusters. In landscape and requires act as effective partner for have hierarchical reporting, addition there are multiple communicating with clients payments however this is not a other verticals such as retail, in at least 8 major languages standard feature in many SFA education, etc. with each if not 22. This requires a •Clients prefer to pay via, products currently in the having limited levels of IT strong local channel partner Demand Draft, Cheque or market. Companies thus pay awareness eco-system to scale wire transfer and tracking an additional fee to be able effectively in the market payments is a challenge. to use the feature. For •The need to create IT Telcom players can be example, ZOHO charges USD awareness through events, leveraged as a payment 20 per user per month to demos and a lot more off line channel to increase efficiency enable users with hierarchical modes than globally accepted and reduce overall cost of reporting online modes, will product delivery substantially increase the spend on S&M to acquire clients Zinnov 22 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  23. 23. It is also essential to look at innovative channels to engage customers and grow business in the Indian Market Strategic Alliances • and Google have formed a strategic alliance for Salesforce Group Edition featuring Google Ad- Partnerships with Telecom Companies and ISPs words, which provides every element of the customer lifecycle, from advertising, creating leads, closing business • Google has tied up with Airtel to launch Airtel Live to and retaining customers in one integrated solution distribute Google Apps (Gmail, Google Docs, Google Calendar, iGoogle) to Airtel broadband customers • Zoho partnered with Google to enable Google users to access all Zoho services with their single Google ID • Tata Communications has partnered with SugarCRM to offer hosted CRM solutions to Indian businesses Integration with Social Media • Several companies such as Trend Micro, F-secure, have partnered with Tata Indicom to provide on demand hosting, backup and security solutions • Zoho has launched Zoho applications (Zoho Writer, Zoho Sheet and Zoho Show) on the Facebook platform, enabling users to chat and work together through the • Indian gaming company Indiagames has tied up with social network several ISPs such as Airtel, MTNL, Tata Indicom to deliver Games On Demand • Salesforce has launched an application on Twitter which enables salesforce users to engage with their client base faster and more efficiently, either individually or en masse Zinnov 23Source: Company websites, press releases Zinnov Management Consulting Pvt. Ltd. (Confidential)
  24. 24. To succeed in the India market its essential that firms look at the right price-value mix, followed by a solution centric approach Basic Principles Child Birth at Homes at Stay 5 Star at Cars at Call at Rs.1 Fly at Rs.1 Rs.1500 Rs.300,000 Rs.1499 Rs,100,000 Zinnov 24 Zinnov Management Consulting Pvt. Ltd. (Confidential)
  25. 25. Thank You69 "Prathiba Complex", 4th A 575 N. Pastoria Ave 21, Waterway Ave,Cross, Koramangala Ind. Layout, 5th Suite J Suite 300Block, Koramangala Sunnyvale The WoodlandsBangalore – 560095 CA – 94085 TX – 77380Phone: +91-80-41127925/6 Phone: +1-408-716-8432 Phone: +1-281-362-2773 Zinnov 25 Zinnov Management Consulting Pvt. Ltd. (Confidential)