Packaged enterprise software hasn’t traditionally done very well in
- Reasonably skilled programmers were available in abundance at a low cost up until a few years back
- Companies’ perception that packaged apps developed by foreign ISVs won’t address their unique local requirements
- General risk aversion to large IT spending
- High cost of packaged applications
- Weak rupee leading to low purchasing power
- Protective trade environment that shielded the local companies from foreign competition
- “Old-school” management that did not believe in the idea of information systems as a source of competitive advantage (To be certain, even the best technology cannot be a source of competitive advantage in and of itself, but when aligned appropriately with the rest of the firm’s activities can prove to be very powerful.)
Almost all of these conditions have changed in the recent past or are about to change in the near future.
- Skilled IT talent is very expensive now. The ‘build’ option is suddenly a lot less attractive
- ISVs see India as a strategic market that could potentially drive their long-term growth and hence are more flexible on pricing terms to get the deals done (with the hope of making money from maintenance revenue that are very profitable)
- Weak dollar resulting in higher purchasing power for Indian companies
- Indian companies are on an acquisition spree throughout the world (UB buying Whyte & Mackay, Tata Steel buying Corus etc.). This is resulting in increased exposure for managers to see how companies in mature markets have harnessed the power of packaged enterprise software
- Foreign companies entering the Indian market as we have seen with Metro, Wal-Mart etc. This means local companies have to get their act together to survive and in most cases this translates to streamlining their operations and improving customer loyalty. Both of those goals are addressed fairly well by packaged apps.
I think we will witness explosive growth for packaged enterprise apps in
