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
3 comments:
Agree, you make some very good points. A large part of getting companies in India to adopt enterprise software is around educating them on the benefits.
However, on the other end of the spectrum, I think the belief that deploying enterprise solutions is far cheaper than home grown solution is to an extent, a misnomer given the amount of money you have to plough into customization and maintenance. What will really sell like hot cakes (ok say, samosas ;)) in India is cheaper, easy to maintani enterprise solutions.
Large portions of enterprises in India are PSUs, SMBs and mom/pop ventures.
Before deploying any kind of information systems, PSU, SMB, employees must be first made mouse-literate then computer literate after this they must be trained to accept things that do not have seals and signatures on them :).
Non-IT labor is still cheap in India, I think you can can hire a human form of Excel( a person who has the skills to do most of what excel does) for less that what it would cost to buy a legal copy from Microsoft.
You definitely bring out some interesting issues, but they mostly refer to the current state of things but not the larger trends at play.
One of those larger trends is that a lot of sectors are getting organized and consolidated by large multi-national players. Retail is a great example. This will reduce the number/density of small, mom-and-pop businesses.
Another trend is privatization. We see this happening in manufacturing, airlines etc. So the PSUs will get replaced by private sector enterprise.
I don't see computer literacy as an issue with the employees of these companies.
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