Isn’t this a highly conducive environment for any SAAS startup keen on creating solutions that rely on the power of smartphones in the hands of a common Indian? Now, top this up with low IT penetration among Indian businesses; rapid digitisation of key business processes; clear need for human resource efficiencies; high acceptance and low costs for cloud technologies and tighter government compliance; one has the perfect recipe for enterprise SAAS software, both generics (or horizontal) and industry specifics (vertical-focused). All a startup has to do is put together a small IT team, manage a few hundred users, offer a competitive monthly SAAS fees and boom…….you have a perpetual revenue generating business.
But hang on, doesn’t this sound “too good to be true”. And if the opportunity is so lucrative, every tech entrepreneur in the country should have jumped onto it already. Lets look at the missing pieces of the puzzle:
- Scale: Ask anyone who has been exposed to enterprise software ecosystem will tell you that it’s not a child’s play. By very nature, enterprise platforms are complex, have linkages, dependencies, rules and business logic built into them. And that changes the scale of development, testing and deployment to a totally new level requiring a mature technical expertise. As a startup, it becomes difficult to attract and sustain a superior technical team unless you have deep pockets or a brand.
- Industry expertise: Even the generic SAAS platforms are built with a fair degree of industry knowhow, let alone the industry specific ones which are strongly correlated to industry requirements. Which means, even with a strong technical team, a startup would need deep industry expertise and years of hands-on experience to create a meaningful and relevant product. This may not be an entry barrier, but often proves to be a customer acquisition and scale barrier.
- Knowing the real customer: Who are the customers for a SAAS startup? A company which is acquiring the product or the employees of the company who will become the real core-users of the platform. Most startups do not go through this exercise of identifying and differentiating their customers and accordingly planning their communication, product benefits and services efforts.
- Change management: Anywhere between 30-60% of all CRM implementations fail, as proven by various studies in the past decade. Can you guess the single biggest reason behind these failed organisation-wide projects which had all the ingredients of success like great product, technical and functional expertise, meticulous project planning and post go-live support. 70% of all failures happen due to end-user adoption which at its core is a human psychology problem. Because these are the areas which require a special consulting and change management skills often missing in startup teams whose energies are focused on building the right product, marketing and selling it to as many customers (i.e. companies) as possible.
- Diversity: Since the real customer of a SAAS platform is the end-user, it brings a great degree of diversity into the picture. Imagine a country like India that has about half a million sales representatives working in more than 500 towns (with 100k or more people), carrying more than 20 different smartphone brands and 100+ models, on 3 different network bandwidths (2g, 3g and 4g), speaking multiple languages and behaving in infinite number of ways.
- Training and development: SAAS platforms were designed to be more DIY (do it yourself) as compared to traditional enterprise applications which were notorious for their long implementation cycle and repeated end-user trainings (that too mostly classroom). In a country like India where software penetration in SME’s (small and mid sized enterprises) is low, SAAS implementations require a lot of effort on end-user training and development even months after adoption. And the situation worsens due to non-office staff, manpower turn and absence of a formal LMS.
Peri’s founding team believes that India is at the cusp of a technological revolution and enterprise SAAS will come out as a big gainer in the process. The factors listed above should not deter the Indian entrepreneurs from jumping onto the highly competitive landscape, instead act as a set of guiding principles of what all to keep in mind. We are also certain that each industry will go through its own learning curve and set of innovations before getting digitized optimally.
One such industry that experts are betting big is the FMCG industry (fast moving consumer goods) that is actively embracing the digital technology to empower and ride the next 3-5 years of growth amid tough competition and slower macro economic environment. The impact will be especially significant in the general trade sales function which, at a pan-India level, supports more than 12 million unorganised retailers, employs more than half a million sales representatives and goes through millions of offline transactions. Till a few years ago, it was significantly more difficult and expensive to digitally capture these transactions and only mature companies were able to afford digitisation initiatives. Now, with almost 100% availability of smartphones and 4g connectivity to these 500k representatives, SAAS startups are engaging with the business owners of all sizes, offering them solutions which fit their business models, at ridiculously affordable price and showcasing them the value it can generate for their sales process.
Peri is both an observer and a participant of this smartphone and data-enabled SAAS wave. Keep following us to read interesting stories about the Indian SAAS industry.