“High share premium is not the basis of a high valuation but the outcome of valid business decisions. This new whitepaper by our iSPIRT policy experts highlights how share premia is a consequence of valid business decisions, why 56(2)(viib) is only for unaccounted funds and measures to prevent valid companies from being aggrieved by it”
The much-hyped Goods and Services Tax (GST), after years of stagnation and lack of political consensus, was finally passed in the upper house of the Parliament, the Rajya Sabha, on 4th August this year, almost a decade after it was first introduced in the Lok Sabha in the year 2006-07. It is the biggest indirect tax reform post economic liberalization of 1991.
The economists say, a double-digit growth in GDP, which seemed too surreal, will now be a reality. This law aims to give a boost to the new age start-ups and make India a conducive place to conduct business. Currently, India is home to around 4,200 startups growing at an exponential rate of 40% yearly. It is predicted that, with further relaxation of rules, India will be home to around 11,000 startups by 2020. This can be corroborated by the fact that India was ranked poorly at 142nd in the ‘Ease of Doing Business’ survey conducted by the World Bank in 2015. With relaxation in the rules and regulations of setting up a business and lucrative schemes like ‘Start-up India, Stand up India’, India went twelve places up and ranked at 130 in 2016.
Before getting into the nitty-gritty of how beneficial will the new law be for startups, it is important that the basics of this law are first looked into. GST, as mentioned above, is an indirect tax reform also known by the moniker – ‘One India, One Tax’. Different states have different tax structures which make the taxation structure very cumbersome and complex. This is a major reason why many start-ups are hesitant to expand their businesses to different states leaving the state concerned with little industrialization and low creation of jobs. GST aims to bridge the gap by integrating all taxes, making only one tax to be paid by everyone. As a result, the tax calculations will be simpler, saving time and energy for entrepreneurs and start-ups to focus on their respective businesses instead of investing time and energy on compliance and paperwork. However, just passing the bill is not the end of the story – there are rules to be framed, tax rates to be fixed, the central and state governments must reach a consensus, and proper infrastructure needs to be put in place. Hence, the implementation of GST still has a long way to go and is likely to happen in mid-2017.
How Does the GST Help?
The Act is deemed to benefit all types of businesses but start-ups and SMEs are to benefit the most. It has been structured in a way keeping in mind the concerns of the small businesses. This is elaborately explained in points mentioned below –
Simple Taxation – Instead of adhering to different tax regulations in different states, GST simplifies the process by making it simpler and clear by integrating all taxes into one so that not only money on taxes are saved but time on compliances are saved too.
Ease of Conducting Business – Registration of VAT from the sales tax department of the state concerned is an imperative to start a new business. A business intending to establish in different states has to apply for VAT registration separately. Not only this, the VAT fees in different states is not uniform, making this one among the many other issues regarding the problems faced by startups and existing businesses in India. To fix this anomaly, the GST Act has provisions which will make VAT registration centralized, uniform and simple for companies. The concerned company/business would just need to get a single license valid pan India and pay taxes regularly. This will further help startups to establish, expand their business hassle-free.
Integration of Multiple Taxes – In addition to the VAT and service tax, there are other tax regulations that must be complied by the businesses like Central Sales Tax, Luxury Tax, Purchase Tax, Additional Customs Duty etc. Upon the implementation of the GST, all such taxes will be combined into one.
Lower Tax Rates for Small Businesses – At present, VAT is applied to businesses having an annual turnover of INR 5 lacs and above. GST aims to cap this limit to INR 10 lacs only and businesses with turnover between INR 10-50 lacs will be taxed at low rates. This move will not only bring respite to the start-ups but also help them invest the money saved on taxes back in their business.
Improvement in Logistics efficiency – Seamless movement of goods is currently a problem with border taxes and checks at state borders which delay the movement of goods which, in turn, results in delayed deliveries and enhances the product cost. GST aims to eliminate such inefficiencies making the inter-state trade less time consuming. With an uninterrupted movement of goods across the border, the costs associated with maintaining the goods will significantly reduce. According to a CRISIL analysis, the logistics cost of non-bulk goods can go down by as much as 20% once GST is implemented.
Other Side of GST: The Cons
While there are other advantages for the start-ups as well other than the ones mentioned above, the new Act also comes with implications, not necessarily for the start-ups. Start-ups in the manufacturing sector with lesser turnovers might have to bear the brunt of paying duty. As per the existing excise laws, any manufacturing business with an annual turnover of less than INR 1.5 crores is exempted from paying duties. But when the GST comes into force, the chances are, this limit could be reduced by six times to INR 25 lacs. This can have a detrimental effect on the growth of start-ups.
There are high chances that the inflation might rise after GST implementation. Also, whether ‘mandi tax’ would be included or not in the GST is ambiguous. Such causes can adversely affect the food startups.
Critics also say, the implementation of GST would also affect the real estate business and add up to 8% of the cost in new homes and as a ramification thereof, reduce the demand by 12%.
Despite its implications, GST is the most important and business friendly tax reform in India which will lead to a double-digit growth. It seeks to unify, integrate different tax structures so that there will be transparency and efficiency in the way businesses operate and the government levies taxes. This won’t just reduce the cost of the products but also create employment opportunities as more startups rise and India becomes the startup capital of the world!
Guest post by LegalDesk.com, a Do-It-Yourself legal platform for making legal documents online. LegalDesk helps startups with incorporation and legal documentation services. It also provides Aadhaar-based eSign service to businesses.
In India retailing of jewellery is undertaken in various small and large jewellery shops. Whether the retailer is a large shop in metropolitan areas or a smaller rural shop, the adoption of Software and IT both for back office operations or for business growth, is almost negligible. Why has the change not occurred?
On September 22nd 2013 at Royal Orchid Central, Bangalore, some of the most inspired minds from the Jewellery Industry and the Software and Technology industry had the opportunity to go on a journey of inquest. Are there gaps in the Jeweller’s perceptions about the benefit of Software and Technology? Do Jewellers have the right external eco-system to enable them to overcome the barriers to adoption? Are Jewellers happy with whatever Software and Technology they have used and adopted so far? Is there fire in the belly of every jewellery business owner, to objectively seek answers to these questions, or do we have to ignite a new spark?
More than three hours of engaging, entertaining and educational experience. A 100+ jewellery retail business owners got the opportunity to interact and seek answers to many of the questions from industry leaders Shoaib Ahmed, President of Tally Solutions and full-time fellow of iSPIRT (Indian Software Product Industry Round Table) and Mr. Ramesh Davanam, Secretary, Jewellers’ Association of Bangalore. Not all elements of the seminar can be reproduced here, but below are some of the key highlights and learnings.
We at SchemesCentral set out to answer many of the adoption related questions about 10 months ago, so that as providers of Software Platforms and Information Systems to the Jewellery community, we empathize with the jewellery retailers, understand their real pains and provide solutions that best address them.
What is required for the transformation of the Retail Jewellery Industry? As owners of family businesses, do retail jewellers realize that change is inevitable? If yes, then what are the real barriers to adoption? What can catalyze the endogenous change within business owners as individuals? These were some of our fundamental questions.
Almost in parallel, nearly around the same time last year, iSPIRT, through its SAI (Software Adoption Initiative) has gone through a similar journey and had put in place a transformative guide that enables all jewellers (whether retail, wholesale or refiners) to become informed buyers of Software and Technology. Sometimes, an entire industry, as a complex collective, can get into a state of equilibrium/inertia, and will need an external shock, to enable radical transformation. Such an external shock is enabled by new policies, new structures and new leaders. In our casual conversation with Mr. Shoaib Ahmed, what occurred to SchemesCentral was that, iSpirt was clearly addressing the exogenous change. What are the factors that can enable the exogenous change in the entire ecosystem, as a collective?
When we marry the two, what is the outcome? A framework that encompasses
- Focused Solutions for changes that are needed from within, as individuals & business owners and
- Broad Solutions for negotiating the external factors that influence the whole ecosystem.
It was this dichotamous synergy that gave SchemesCentral the confidence to organize the first seminar in close collaboration with 2 industry associations. The Jewellers Association of Bangalore (JAB) and Indian Software Product Industry Roundtable (iSPIRT).
The idea for the Seminar was concieved less than 3 weeks ago and Mr. Ramesh Davanam, Secretary of JAB, was the first one to give his complete vote of confidence. It was whole-heartedly seconded by the President of JAB, Mr. G.V. Sreedhar, and very ably supported by the members of the association. Within the next week, we had the theme for the Seminar in place, “Enabling Retail Jewellery Businesses to grow exponentially”.
After having invited more than a 100 jewellers, reserving the venue, and working through more than 3 hours of engaging content for the session, we were anxiously hoping that we hit the right chords. Then another magic happened, Mr. Shoaib Ahmed volunteered and gracefully accepted to be part of the Seminar too. And with his natural charm and flair he was also clearly the man-of-the-match on the Seminar day.
22nd September 2013 in Bangalore witnessed the beginnng of a new journey. As the session commenced and the clock began to tick, more than a 100 guests and delegates, crowded the pinewood hall. With a full-house, the audience were treated in the 1st session to a new way of thinking, to first as individuals, transform themselves. The intention of the session was to motivate them and nudge them, into accepting certain realities like,
- The reach and power of the internet,
- The benefits of engaging with the connected consumer and
- The implications of being in an Ecosystem of Technology partners.
By the start of the 2nd session, most retail jewellers started to open-up and wanted very specific focused answers to all their software and technology challenges, trust being the most important of them all. It was at this moment, a couple of testimonials from iSpirt and an inspired talk by Mr. Shoaib Ahmed, encouraged them to further explore answers to most of their problems.
In the final session the SchemesCentral.com platform as an idea in-itself, gave the delegates very specific focused answers on their challenges for maintaining and tracking payments for Jewellery Savings Schemes, it was only but natural for them to understand that there is now a community of software developers and partners, just within their reach, in their own neighbourhood, who are willing to help them in their quest for business growth.
If we tell our customers about our solutions they might forget, if we show them they might remember, if we involve them, they will understand. So start your seminars or workshops today. The Key-takeaways from the Seminar on 22nd September are,
- If you have a revolutionary software product or platform, seek avenues and opportunities and reach out to established institutions to collaborate and grow.
- There is fire in the belly of every business owner to grow his business and break new boundaries, jewellery retailers are no exception.
- We in the software community have to find both endogenous and exogenous ways to nudge them and motivate them, so that we can catalyze the spark within them to become a wild-fire for software and technology adoption.
The last date to apply for this bootcamp has been extended to 16th August especially for Product Nation subscribers.
TiE-IQ Bootcamp is a no contract and free 60-day bootcamp where the participating startups will have an opportunity to create products, launch companies and walk away with their spoils and a lot of learning.
This first edition of the TiE-IQ Bootcamp is restricted to B2B technology product startups. It builds up on the successful bootcamp conducted by IQ earlier this year. Selected startups will walk in to the TiE-IQ Bootcamp with just a minimum viable product (MVP) and take back the following :
- Mentorship and Workshops by entrepreneurs leading successful startups to help you.
- Refine and finish the minimal viable product (MVP) into a ready to buy product
- Market your product
- Get the first few customers
- Peer Learning
- Learn from some of the best startup brains developing B2B products alongside.
- Working Space for two months in the heart of Mumbai.
- Software credits with some of the bootcamp partners
- Interaction with some of the best brains in the venture investment world.
- Demo Day: Your chance to pitch to investors in Mumbai (and Bangalore – to be confirmed)
Who should Apply?
- Enterprising (co-)founders and technology enthusiasts who want to build disruptive technology products or services for the Indian or global market.
- Teams with 2-3 members that are capable to design, code and release a beta version of their product to market & sell it.
How to Apply?
To apply, visit this page for more details on eligibility criteria, and how to apply. The last date is extended to 16th August exclusively for Product Nation subscribers. For updates follow the twitter hashtag #TieBootCamp.
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. ― Winston Churchill
Small and Medium Sized Businesses (SMBs), the growth engine of India, are on the threshold of a tremendous opportunity. Globalization of trade and the rapid proliferation of computing and communication technologies are affording them a platform to expand their reach to national and global markets and compete head-to-head with global players. But on the flip side, those SMBs that do not recognize and capitalize on this wave quickly are likely to be swept away by the stiff global competition. If SMBs are to successfully counter global competition in their own backyard and elsewhere, they need to adopt software technology on a large scale, enabling them to run their businesses efficiently and effectively. But, few SMBs have the financial muscle or the technical know-how necessary to implement customized software solutions. Therefore, the majority of 13 million SMBs would count on standard business application software that requires minimum upfront investment and ongoing maintenance, to fuel their growth. Such software is distinct from the software deployed in large corporations and I refer to this as ‘Small Business Application Software (SBAS)’ to distinguish it from large enterprise application software.
Business application software (SBAS) such as accounting software, ERP, CRM etc., offers multiple benefits to SMBs –
- As shown by research, SBAS significantly enhances the internal productivity of SMBs as well as their ability to manage relationships with vendors and customers, leading to superior firm performance.
- It forces SMBs to adopt standard processes and best practices, moving them rapidly up the quality and value curve.
- Most important of all, by streamlining day-to-day operations, it not only frees up the entrepreneur’s time for strategic planning but also assists her with the tools needed to make informed strategic decisions.
The question now arises – How can Indian SMBs get the right fuel for their growth? This is where a vibrant Indian software product industry plays a critical role. Indian SMBs cannot realize productivity and performance gains from software that is designed for developed markets. This is because the business environment in India (and other emerging markets) is substantially different from that of developed markets. It is volatile, with frequent regulatory changes, and rife with institutional and infrastructural challenges. For instance, there were 340 updates to Indian tax laws last year. That’s more than one tax law update every business day! Therefore, SMBs need software products that can buffer them from such volatility and help overcome the challenges associated with operating in this unique and dynamic environment. This is possible only when products are designed specifically for the Indian SMBs – and this is best done by a strong indigenous software product industry.
Indian software product companies are better positioned than foreign firms to support the Indian SMB market. This is because,
- They have lower cost structures which allow them to meet the stringent price-performance expectation of Indian SMBs.
- Further, because of their familiarity with the operating environment, they can build effective channels to drive software awareness and adoption among Indian SMBs- remember that Indian SMBs are more like enterprise customers than individual buyers in that they expect suppliers to sell to them.
In summary, there is a symbiotic relationship between SMB growth and a robust software product industry in India. SMBs need the software product industry to power the next phase of their growth and make them globally competitive. At the same time, the Indian software product industry, having missed out on the individual productivity and communication software wave, can leverage the large SMB market in India to establish itself as a global leader in the SBAS space. In other words, software product industry is the fuel for the SMB engine and the SMB engine can drive the Indian software product industry towards SBAS leadership. By moving in lockstep and moving quickly, India can create a competitive SMB sector and a vibrant software product industry.
(Post 1 of a series on quick research and usability techniques. Start-up’s can use these techniques fairly easily to connect to and understand their end users better, as well as maintain usability standards on their products.)
ProductNation in collaboration with a few like-minded design professionals, recently put together an informal forum for designers, engineers, product managers & entrepreneurs in the Delhi NCR region. The objective of this forum was to evangelize and encourage a dialog around Design Thinking among the start-up community.
I conducted a short workshop on this topic at the forum’s launch event – a day long interactive meet up – hosted at the MakeMyTrip office in Gurgaon.
During the workshop, I introduced participants to the concept of Design Thinking and touched upon a few design research and usability methods that they could use to support design thinking within their organizations. A brief recap:
Design Thinking is an approach to design rather than a specific technique or method.
A core principle central to supporting design thinking is iteration. A ‘prototype and test’ focused approach fuelled by empathy for the people who will ultimately use the product, is recommended to be followed throughout the product development lifecycle.
There are several user research methods that can help companies connect to and understand their end users better. Guerrilla Research techniques in particular, are especially useful in context to the start-up environment – Where time is of essence, budget is limited, teams are small, people are typically multitasking and playing multiple roles.
Guerrilla Research includes research techniques that can be done more quickly, with less effort and budget, as compared to formal or traditional user research techniques. Remote / Informal Usability Testing, Man on the Street Interviews, Micro-surveys, Fake Doors, ‘Design the Box’ and Personal Inventory are a few examples of quick research techniques that can be learnt and implemented fairly well by a newbie researcher / anyone on a start-up team doubling up as a researcher.
In this first post, I want to introduce a discount usability engineering method called the ‘Expert Usability Review.’
Like Guerrilla Research methods, a Usability Review is an effective way to quickly identify usability and ease-of-use issues on a product. However, unlike user research, this method does not involve talking to end users at all.
What it involves is ‘expert evaluators’ reviewing a product, to identify usability and ease of use issues across different UI areas like Navigation and Structure, Layout, Visual Design, Interaction, Error Handling, Content etc. The experts are able to identify issues by drawing on their own experience in the areas of design and usability.
Subjectivity is minimized and issue validity maximized (or attempted to!) by ensuring that issues identified map onto existing and recognized design guidelines / principles / best practices or heuristics.
The issues identified through review, can then be fixed as part of an iterative design process. The kinds of issues that a Usability Review typically identifies are the ‘low hanging fruit’ or obvious usability problems.
Doing a review helps to highlight any aspect of an interface that violates usability and design principles.
The issues that surface through a review are different from the type of issues that come up while using user based methods like Usability Testing. So a review is a good complement to other user research techniques that may also be employed.
To demonstrate the type of issues typically found through a Usability Review, I evaluated the ‘Submit Ticket’ function on Freshdesk. Freshdesk is an online customer support software, targeted at small and medium sized businesses looking for a cloud based solution.
Here are some of the issues that I found:
Note: This is not an exhaustive review of the ‘Submit Ticket’ page, but a few example issues that help illustrate the type of issues that may be found through a usability review.
The products selected to be used as examples in this series of posts are products that are well designed in general. This highlights the importance of iterative design / the type of issues that can be unearthed even in well-designed products, by using various usability and research techniques.
The examples shown above are just a fraction of the issues that a Usability Review could highlight.
The success and effectiveness of this technique is dependent on the experience and skill of the reviewer. A review is typically done by three or four experts in the field of usability and design.
This method is best suited for start-up’s who have access to skilled and experienced usability / design professionals who can conduct a Usability Review.
Post 2 coming up soon, will introduce a related technique called ‘Heuristic Evaluation’.
With similar goals to an Expert Usability Review, a Heuristic Evaluation is a relatively easier starting point for novice researchers – Ideal for start-ups who don’t have a formal design / usability team in place, but want to try their hand at usability evaluation.
Are you a design thinker evangelizing or facilitating user research and usability methods within your start-up?
We would love to hear about your experience / answer any questions that you have about the methods that you used.
We also invite members of the start-up community to volunteer their screens / functions for use as examples in upcoming posts showcasing additional research techniques. Email me at devika(at)anagramresearch.com to check whether your screen is eligible for selection.
No one is sure of their exact number, but a census of micro, small and medium enterprises (MSMEs) done a few years ago estimated that there are 26 million small and medium enterprises in India. It is well known that this market is fragmented and price-sensitive and, hence, large companies have tried to tailor products and services to target this market. But, is that enough? Take a look at the case studies below and see for yourself.
MSMEs often complain that they don’t have adequate access to financing. One reason for this is that banks and financial institutions find it expensive and difficult to do a thorough analysis of a small firm’s credit-worthiness. Seven years ago, Crisil, India’s premier rating agency, stepped in to address this problem. The challenge was that any credit-worthiness assessment had to be completed within a reasonable period of time, maintain Crisil’s standards of analysis, and yet be affordable.
Crisil launched SME ratings in 2005. It created a network of qualified individuals in more than 180 cities, who were given intense training based on a specially-developed methodology, and had to meet rigorous certification requirements. This network of trained professionals became the bedrock of the SME rating system. To attract these individuals who are not formal employees of Crisil, the company even brought their parents to the Crisil office to show them that the company was solid and that this could be a career option. Reputed chartered accountancy firms with an all-India reach were hired for verification and oversight. The rating was based on a simple, two-dimensional scale of performance capability (five categories) and financial strength (two categories). Once all the data is collected, technology is used to complete a rating in a few days. Overall, the rating is completed within about a month. With this process in place, Crisil is able to do about 10,000 SME ratings a year, making it the largest SME rating agency in the world.
With a credit rating, an SME can get better access to bank finance and, sometimes, even lower interest rates. However, even with these benefits, the Rs 50,000-1 lakh price tag was found to be too expensive by many SMEs. So, in spite of the well-designed product, and the business and process innovation that Crisil introduced to make the rating product accessible, the government had to step in to provide a subsidy for those MSMEs who couldn’t afford it. But, pricing is not the only barrier to adoption of new products by MSMEs. In 2007, India’s largest IT services company, Tata Consultancy Services, identified SMEs as an important segment. But since it lacked adequate experience in working with SMEs, the company met with more than 250 organisations to understand how they use technology.
TCS found that SMEs had made significant investments in devices and hardware, including networking, and used their computers mainly for accounts and inventory. But MSME owners complained that the reports they generated didn’t reflect actual performance because there were islands of data that were not integrated with each other. Others reported that they struggled to keep up with technology changes, keep their systems virus-free, and to hire and retain staff for IT. Even evaluating offers made by vendors was a tricky task.
Based on these customer inputs, TCS saw an opportunity to take responsibility for running SMEs’ IT, based on some basic principles such as covering all key business processes and providing for all statutory compliances. To avoid fresh capital expenditure, the company provided an operating expenditure-based service.
The resultant TCS cloud-based solution, TCS iON, was launched in the market in March 2011. iON is periodically upgraded by TCS, but the user doesn’t have to do anything extra at his end. Though iON is available across six verticals, in the first year and a half TCS had only about 300 installations, with the largest concentration in the education space, apparently much less than what the company hoped to achieve.
Overcoming the trust deficit between technology acceptor and new product is the biggest barrier to innovating for the MSME market
At the other end of the spectrum is Tally, arguably the most successful product ever built for MSMEs in India. It is estimated to be in use by about two million users although less than one million users have purchased licences. Right from the beginning Tally was built with Indian users in mind — it used minimum hardware resources, and was tailored to Indian accounting practices. Even novice users were able to quickly learn how to use the product and it rapidly gained a large installed base of users, thereby creating a platform for the positive returns of network economics. Tally worked closely with hundreds of institutes across the country to impart training and thus create a base of accountants with Tally skills. Early on, Tally created good relationships with the chartered accountants community. With its huge installed base, Tally has become a basic requirement for any accountant in India — if you don’t know how to use Tally, you can’t be a practising chartered accountant!
To address the piracy issue, Tally reduced its prices substantially a few years ago. The product has also kept up with changes in technology and applications — it was very quick in providing VAT functionality after the law changed; it is available on the cloud; and the product today addresses much more than just accounting, it has become more like an ERP software. Of course, Tally’s success was also the result of some historical factors such as the decision of the Income Tax department and the Department of Company Affairs to make e-filing compulsory. Not all companies will have this path-dependent advantage.
The formula for success
So, what does it take to innovate for the SME market? Recently, a senior industry executive told me that the key to meeting the needs of the MSME market is realising that it is more like the enterprise market of the West than the consumer-like Small Office Home Office (So-Ho) market. Early adopters in the MSME market are very small in number and crossing the chasm to a larger “technology acceptor” market is very difficult. Many “technology acceptors” are reluctant to buy a new product even when they see a business case for it because they have had bad experiences in the past with products that were pushed to them with exaggerated promises, at high prices, and with limited post-sales support. Overcoming this trust deficit that has been created is the biggest barrier to innovating for the MSME market.
Innovation may be the solution to this problem as well. iSPIRT, a think tank recently launched by software product companies, is creating iSMB to be a market maker for software products in the MSME community. iSMB will bring out product guides for important segments of the MSME sector so that they can make informed choices regarding the software products that suit them. They will also certify products and encourage product companies to create visible dispute settlement mechanisms.
So, the key to innovating for the MSME market is not only tailoring products to their needs at easily affordable price points, and updating them to adapt to evolving use needs as Tally has successfully demonstrated, but providing effective ways of bridging information gaps, establishing and communicating a clear business value proposition and lowering the risk of purchase by the customer.
Shoaib Ahmed, President of Tally Solutions, began his career as a retail
software developer in the early 90s. Formerly the Founder-Director of Vedha
Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a
market-leading retail business solution — and the first of its kind in India to
bring in barcoding to the retail space. The company was acquired by Tally
Solutions in 2005, where Shoper merged with the Tally platform to offer a
complete enterprise retail software suite. In the second of a three-part series,
Mr. Ahmed talks about product development in the B2B space and reaching out
Why do you think we are seeing businesses that start off as a product
company become service entities?
This is where I see the need for educating customers: why should you buy our product,
what can you expect from our product and what shouldn’t you expect from our product?
More importantly, will the product solve your key issue and will it do it well? Unfortunately,
who is educating the customer about these aspects? It may be a service provider who is
interested in the service revenue only. So there’s a disconnect — there’s nobody who is
evangelizing the product and being a product champion in the small and medium business
What do you feel about having ‘pilot’ customers who can obtain the
product with an attractive offer like a reduced price?
I don’t think this is the right way of doing things. When you’re reaching out to customers,
it’s important to solve some of their key issues. To do this, you need information about a
particular profile of customers so very clear about who your customer is and what your
customer looks like to you. Now, if you want to get a large enough slice of the market
make sure you have experience with a complete set of customers — you cannot pilot
a semi-experience. You need to be able to engage with him and get your value from
him over the proposition you are making. This means measuring not only the product’s
effectiveness, but also measuring the quality of the sales pitch and that the service
capability and the service quality promise is being fulfilled.
You may decide in the first six months to choose a smaller customer set to target but
you’ll be measuring to see if all elements of your complete product experience are being
monitored for effectiveness or reviewed. This gives you an idea of scalability, since you
can then adopt an attractive pricing strategy with confidence. It can be an incremental
process, but unlike a pilot, you’re not only reaching out to a few customers and shaping
your product around them. With a pilot, the danger could be that the pilot customers are
early adopters who will view evangelizing you product amongst their peers as letting go of
a competitive advantage.
Do you think it’s a myth that it’s easier to develop B2C products rather
I think the success of Tally disproves this. Out of a potential 80 lakh businesses, nearly
40-45 lakh own computers. A large group use Tally for their business — nearly 90%
of the market. So, the constant need for us to deliver a value is critical and it’s also
important to keep communicating this value. If I as a business owner don’t see a value
in paying you for a product or service then I don’t, but increasingly in the connected
world a businessman understands that he can grow his business manifold by leveraging
technology. The information system now has to support him because he is in a connected
world so the game is changing.
In the B2C area, let’s look at the average individual : he has a higher disposal income and
is more exposed to technology. A lot of his day-to-day activities are done using technology
(like banking and filing returns). When he’s engaging with the rest of the world, he’s going
to expect a similar experience. This may act as a driving force for businesses to match
that : for example, can an individual get his doctor’s appointment online? If there is no
supporting eco-system for the the tool that the customer has, then even the greatest
online tool available to this customer can’t drive enough value. In my mind its critical that
business-to-business product development is on the system and the efficiencies have a
direct economic impact. For example, the average time for payment reconciliation in the
small business space is an average eight days. From a digital perspective, it should be
instantaneous. Just imagine the impact and velocity of commerce!