Posted on

The SaaS Juggernaut: Advantage India

An Indian software company serving majorly clients in the US or Europe is not an unusual thing anymore. However, if anybody were to guess the location of the India office, a company that counts amongst its clients about 100,000 small businesses globally, they would most probably chose Bangalore or Hyderabad. However, Appointy, which is an advanced web-based scheduling software tool and has around 90,000 salons, spas, and dance and yoga classes as its clients in 100 countries does it out of Bhopal. Similarly Kayako, which sells support software to over 30,000 clients including NASA, Peugeot, Sega found its roots in Jalandhar, which as per their own website is “one of the least likely places to establish a technology start-up”.

The emergence of these companies from relatively smaller towns, highlight India’s comparative advantage in terms of ability to build high quality companies in the domain of Software as a Service (SaaS). The inherent model of the SaaS business does not require proximity to the end user. In the simplest terms, it is a software that can be accessed through a web browser, by paying a subscription, either on a monthly or yearly basis. The software is hosted exclusively by the provider, as opposed to being downloaded upon purchase and subsequently hosted by the client. The customer gains by spending less upfront, not having to maintain hardware and not worrying about upgrades & data security. Driven by such factors, the SaaS model is growing exponentially and the global market for 2015 stood at USD 31 billion (NASSCOM). The growth is expected to continue at CAGR of 18% to reach a market size of USD 72 billion by 2020. Another study by Google and Accel Partners estimates the 2020 market to be USD 132 billion.

The Indian SaaS landscape is expected to evolve even faster. The FY16 market is estimated to be USD 407 million, a 34% growth over FY15. This figure is expected to triple by 2020 growing at a CAGR of 27%, 1.5 times the global growth rate. It is easy to see why India is going to be a hotbed of activity for SaaS companies. The cost of product developers is one of the biggest items in a SaaS company’s P&L Statement. A software developer in India costs 25% of what a similarly skilled one based in the US would cost. India has an estimated 36,000 product managers, 25,000 SaaS engineers and 100,000 other engineers with the skills for building a SaaS product. Another critical factor is the adoption of mobiles as the primary device for accessing data. India being a mobile-first nation is well placed to ride this shift as its young companies are more flexible and can focus on mobile platforms.

Buoyed by these advantages, companies have been sprouting in every segment of the sector. NASSCOM estimates that there are around 150 Indian companies offering SaaS solutions. 40% of these companies have been incorporated after 2010. Customer Relationship Management (CRM), Content Collaboration and Communication (CCC) and Enterprise Resource Planning are the hottest segments accounting for more than half the market in FY16.

Screen Shot 2016-06-17 at 8.54.06 am

 

Growth in the domestic market is also expected to be a major boost factor for the Indian companies. A deeper dive into the key underlying sectors which are adopting SaaS brings even more attractive prospects to the fore. Healthcare, E-commerce, BFSI and education sectors have been the most targeted segments by emerging SaaS companies. Each of these sectors is expected to expand at a healthy pace in the near future riding on the overall economy’s consumption led growth. At 7.6%, India’s GDP growth rate for FY16 has been the highest in the last 5 years. Small and Medium sized businesses emerging in these sectors would be much more nimble and receptive of SaaS solutions to avoid upfront large capex on technology.

The investor community, financial and strategic, has also embraced the SaaS opportunity with both hands. A total of USD 650 million was invested in SaaS companies in India till 2014. The funding in 2014 is estimated to be between USD 170 million to USD 200 million. However, the funding skyrocketed in 2015 with USD 450 million in the first half of the year itself. Some of the most active investors who are backing SaaS companies India are as below.

  • Accel Partners (Freshdesk, Hotelogix, Mobstac, Mindtickle, Chargebee, Zettata,)
  • Blume Ventures (Zipdial, Hotelogix, Mettl, FrameBench, WebEngage, Mobstac)
  • Nexus Venture Partners (Druva, Indix, Unmetric, TargetingMantra, Genwi, Helpshift)
  • Norwest Venture Partners (BlueJeans, CRMnext, Act-On, Capillary Technolgies, Attune)
  • Sequoia Capital (Druva, Capillary Technologies, Knowlarity, Practo)

The investors will have their hands full the short to medium term as most of the companies move traverse from Series A to B to C and so on. With companies maturing and cash balances building up, the sector is also expected start throwing up M&A opportunities much faster than any other sector.

The SaaS story hasn’t quite meant curtains for the traditional software licensing business model yet. Currently, SaaS commands only about 9% of the over Indian software market which is estimated to be USD 3.1 billion. However, Indian SaaS companies have already been able to create a market perception of building great products at lower cost. Currently, a large number of Indian SaaS companies would lie in the revenue range of USD 1 to 2 million. However, there are enough cases of rapid scaling up companies (such as Freshdesk, Capillary Technologies and CRMNext) to help us believe that we will soon see companies with multiple billion dollars in revenue emerging from India.

 

Screen Shot 2016-06-17 at 8.57.35 amThis is a guest post by Arvind Yadav, Executive Team Member at Aurum Equity Partners LLP.

 

Posted on

Meeting Product Startups #Ahmedabad

Over the last few months, I have interacted with a couple dozen awesome product startups in India as a part of product roundtables organized by iSPIRT, a non-profit industry group for software product companies in India. The roundtables that were in Pune, Delhi and Ahmedabad included around 8–10 product founders getting direct feedback about their products from their peers and experienced product founders.

The goal of this roundtable is to help software product companies gain more traction without doing sales. Sales is a great tool, no doubt. But if the product is designed in a way that it can be used without anyone’s hand-holding, then it can be used by a large number of people very quickly. The feedback from these users creates a virtuous cycle of improvements and more users. This has been the central theme of these roundtables.

Most of the products we saw were well executed. A cottage industry of SAAS applications and marketplaces is blooming all over India. Many of them have the potential to become sustainable and profitable businesses. The obsession is ofcourse about building the next unicorn, the billion dollar startup, but we will keep that on hold for now. If we are able to create an ecosystem with hundreds of successful apps, the unicorns will automatically emerge.

As a bootstrapped and sustainable startup, with a product that is more than 8 years old, we are probably only a few steps ahead of these young startups. Sometimes, you can learn a lot more from people who are a few steps ahead of you than those who are way ahead, so I am happy to share my journey with them. In the process, I have learnt a lot from these startups too and having interacted with so many of them. There are some themes that I have seen again and again that seem interesting.

Making good looking CRUD apps is a commodity

The state of web tools in 2016 is such that building a basic app that has CRUD (create, read, update, delete) functionality is very easy. The frameworks and design resources available can make your apps look professional and neat. A couple of devs can churn out such apps with reasonable polish, within a few weeks. Using contractors and themes, you can churn out good looking websites pretty fast too.

What startups need to think about is distribution. How will people know about the app? Why will they sign-up? Why will they tell their friends about it?

Sales is still the default option

Most startups still rely on high touch sales to get users. The good thing about doing sales is that you get first-hand feedback from your users. If you are a good sales person, and if you are persistent, you can convince the user to sign-up for your application too.

The bad thing about this is that you have no idea what a user who has no context about your product thinks about it. You have no idea of easy or hard it is to start using your app instantly. You cannot reach out to users who are not in your network or timezone. And doing sales is expensive and not scalable.

To build applications that get customers without sales, products need:

  1. Great copy on the website that makes it extremely easy for someone to understand what the product is about.
  2. Automated, instant, no-hassle sign-up.
  3. On-boarding workflows.
  4. Online help with videos and documentation.
  5. Excellent product usability and quality.

Often, these projects are as daunting as building the original app, if not more. Often this is what takes time and is largely under-estimated.

Standing out, communicating clearly

Very few of the products we saw were memorable in terms of their marketing and communication. Since we live in the internet era where we are exposed to the best quality of content, it becomes even more important to be memorable and interesting. As the branding and design great Stefan Sagemeister puts it, “Everyone who is honest is interesting”, companies need to be a lot more honest about who they are and why they do what they do.

The best example I can think of is Basecamp. They have set the standard of how companies should communicate about themselves. Companies can use a lot more authenticity and their personal stories a lot more. Using stock images with caucasian models just does not cut it.

Closing

It has been fantastic communicating with these startups and the credit of making this happen goes to Avinash Raghava and iSpirt. Doing grassroots work is always hard and unsexy and not very visible, but is very necessary if you want to create a lasting change. It has been awesome to interact with Niraj and Pravin, two awesome product thinkers with whom I have conducted these sessions.

I wish I had access to such mentoring when I was starting off few years ago, and I am excited about the future sofware products that are coming out of India.

Posted on

Enablers for Defence Start-ups in India

Once upon a time, there was an Asian Dragon and an Asian Elephant, both wanting to be self-sufficient in defence technology. But they chose different paths. In Jan 2004 one went out to acquire four retired aircraft carriers for study, along with purchasing foreign aircraft carrier designs; which resulted in this Asian Dragon commissioning their first Aircraft Carrier in 2012. The Elephant, however, did not invest in any old aircraft carriers or their aircraft designs, but went on to buy out an old Russian Carrier which had to be upgraded to being sea worthy; with the refit alone costing it nearly 2 ½ times the price that was originally agreed. This Asian Elephant – India; still does not have its completely indigenously built ship, whereas the Dragon – China, is building its 2nd.

Our take – India needs to completely focus on Indigenization. India can achieve self-reliance by having control on design IPR, know-how and innovation. Establishing ‘Country Champions’ in each of the critical areas of technology for products today upgrades and future-proofs it. Since the rate of change in this area is comparatively higher, agility is critical. And, this is where engagement with the startup community will help India develop world-class products quickly.

There are four pillars around which this strategy needs to be developed-

  1. Indian Entrepreneurs must focus on Innovation & Design; and eventually prepare the business to scale globally.
  2. The Academia must encourage fundamental research in Warship Building Design and Innovation; and help build and drive models as per world class standards.
  3. Encourage Foreign Investments in Semi-Conductor Fab’s; Component Manufacturing Plants in India; ToT of Mature technologies.
  4. And most Importantly the Govt. needs to address Disabilities faced by the domestic industry and support Polices for R&D and Market Access.

The government needs to fund long-term investment in critical technology development; make existing policies more effective for R&D; reduce the Cost of Money for Industry on Interest Cost; and be open to fund risky R&D in the private and government sector. The Govt. Needs to encourage all R & D/ Technology Development Funds of organizations like DRDO, to be used via Challenge Grants, enabling the startups to be a part of the process to solve various challenges.

Market access is a big pain point for the Startups while dealing with the Govt. The Govt. needs to encourage a level playing field by removing restrictive eligibility conditions like prior experience and turnover to allow the budding domestic Industry to compete. Onerous NCNC conditions should be removed,; trials should be paid for or done post selection; and award of contract should come with strict penalties.

And finally, the government must increase the effectiveness of the “Offset Policy” by encouraging foreign OEM’s to support vendor development for discharging offsets and to appoint a Joint Secretary to address the R&D and market access issues and as well work with the industry to shape technology strategy and its implementation and help them look at the bigger picture.

With over 19,400 Tech startups serving various sectors of which 5000 have been started in 2015 alone, Startups in India are all set to reach over 1,00,000 startups, employing over 3.5 Million and creating over $500 billion in Market Value in this decade. Startups like Tonbo Imaging, Aurora Integrated Systems, Astra Microwave and many others are already helping the Government in solving the various technology problems.

With over $1.78 Trillion being spent in 2014 in Defence, America contributed $610 Billion by far ahead of rest of the world with 35% of the overall spends. The interesting factor is that Countries in Africa, Asia, Middle East and South America contributed to over 43% of Defence Spending at $765 Billion. This figure is going to keep increasing by 6-7% on an annual basis and see the Defence Spending from these countries touching over $1.10 Trillion by 2020. Of the 25 largest defence spenders in the world, 13 were from Asia and Middle East. This is where the opportunity is for India to supply to Africa, Middle East, South America and other friendly Asian Countries.

With the growing soft power of India, this opportunity is for us to leverage. Startups can play a pivotal role for India to leapfrog ahead of others in the defence industry.

Authored by Mohandas Pai & Co-Authored by Nakul Saxena

Posted on

‘SaaS’ – indirect tax issues in India

It seems there is still time before the Software as a service (SaaS) blooms well in the Indian domestic market. The biggest friction points are relatively low acceptability of online model, lack of quality internet penetration in country side and the unsupportive policy framework e.g. recurring billing, expensive payment gateway solutions and confusing indirect taxation in India. Owing to these bottlenecks, many SaaS companies relocated outside India or open a branch or foreign subsidiary.

iSPIRT has been pursuing a stay-in-India check list with Govt. of India, with following three top taxation issues embedded in it:

  1. Removing confusion between ‘goods’ and ‘service’ tax on Software
  2. Not treating software sales as royalty income and do away with TDS on sale of software
  3. Start taxing online B2C sales by foreign companies

All three are relevant to the Software product Industry. However, the problem of ‘goods’ verses ‘service’ tax is intriguing to be solved and the subject of this article.

From tax perspective, many get carried away with the etymology of ‘Service’ in SaaS and believe service tax is the obvious classification. However, the classification under service alone, can’t be the most advantageous position for SaaS industry in a complex tax regime like India which is riddled with confusions.

This article attempts to explain this confusions of goods verses service tax effecting software product industry where SaaS is a special case in consideration.

Explaining the confusion between Goods V/s Service tax

The Indian tax system today classifies Software in following manner:

1. Treated as goods – has a tariff code associated (ITC HS Code)

  • Pre-packaged on media or paper license or PUK
  • Pre-packaged embedded with hardware

2. Treated a Service

  • Bespoke/Customized software development
  • Rest everything else that is not covered in a) above (SaaS falls here)

Those covered under a) above have a tariff code (ITC/HS Code) associated with them and hence fall under ‘goods’. The pre-packaged category (i.e. the Software products) have following tariff code assigned currently.

HS Code Item Description
4907 00 30 Documents of title conveying the right to use Information Technology software
4911 99 10 Hard copy (printed) of computer software (PUK Card)
8523 80 20 Information technology software on Media

Same pre-packaged software downloaded ‘online’ is covered under service tax and is not treated as ‘goods’. Further, the tax system does not understand other models of SaaS, PaaS etc. All other categories of Software i.e. other than mentioned in a) above are covered under service tax by default under a logic of exclusion (not having covered under the tariff code list).

There is no guarantee that if the Service tax is applied there will not be a goods tax applied. VAT is applied in many cases based on interpretation in a way leading to double taxation. Even large players like Microsoft are not able to circumvent the double taxation. Their SaaS based offering (office365 bundled with exchange and storage on cloud[1]) are taxed differently at different point of times. Sometimes just the service tax and at other times service tax + VAT. You can hear a large number of use cases like this.

According to tax authorities in central government, the problem is solved simply by making goods and service tax rate one. They have solved the riddle by bringing in a notification for paying only one of the two at a given time excise duty/CVD or Service tax. But they have no remedy on states charging VAT. Whenever it is considered that the transaction implies ‘Transfer of right to use goods’ for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration, it is deemed to be a sale under Article 366(29A) of the Constitution of India. As a result Software even when defined as a services gets caught in 29A of (366) and VAT is applied based on how local authorities interpret a transaction.

The root cause of this confusion is that the tax regime has not given place to ‘intangibles’ at par with tangibles. As far as the tangibles trade is concerned, intangibles are treated as ‘goods’ as defined in 366(12) of the Constitution and their sale is covered by sale of goods act 1930. All that is defined as goods cannot be service by definition.

Does GST solve the puzzle?

Some people argue that these ‘good’ v/s ‘services’ tax problems will all vanish when GST is rolled out, based on the argument and assumption that the rate of tax in GST will be one.

GST is a ‘supply’ and ‘destination’ based tax system replacing the concept of manufacturing with concept supply of goods and supply of services. GST will also amalgamate most indirect taxes in existence at center and state. Both Center and state will have power to tax under GST for both goods and services. At present states do not have power to tax services.

One tax rate may be a necessary condition for attaining the neutrality and level playing field but not the sufficient condition.

Following are some reasons why even one rate GST is insufficient to solve the problem:

  1. GST bill does not take cognizance of the root cause of absent definition of a ‘digital good’ i.e. including ‘intangibles’ at par with tangibles
  2. The value chain of use and consumption of ‘goods’ and ‘services’ are quite different and hence will pose challenge in practice
  3. The tax structuring is not done exclusively for the either software or the digital business. Also, Tax departments are prone to provide differential rates for new industry structures and business models for social needs under pressure of lobbying and differential tax rate may emerge for some segments of the Software Industry segments. The needs to tax new sectors of business and new models of business all arise in bits and pieces and then rules are overplayed above the basic tax structure, thus causing the confusion.
  4. GST legislation is not clear on tax credit system in its completeness e.g. the inclusion of zero-rated supplies
  5. The Clause (29A) of Article 366 has not been deleted in the proposed constitutional amendment and would need to be deleted as this would be redundant under the new concept where sales and deemed sales will be replaced by concept of supply or it may give rise to misuse under some pretext.
  6. Any new statute has to be tested on ground it takes few years to evolve and align with ground reality. GST will be no exceptions.

GST bill has yet to be passed. After the GST bills is passed the rules will be framed under CBEC and it is expected that CBEC to be in its comfort zone will like to use existing frameworks and for Software product industry adoption of existing framework will not be helpful and it is imperative on us to suggest to government remedy for these long existing problems.

Proposed Solution – the need to define “Digital Goods” and “Digital Service”

To remove the root cause of the problem, a clear distinction between a “product” and “service” or “digital goods” and “digital service” is needed.

In the previous blog ‘SaaS’ – the product advantage and need we have argued that the product side in SaaS cannot be ignored. Even the service component in SaaS is about using this digital (intangible) product. Let us understand the product/goods properties that are commercially viable and legally tenable.

iSPIRT has been pursuing application of a frame work “COG-TRIP Test” that can be used to define Software Products as distinct from Software services. A SaaS product can be mapped to the complete COG-TRIP test. Given below is the framework of COG-TRIP.
1. Countability – no of licenses/users/subscribers
2. Ownership and Intellectual Property Rights
3. Qualification as an Intangible Good
4. Tradability: The Software Products (Goods) can be sold through different delivery modes.
5. Right of service/Right of Use
6. Identifiability
7. Production/Development Cost: All software production costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value

In the legal framework the above definition of “Product” has to be mapped to “Goods” as defined in 366(12) of the Constitution and hence there is need for the definition of “Digital Goods” at par with constitutional provision of “Goods” in article 366(12) which further is related to the Sale of Goods Act 1930. This will also cover the article 366(29A) aspects.

Gradually the world is also moving toward the above proposed scheme of overlaying the existing structure with a clear definition of ‘digital goods’ and ‘digital services’. US has a “digital goods and services fairness act” pending to be passed by congress. Australia has come up with a new digital GST.

The clear definition of ‘digital goods’ and ‘digital services’ definition not only provide the ease of doing business but also the level playing field against the foreign companies under new emerging business models every day.

Concluding notes – Looking for a long term solution

In a previous blog on ‘SaaS’ – the product advantage and need we have made a case for SaaS industry to be a formidable part of the Indian Software product industry (iSPI). For SaaS Industry, the advantage is in favour of getting defined under product (digital goods) category as an industry. This also infers that SaaS itself is a “Product” that provides a services to businesses or consumers who may actually fall in any industry verticals.

The tax is applicable on a transaction and does not get defined based on sector or industry. Once SaaS is recognized as Product (intangible goods) the next issue to be solved is asking for one single clear tax on a transaction be it “goods” or “services” based on the transaction.

Hence three basic requirements for SaaS segment to get a boost are:

  1. SaaS is identified as a product or digital good
  2. There is clear definition of digital goods v/s digital services in tax regime
  3. There is one single and clear tax on one transaction

Tax and trade are much related in promotion of an industry and we hope these concerns will be addressed by Indian government in near future. SaaS can become a segment that can bring India pride and has possibility of emergence of next google from India.

Footnotes

[1] Consider a real life used case. I am running an office365 email service, procured through an Indian partner of Microsoft and I pay service tax on the subscription. I went ahead and placed order for a new office365 (same service) for a different domain directly from Microsoft online, the invoice charges me 14.5% service tax as well as 5% VAT. I tried to get a quote from other partner of Microsoft and again I get a quotation for 14.5% service tax and 5% VAT. In the first case I am buying from a partner of Microsoft who is a hosting provider. In second case the partner is a usual Microsoft partner selling their products or services.

Now consider buying office365 (office 2016 1 year subscription) for desk top licenses and there is CVD + VAT, even when it is a mix of offering both Product and Service for online storage and fully installed office pack.

The above used case mentioned above is of the office365 business essential plan has all the components built in the exchange online, access to MS Office products online only, online storage etc. It actually carries the many examples of the MS Office 2016 offered as SaaS model, Exchange offered as an email service and Storage offered as a service.

Disclaimer: The above example is based on real life personal experience of the writer and has nothing to do with iSPIRT.

Posted on

6 traits that define successful entrepreneurs

The contribution of entrepreneurs to boosting the global economy is undeniable. Right from the Graham Bell to modern day Steve Jobs, their journey of innovation has greatly benefitted their countries and the world in general.

For sure, entrepreneurs are cut from a different cloth, though one cannot really pin down a particular type that defines them. They are driven, creative individuals with a great capacity to overcome hurdles and adverse conditions in order to realise their ‘big dream’. It’s commendable how they manage to fulfil a gap in the market or create a new demand altogether with their disruptive ideas.

Here are some of the most consistent six qualities that define a successful entrepreneur and make them tick in a highly competitive environment:

  1. Risk Taking

They have to have nerves of steel to branch out on their own, do something new, with a dream in their head and little in their pocket. “To win big, you sometimes have to take big risks” in the words of Bill Gates, aptly defines their attitude. It also indicates an acceptance of failure as apart of that risk. Successful entrepreneurs usually chalk out all the aspects of failure and keep resources, plans and bandwidth for dealing with them as a standby before taking the plunge. It is the challenge of making a winner out of nothing which gives them the adrenaline push to make them take the plunge.

  1. Ability to influence others

Entrepreneurs are no less than a firebrand idealist, politician, military strategist and actor rolled into one. They have to be able to sell their dream to their employees, customers, investors, shareholders and other stakeholders. Entrepreneurs possess a very high social intelligence and an ability to build relationships that help in their company’s growth. As a result they are able to get the help of mentors for valuable advice, garner support from fellow entrepreneurs for networking and build a loyal and capable team for the firm as well a loyal customer base. It is this emotional instinct and empathy with others which helps them strike the right cord with others and get things moving in the right direction.

  1. Foresight

Foresight is perhaps what sets the best entrepreneurs apart from the rest. After all, entrepreneurship is all about identifying the right opportunities and seizing them at the right time in order to stay ahead of competitors and conquer a larger share of the pie. The key is to be able to spot the opportunities long before others do. For instance, Steve Jobs was always known to be steps ahead of competitors when it came to technology, and hence was able to launch one iconic product after another while he was at the helm at Apple.

  1. An eye on the ‘Big Picture’

Entrepreneurs are visionaries and always have an eye on the big picture when taking any decision. They understand the implication that the smallest of decisions can have on the organization, and hence, know exactly whether or not it is in its the best interest to implement it. The entrepreneur’s true value is in creating the path to the vision and guiding the company towards it, making sure they never lose focus. In fact, it is very easy to stray as the daily struggles and challenges tend become the biggest distractions. It is during such times that they not to hold fort and lead the way for others to follow, inching closer to the goal with every step. It is best to leave the details and day to day workings to the staff and managers.

  1. Resilience

There are very few guarantees on the path of a start up and an entrepreneur is well aware of that. A few rough knocks and road blocks are treated like learning grounds for the future. Instead of agonising over the wrongs, they analyse what went wrong, and take corrective and preventive steps to correct themselves. Above all, they don’t shame failure, but celebrate it, because with every failure you learn something new that you can use to propel yourself and the startup into ‘something bigger’. Mr. Sunil Mittal, is a great example of this quality. Even after two failed entrepreneurship attempts at a cycle parts business and a capsule making business, he didn’t give up. He started again with a new enterprise of manufacturing push button telephones, and ever since then, there’s been no looking back!

  1. Attitude

More than anything, it is the attitude that sets an entrepreneur apart from others. Real entrepreneurs are never afraid of failure. They are driven by the desire to accomplish their mission, no matter what and have a ‘never say die’ spirit that keeps that going even under the toughest of circumstances. No amount of pressure can make them crumble. Rather, they see every problem as an opportunity to come up with new and unique solutions that’ll work.

Conclusion

It takes a lot more than a great idea to become a successful entrepreneur. Aspiring entrepreneurs can take a cue from these points and imbibe some of the aforementioned qualities, if they plan to prove their mettle and are here to stay and make a difference.

 

VU-Picture

 

Author

Vikram Upadhyaya

Chief Mentor & Accelerator Evangelist at GHV Accelerator

Posted on

‘SaaS’ – the product advantage and need

India has all the potential to lead the world in the SaaS segment, yet the largest number of SaaS companies relocate out of India, for want of ease-of-doing-business. SaaS is one of the major blocks in the emerging Software product Industry of India and it needs urgent attention in this digital economy age.

Whether SaaS is a product or service is often debated.

From the perspective of integration of SaaS into the overall policy frame work of the country, it is crucial for us to understand the dynamics of the SaaS business.

This is the first in a series of  blogs to understand the dynamics of  SaaS as a sub-sector within the Software Product Industry. The idea of this blog is not to prove that SaaS is not a service, but to emphasize that it closely relates to the Software Product Industry, and is distinct from the custom built, project/program run or SLA based IT/ITES services Industry. And further, there is a need to include this as a part of the Indian Software Product Industry (iSPI) in order to be in an advantageous position to both  – promote the SaaS business and also to develop an eco-system that is synergistic to all segments of the Software Product Industry.

SaaS has both a product and a service component. The product precedes the service. The service is not just the access but also the elements of all that goes into providing service to a consumer. Whereas customer satisfaction is focal to the service component, the attractively featured product, stability, cutting edge technology, speed and security are focal to the product side. The product needs a continuous investment and development. Product is the flesh and blood of the SaaS business body, and the body needs the air of service, to breath and run. The interplay between the product and the service component of a SaaS offering is important for success.

SaaS – Product advantage side

SaaS as a product or a service is a border line debate. Here are some important pointers to why SaaS has more weight to be classified as a product than a service:

  1. Software-as-a-Service is an online access or delivery model, thus offering a different business model. In most situations, the same Software (with same features) product can also be sold in a Pre-packaged form, delivered and used in an on-premises model.

A software in any form (on media, downloaded online, on premises or accessed online over Intranet or Internet) provides a service to a user but the software itself is a “product” or an “intangible good”. There is no doubt that SaaS is also a pre-packaged software. The distinction is in the delivery model and the business model.

Hence, all three forms i.e. the Pre-packaged software sold on a media, downloaded online and SaaS model possess the properties of ‘digital/intangible goods’. The other models of channel sales and distribution e.g. EULA, paper license and self-generated access PINs, all can apply to any of these three forms.

  1. SaaS is subject to the same IP law and IP right issues as the non-SaaS product is.
  2. SaaS is mostly sold in an MRP format, the price-quantity relation is very clearly defined. MRP is a concept clearly applicable to supply of goods, produced.
  3. The condition ‘license for use’ can be a condition for a service but for a product the license is for “right to use” and as soon as the license is sold to the customer, for a consideration the “right to use” is transferred for the specified period of time. Thus, implying a condition of transfer of “right to use”.
  4. Trade is the most important aspect: Many people assume SaaS means a direct B2C relationship between the SaaS Product Company and the end users. No SaaS company can become global  unless it focuses on the ‘trade’ aspect of the business.

Even direct B2C has to incorporate trade as an important attribute. Microsoft when it sells office365 hosted product is a SaaS company that is trading a bundle of products and an integrated services through its channel partners. Scale can be attained only when a SaaS producer take with him a strong ecosystem of trading partners.

When trade has to be activated as an important attribute of a successful SaaS business, the transfer of ‘right to use’ or trade of ‘right to use’ becomes inevitable. Being a product company carries a built in message to channel partners for trade.

What is traded is the features of product, the ‘goods’ that you sell and the ‘service’ component gets activated only when the end-user interfaces. B2C can either convert in to a B2B2C or B2nb>c.

  1. The Software Products of modern age may be a combination  of complex scientific or commercial applications with a mix of data, voice, video, images, texts, document files.

A combination of one can produce another. SaaS therefore, cannot be limited to the strict periphery of a ‘computer program’ or ‘information technology software’ but graduate to be a ‘digital good’ that forms the basis of a ‘digital economy’.

  1. Considerable capital is invested in R&D, product development and product improvisations on continual basis in any SaaS based product. The differentiation is achieved in Product side by bundling the differential features. The Differentiation in service side is also incidental to the robustness, user friendliness, ease of use, security and most importantly the together the quality of product itself.

Hence, even when the service side is so important to the SaaS business, the Q-o-S itself depends heavily on the quality of the SaaS Product.

The Software Product and SaaS Industry in India

The global Software Product Industry is estimated to reach $1.2 trillion by 2025. The Indian Software product industry today is about 5% of the total exports. The total revenue of software product industry in India is $6.1 billion today. Indian Software Product Industry by conservative 10% estimate will be $100+ billion by 2025.

According to the Google-Accel Report  the SaaS business in India is about $600+ million and will be $10 billion by 2025, which makes it 1% of the entire Software product estimates.

IDC has a higher forecast which says, by 2018, 27.8% of the worldwide enterprise applications market will be SaaS-based, generating $50.8 billion where SaaS revenue is forecast to grow at 17.6% CAGR. 27.8% translates to approximately one third of worldwide enterprise applications market.

If a combination of all these numbers are to be believed, the global SaaS market in 2025 at a CAGR of 17.5% will be $157 Billion. If the share of SaaS (27.8% of global enterprise app market) comes true and is retained the SaaS business in 2025 will be much higher than $157 Billion.

The domestic market in India is not strong enough. Most SaaS players are presently targeting the matured global markets with matured online acceptance and internet penetration. The online acceptance in India is also on rise and the rising e-commerce industry speaks volumes about it.

The Domestic market is going to get further strengthened due to various factors in coming times. “Digital India” will increase internet penetration as well as improved bandwidth accessible to consumers. A drive for cashless economy will push large number of SMEs. “India Stack” will enable large number of SaaS products. Government buying will increase in SaaS space with acceptability of cloud and opex business models.

In view of the above, India can certainly aspire to be at a much more than $10 billion by 2025. India will need to harness its prowess to aim at 15% global SaaS market and hence aspire to cross the $20 billion mark by 2025, which is double of the Google-Accel report which seems to focus just the SMB market.

Pursuing the Policy for Software Products

The above mentioned targets require a serious look at the country level “strategy” and developing a complete eco-system that can help the SaaS industry boom in India.

This requires consolidating Software product as an Industry with SaaS as an important vertical block and accordingly a need for following:

  1. Focused policy by Govt. of India
  2. Aligned trade and tax regimes
  3. Participative Industry action by various agencies on ground

iSPIRT has been following action at various levels on all of the above.

The National policy frameworks provide recognition to an Industry sector or sub-sector as well as provide a strategic frame work for growth of this Industry. There are two major Industrial policy frameworks.

  1. The IT Policy is primarily catering to the IT Services industry and has mixed agenda.
  2. National Policy for Electronic (hardware). The focus of this policy is to promote electronic products.

There is no national level policy focused on Software products.

To further this objective, iSPIRT is pursuing a National Policy for Software Products (NPSP). SaaS naturally forms a part of this proposed NPSP within the realms of Software products industry. Included part of these plans is the trade and tax specific issues with Govt. of India on reforming and making these regimes futuristic to compete in the world trade and ease of doing business in India.

One of the results of this active follow up on Govt. policy has been the Startup policy. SaaS has one of the biggest tractions in the Software Product startup space. SaaS startup is closest to the Software product startup in terms of issues and challenges faced.

Conclusion note

Both the product and the service side of SaaS cannot be ignored. Even the service component in SaaS is about using this digital (intangible) product. Both  – the product is intangible and also the service it provides is intangible  – just as any other enterprise on premises software product. Yet, product is an overwhelming part, right from stage when SaaS is conceived.

The issues of product development, funding, marketing, trade and taxation are all common to the Software Product Industry.

In view of the above, it is advantageous for the SaaS Industry to position itself as a product-based service providing industry.  This will help build an integrative Software Product industry of India, which can develop global products in all segments enterprise, on premises, mobile apps, cloud and SaaS based, even as we keep progressing towards building SaaS as new generation Industry.

SaaS will be the segment to reckon with as India emerges into a Software Product Nation in next decade.

References

[1] Google Accel Report – SaaS India, Global SMB Market, $50B in 2025 Public Version 1.1 – 7 March 2016. http://www.slideshare.net/AccelIndiaVC/google-accel-report-saasinindia-public-version-11-7-march-2016.

2 IDC report reference. http://www.forbes.com/sites/louiscolumbus/2014/12/20/idc-predicts-saas-enterprise-applications-will-be-a-50-8b-market-by-2018/#1de5d71295ae

3 Startup India http://startupindia.gov.in/

Posted on

An Indian Fintech Entrepreneur’s Views on UPI

Ever since UPI (Unified Payments Interface) alpha launched on 11th April 2016, I see much confusion amongst various stakeholders. For me, the most relevant question is will UPI kill payment gateway aggregators and PSPs (payment service providers) ?

My answer is No. If you’re interested to know more, please read on…

To understand in detail, let’s understand below 5 pointers:(1) What is UPI (Unified Payments Interface) & what is it’s objective ? And who is an Aggregator /PSP & what is their objective?

For the uninitiated, UPI is a layer on top of the IMPS etc (see image above) which will work on a network of banks, facilitating account-to-account transfers in a simple and secure manner .

In other words, UPI (standalone) will just be another way of transferring funds from ones’ bank account to another without going through the hassles of adding someone as a beneficiary / IFSC / account no (NEFT) or entering MMID / mobile no (IMPS) . The objective is to simplify the payment process vis-a-vis NEFT / IMPS which didn’t reach critical mass required to make India cashless — both from person-to-person (P2P) and merchant payments standpoint.

Whereas, a n aggregator /PSP is one which continuously works towards empowering its customers aka Merchants ( in our case, mostly long-tail online merchants and individuals desirous of collecting online payments) with as many payment options possible & more. For example, debit cards, credit cards, net-banking, cash-on-delivery, IMPS, cash deposits, prepaid wallets etc. The objective is to provide one stop payment collection solution that encompasses all possible payment instruments in one bucket. But that is not all. The PSPs also supports its clients by creating new products & features to enhance their business outcome too!

Now here is what a PSP brings to the table which UPI does not today :

  • Provide other payments instruments which comprises a significant majority portion (~ 60 -80 %) of the total online payments. May be, UPI might become the new net-banking, by replacing it as a payment mode.
  • Detailed information on received payment (who paid & for what), apart from providing transaction management, reconciliation, insights etc.
  • Customisation at every level (payment options, payment page, etc) which is beyond a simple push-n-pull movement of money via UPI.
  • Trust custodian — one who provides protection against any dispute between merchant & consumer (this is completely missing in UPI today).

(2) What UPI adds to existing systems & processes?

The apps that will be built on top of UPI architecture might not only be easy to use — but the mobile first, secure & interoperable ( any bank to any bank) nature of UPI makes it one of a kind. With the learnings of digital wallets and IMPS adoption in the past , NPCI now has all the ingredients to revolutionise the the way Indians pay one another.

(3) Can UPI act as a catalyst and benefit Indian Fintech ecosystem?

We at Instamojo will add “UPI as a payment option” in the checkout page (representation image below) along with other available payment instruments and ride the wave of consumer adoption.

(4) Can UPI adversely affect anyone in the Fintech space?

Launch of UPI at this time is actually a blessing in disguise for payment agnostic players like Instamojo. Because the likely causalities of UPI will be those who have invested time & money in building non-interoperable and siloed products. Namely,

  • Digital wallets — UPI doesn’t allow interoperability of wallets on its platform today. Hence, P2P payments might shift entirely via UPI.
  • Net-banking network providers — Many players in the ecosystem had long enjoyed the relationship they had with each banking partner to put the net-banking infrastructure in place. If UPI picks up, it might become a one stop solution to get connected to all the network of banks due to inter-operability. Thus making all their hard work redundant. Now simply getting connected with UPI architecture via one banking partner will give exposure to all others banks required to process merchant payments.
  • Card network providers — If UPI is going to hurt anyone in a meaningful way, it will be the card networks like VISA/MC which will loose out of the Debit Card interchange to some degree, provided RuPay card become predominant.

Moreover, this revolutionary approach might make more consumers “online payment ready” in a very short span of time. And I hope, what Telecom revolution did for communication, UPI does the same for the Fintech space in India.

(5) What happens if UPI takes off massively?

Most digital wallets will lose relevance in the P2P payments space and will ultimately phase out and die like good old pagers . However, there can be a counter argument that in a winner-take-all or winner-take-most market, the digital wallet provider with largest merchant acceptance network might win due to inter-operability as consumers would gravitate towards the player which provides max fungibility for one’s wallet balance.

So, merchant payment collections via net-banking and wallets will be replaced by UPI. VISA / MasterCard will loose it’s share of revenues from debit card processing since RuPay (India’s own VISA/Mastercard) will share the interchange nuggets which is part of UPI now.

However, aggregators and PSPs will still be central to a Merchant, since such players bring other modes of payment collections too e.g. credit card, unified reconciliations of orders with payments, integration & APIs, customization, industry specific pricing & features, data and analytics and possibly discovery — apart from UPI enabled payments too!

On top of above, an online Merchant who is shifting from NEFTs / Cheque / Cash to PSPs for their payments need, will still turn t o the PSP as the pain-points still remains the same , with or without UPI coming into play i.e.

  • Integration & APIs
  • Order and transaction management
  • Unified reconciliations — orders with payments
  • Refund management
  • Dispute resolution
  • Customization — at every level
  • Industry specific pricing & features
  • Data & analytics
  • Support management
  • Risk management

Even if UPI solves all the above issues for an Online Merchant, they will still solve a portion of their payment collection needs, as UPI does not support VISA / Mastercard led credit card processing which stands at 20–25 Mn active users in India today.

Conclusion

It is evident that UPI is a boon and might be the much needed catalyst to increase the digital shopper base of India and in the process, might take a stab at the real enemy — CASH or unaccounted money exchanging hands; thus hurting the progress of our economy!

Hence, UPI is working very closely with banks under the guidance of RBI. In turn, banks are partnering with various players to take this new payment instrument to merchants & consumers.

Footnote:

  • For an aggregator/PSP , it will all be the same — only the graph of the credit card processing will dip while a new segment will rise.
  • Lastly, if someone thinks that banks will themselves act as an aggregator and offer UPI directly to the Merchants. W ell , they tried that before by offering IMPS to merchants which did not work . For argument s sake if one says it failed because of the complex MMID etc and now with a simpler process it will work, it won’t work for entire suite of payment instruments that a merchant needs.
  • And finally, if one believes that banks would offer a bundled solution of Cards + UPI — well I would say its will be a good debate to be a part of but end of the day, even banks know what they are good at i.e. retail banking / CASA / lending & deposit arbitrage!

Credits:

Guest blog post by Sampad Swain, Instamojo. The original article can be accessed here

Posted on

Getting Marketing basics Right (for First Timers) by Pallav Nadhani, FusionCharts #SaaSx3

Marketing for beginners
The morning of the SaaSx3, saw a round table by Pallav Nadhani, CEO of Fusion Charts.
And I was one of the few lucky people who managed to find a seat at this already cramped round table.

PallavatSaaSx
Pallav, kick-started the session with a question:

Who are you & what will the world miss if your company dies in 10 years?

The question (although slightly morbid) did its trick.
It gave us an idea of what we had in store for the rest of the RT and beautifully set the context for what we could expect. And what we had to do if we had to market a product.

Interspersed with quirky humour, anecdotes, and important questions to ponder, the session was definitely interesting and novel.
Here are some key takeaways:

Aligning Product with Marketing

We usually talk about our product, our goal as a company. But Pallav stressed on the importance of flipping the question and address the problems of the customer.

It’s only when marketing defines product, will the product shape into an answer for the customer’s problems. And you’ll be building something that customers will get value out of.

He asked us to put a “why” to the problem that we were trying to solve for our customers.

An example he cited from some big companies that asked this question:

“Why shouldn’t you have access to your files, whenever/wherever you want?” was Dropbox’s question before they started building their product. Similarly, ask yourself that “why” to the problem you’re trying to solve.
Quoting Simon Sinek’s TED Talk on the Golden circle, Pallav went on to discuss the important questions of the purpose, the process and the result
– Who to reach
– When to reach
– How to reach

Who to reach?

Identify the three personas you have to sell to: Influencer, buyer and user
Depending on the nature of your product, decide who has to be engaged to ensure you’re able to sell to them.
Figure out “Why” should that person use your product? Everybody has a different reason, but what’s that persona’s reason?

If you’re asking somebody to switch from an existing product to a new one, how seamless is migrating? If it’s a new product, how will you sell him the need?

Tip: Ensure you’re asking the same “why” as your customers. Pallav cited an example here. Every time there’s a new download, they send an email to the customer asking the purpose behind the download. This way, they made sure that they were delivering on what customers expect from them.

When to reach?
Collect as much information on your customer (in a non-stalky way, of course!). The information should include the information that they consume on a daily basis, and how do they consume it. And how do you make sure you are in those media, so as to make an impression?

Pallav's RT at SaaSx
A classic example of this that he quoted was the billboards. He asked us to recollect some of the latest billboards, and then tried to delve into the reason behind it. We discovered that we see the billboards that we choose to see. If you’re hungry, you remember a restaurant’s board, or a car if you’re looking to buy one etc.

Tip: Make sure you actively hit customers that are seeking for your product. Identify where your customers would be, and then hang around to make an impression.

How to reach?
We discussed various ways of doing the actual marketing here.

One of the classic marketing strategies is The Sniper Approach vs Carpet Bombing approach to marketing.
Swearing by the sniper approach to marketing, Pallav said that, rather than trying a wide casting net approach with different experiments, try a laser-focused activity with precision, to ensure you nail the sell!

And the only way to do this would be to, Know your user, see if you understand a DILO (Day In the Life Of) your customer (creepy, but highly insightful) and see how you can fit into the picture.

Also, can you partner with someone to push your product? Or can you poach any partners of your competitors?
Tip: Unless you discover who you are, and why you exist, nothing can help you explain it to your customers.

Here’s a quick summary of all the major points:

  • Find that key problem that you’re trying to address and make it your goal.
  • Identify your ideal user & study the various personas.
  • Now ensure you “marry” the your goals to the user’s needs.
  • Work towards creating an experience, so your prospects take action.
  • Collect as much information as possible on your customer, so you know when and how to hit them with your product.

Happy Marketing!

Posted on

Every Product Needs A Good Teardown

(originally posted here)

Last Saturday in Chennai at the SaaSx3 I had the privilege of participating in my first “Product Teardown”

A Product Teardown, “or simply teardown, is the act of disassembling a product, such as a television set, to identify its component parts, chip & system functionality” – Wiki

In the context of the teardown of my company, Hummingbill, a Software as a Service (SaaS), it involved a deep dive into the company’s Idea, Discovery Process, Landing Page, Sign Up, and its “Wow” experience.

Prouct-Teardown-1024x576

(image courtesy of Suresh Sambandam of Kissflow)

But before getting into the details of the teardown I want to make mention of the audience in front of whom I presented, and the panelists who judged me. This teardown event was among several sessions during this year’s SaaSx – a conference cum meet up of India’s best-in-class SaaS founders, among whom in the audience were Girish Mathrubootham, founder of FreshDesk, Avlesh Singh, founder of WebEngage, and Pallav Nadhani, founder of FusionCharts. And as impressive as the audience was, so too were the group of panelists critiquing my company. They were, Shekhar Kirani, partner at Accel Partners India, Suresh Sambandam, founder of Kissflow, and Bharat Balasubramanian, director of Design at Freshdesk. The entire experience was an honor, to say the least.

So! how did it all go down?

The panelists had me up on stage with a projector showing our website, and we started with Shekhar and Suresh who was requested a description of the Idea of Hummingbill, which included a snapshot of the problem, solution, and our characteristic customer and user.

Our Idea:

(bear with my plug!) Hummingbill is a Gmail plugin that automates accounts receivable management for organizations that track hundreds of unpaid invoices from hundreds of customers. Our characteristic clients are SaaS and advertising companies. Currently, these companies use QuickBooks Online, Tally and Zoho to manage their invoices, but the problem is that these softwares make invoices inaccessible to those who need them most – sales reps and account managers who are among many things also responsible for payment collection. Today, the only window accounts and sales staff have into Accounts Receivable is a manually generated, manually distributed weekly aging report sent from the finance team.

Second, we discussed the Discovery process of Hummingbill:

or how businesses find us on the web. Because Hummingbill is more of a direct sales organization at-the-moment, we were let off-the-hook on this one, but for any disciplined SaaS company, they must be extremely conscientious of the “keywords” they use on their website to make their website more likely to be found by their target customer on Google. This is called Search Engine Optimization. By identifying those keywords – e.g. “Invoice Management” and “Accounts Receivable” – and carefully placing those keywords into their website, businesses can improve their performance ranking on Google which allows them to be more easily found by their target customers.For an example of a highly search-engine-optimized website, have a look at Hiver. They are one of my favorite examples of a company that carefully updates its website over and over again to improve its performance for specific keywords within its category.

Then, after discussing discovery, Bharat critiqued us on the Design of our website

A lot of learning happened here. Some of the key takeaways were:

  1. If you have big customers like we do, put them up at the top of your webpage. This helps build trust in your product.
  2. Use the most accurate language possible on your landing page for your target users. Don’t be generic. During the event, the title on our landing page was “Get Paid Faster” – Suresh pointed out that this title  would be an empty statement for our target users, CFOs and Heads of Finance. Instead we should use more accurate language like “Reduce Days Sales Outstanding”.
  3. Add a second Sign-up button at the bottom of your landing page. This makes it easier for people to sign-up for your product .. .which is just good for everyone.

After the Design step, Bharat walked us through the Sign-Up process

or onboarding experience of Hummingbill. This step is where new users enter in their contact information and preferences, and then are guided through the software product.  If you’re not familiar with SaaS, then you should know that this step is the first impression customers have of your product, so it can “make or break” a business. It’s the reason why, for example I didn’t use Ola cabs, a very popular taxi service in India, for a whole year – I found their sign-up process clunky and time consuming, so I immediately switched to their competitor taxi service. And similarly to how I fell-off of Ola, SaaS founders need to be conscientious of their target customers’ patience, less they lose them at the first step to using their product. Building a fluid and intuitive sign-up process takes significant discipline to decide which information to collect from users now vs. later, and which features of the product to show now vs. later.  For inspiration on great onboarding experience, check out UserOnboard.com to see examples of how some of the best tech companies in the world  sign-up their users.

And last but not least, the product teardown ended with the functional Wow of Hummingbill. The functional Wow is simply the moment when users experience the 1 or 2 features of your product that fulfill the value they were seeking and found on your website. This is where products can close the deal and why it’s important for companies to get to that functional Wow delivered as quickly as possible. For example, if a company has a CRM product, then the functional Wow would be something like guiding the new user to creating a “prospect” customer in their sales pipeline, enter in the prospect’s details, and then move the prospect to becoming a “lead” in the CRM. For Hummingbill, we like to Wow users during onboarding by getting them to: 

1. Generate an Invoice 

2. Track the invoice in Accounts Receivable

3. Receive an email aging report

This functional Wow helps confirm to the users why they signed-up for your product. Seeing is believing, so the best practice here is to show your users the functional Wow ASAP

All-in-all the Product Teardown was an excellent learning experience for my team and I

As a public forum, it forced me to look more carefully at Hummingbill through the eyes of my target customer. Because SaaS is very much a numbers game – about driving as much traffic to your website, then trying to convert as many visitors to becoming users of your product, then trying to convert those free users to becoming paid users – SaaS is all about constantly iterating your website and customer onboarding experience to improve those conversions. Do teardown your product yourself. Though it’s an exhausting process, do it with a potential-user who can be honest with you and give their feedback in real time as they visit your website, sign up, and try your product for the first time. Best of luck in this process and keep doing it because it’s the only way for early stage companies, apart from marketing, to ensure they will have a constant growth of new users.

– Adam

Posted on

Hey Indian SaaS Founders, Are you dreaming big enough and aiming high enough?

I took SaaSy bus to attend SaaSx3, a fun journey networking and ice break session among SaaS founder The sessions were on common challenges from funding to hiring right resources and also instant mini FinTech RoundTable (picture below).

SaasybusThe venue was at Chennai (Mahabalipuram) well described by above tweet and event started with afternoon session by Pallav Nadhani of FusionCharts on Referral Marketing. The discussion started emphasizing needs of marketing starts before existence of the product and continues with product and marketing should not be looked in silos away from the product. One question for SaaS founders is whether their startups are geared to leverage product features to perform self-marketing of the product The session brought some real examples of SaaS firms who have already done this successfully.

The impact of using “Powered by Logo” inside your product features on B2B2C websites that are focused on end user was highlighted and is more effective to target customers from new geographies where your product has not been adopted and are in early stages of entering new geography.

Nemesh of appointy stressed importance of backlinks (two lines of codes in the product), that became part of Google search when someone searched for a tool for appointments. Other suggestions include:

  • Sell lower price plan without option to “White label” product offering. After product is adopted, the lowest price plan can be offered as “Free forever plan” without white label option.
  • Find a WordPress plugin that is active and popular. Buy plugin and add one line in this plugin and publish the plugin.

#OneThing session happened where SaaS founders were asked to share a set of one things that creates significant transformation in their startups.

  • We did not predict, we performed action
  • Upgrade Field on Sales approach to Customer Success approach
  • “Support and train customers for first 45 days increased NPS score” – Think of it as customer Success Channel that is needed in scaling stage.
  • Keep high touch with customer and experiment how to maintain high touch with customers being online and not on-site. Leverage and experiment with cloud telephony, gamification and customer management.

Product Tear Down session where SaaS founders offered their product to be teared down by expert SaaS founder and audience. The experience SaaS founders published guideline template based on which they will provide feedback to brave startup like Zipboard and CanvasFlip and here are comments that apply to lot of startups found here too.

  • You first need to go deep focusing on the right customer segment before going broad.
  • While building a branded website, remember that website home page needs to convey emotional, functional and technical aspirations to connect with your audience. One good example is slack website, it is inspirational.
  • While displaying metrics of your product on the website, show metrics that creates positive impression in mind of prospects. Small number may not create right impression.
  • Remove small irritants. Devil is in details.
  • Does your product features pass Tooth Brush test? Ask, ‘Is this something people use once or twice a day and does it solve a problem?’
  • No right or wrong strategies, only shades of right while building startups.

Product-TearDownPeople who teared down choose right words to share comments to the founder who offered his product for tear down, also adding kind words “Do not become defensive. Their inputs are to improve not to criticize”. SaaS founder in the audience really liked the positive impact of product Tear Down session and followed with asks to #ispirit to have more startups in Product Tear Down sessions and suggestion for virtual Product Tear Down session.

There was another #OneThing session focused on what is one thing that in last 12 months worked well for SaaS startup with Aditya Sangi of Hotelogix , moderated by Prasanna

  • Alliance building approach steps – find complimentary product. Check whether your product adds to their value offering and whether other product have efficient reach to your customer target and whether joint offering creates value for your customer base.
  • Do not keep building a lot of non-core features in to your product and make the world as your competition and end up with no partners.

One attraction in SaaSx#n is story style presentation by Girish of #freshdesk, who genuinely shares learnings from his journey. This time the story had movie effect and learnings from the movie are

  • Everything need not be data driven. You can do things that people would notice and they will notice when things are on high quality bar.
  • Do what is right for customers first. Help sales team to develop focus on customer success by incentivizing to help customers first.
  • Started with sales team of young minds fresh from college and they started with focus on number of agents sold rather than revenue of agents sold. Once they were more customer focused and time arrived to scale, a change was implemented in discussion with sales team to change their focus to revenue earned per sales team member.
  • The importance of alignment between marketing and sales using instances from freshdesk journey.
  • Marketing teams must have targets for sign-ups. Pre-Sales team was useful to prepared customers on the product. He referred to article CREATING A SALES PROCESS FOR YOUR INBOUND LEADS: 150 IS A MAGIC NUMBER
  • Hired fresher’s following hack “Hire them for attitude and you can get them skills”. I liked the fact that the hack was implemented in sales and marketing function and not only in engineering.
  • Similar to other startups, freshdesk also got junks as prospects. They pruned not only junk and also channels where hunk data originated from. More junk arrival from channel lead to removing channel, leading to arrive at list of channels that worked for them.

Girish once again demonstrated that he was a hardcore Rajnikanth fan in real life too by creating a real movie style experiences bringing young talent who accompanied him at the start of #freshdesk journey in sales and marketing on to the stage. He created right impression that success is attributed to team’s effort rather than individual effort. Consider to be special in the days of “Winner takes it all”

Girish complete the movie with some thought provoking questions “Are SaaS founders aiming high?”, “Do you want to be happy with small year on year growth?”

Post by G. Srini, volunteer for iSPIRT

Posted on

Product Teardown at the “SaaS”y Day at Chennai: Chapter 2 on SaaSx3

The sea breeze was cool. And the SaaSy people went cool as well. Kiruba unleashed some tricks for networking that had the participants engaging in banter, fun and games on the lawn. It also wore off the participants from postprandial somnolence (carb coma) after lunch. The SaaSy bus by then had arrived from Bengaluru, and the participant number swelled to 150 or so.

Using your product as a marketing tool

Pallav Nadhani set the theme for #OneThing discussion involving of Siddharth of Practo, Nemesh of Appointy, and Ankit of AdPushup. He cited examples of MailChimp, which sends annual reports about the number of mails sent through its service, and Rancore, a research organisation that sent reports about Share Point, a Microsoft product for developers. He said that research reports set benchmarks for what works. He spoke of referral marketing and commission paid on referrals to existing customers as strategies to acquire customers without much of a marketing spend. Avlesh of WebEngage said that marketing does not exist in silos away the product. He spoke of incorporating the marketing element inside the product itself.

webengageOne strategy is using the “powered by *product logo*” inside the product to attract more prospects. This was especially used in a novel way. WebEngage chose a customer (of course, after a due diligence) to sell its low-priced product in an unpresent geography. Then the logo was added in the product to attract more customers in the region. The customer acquisition cost is reduced as a result. Nemesh of Appointy (which helps businesses to schedule appointments) has 118,000 customers, all of them acquired at zero cost of marketing. This was done through backlinks (two lines of codes in the product), which would indirectly show up in the Google search when someone searched for a tool for appointments. Ankit spoke of four strategies to customer acquisition without much marketing spend.

The VC speak

Mohan from Norwest said the SaaS multiples have compressed in the United States – it’s five times the revenue now rather than the 10x number that was the norm until sometime ago. He also said that SaaS companies have a history of not making a profit but was confident that it is possible to build a profitable SaaS company in India, which is capital-efficient.

Tarun of Matrix Partners clarified that now the focus has shifted to profitability of SaaS companies rather than growth. He said that growth expectations are tempered according to existing market conditions. Now, liquid capital is not available easily. He agreed that there was a time when growth was the focus when the capital was easily available. Now that capital has shrunk, it’s difficult to have a growth at the cost of profit strategy but the one focused on profits is the best.

Tearing down the product

Frictionless sign-up, a clutter-free website and a shortest path to functional wow! are some of the elements of the SaaS product that is self-serving and sold to remote customers. Three products were at the receiving end … er … learning end from Suresh Sambandam of KissFlow, Bharat, head of UX at Freshdesk, and Shekar Kirani of Accel. While Suresh focused on the sign-up aspects, Bharat gave feedback on design whereas Shekar pinpointed the market focus. Zipboard, Hummingbill and Canvas Flip were the three products that were reviewed on stage.

product etear down

This was easily the most popular segment of the day. There was laughter, there were learnings, there were moments of revelation, and on top of it, the three products wouldn’t have received such an honest feedback elsewhere. Shekar’s advice was worth a weight in gold especially for Zipboard and CanvasFlip. He was laser sharp in identifying the right customer segment and market and the entrepreneurs in the audience were overawed by his clarity.

The audience felt that Product Teardown deserves to be expanded in future editions of SaaSx. Peer feedback is valuable and helps to refine the product to make it efficient to acquire more customers.

The grand finale of the day was Girish making a fantastic presentation on his journey – from $1 million to $5 million. At each stage in the presentation, he called in the team members who worked on identifying a specific problem and explained what worked and what didn’t. What came through was the endeavour that propelled everyone at Freshdesk to work towards a common goal. What made these young guys work like men (and women) possessed is the specialty of the Freshdesk culture. Not much detail can be revealed, as we have to respect the fact that Freshdesk is a funded company. But what Girish said at cocktail was taut: “When I am on stage, if some guy thinks if he can do it, I can also do it, I am happy about it” It is suffice to say those who were at the hall were pumped with inspiration by Girish to think big and if you need that, you have to make it to SaaSx. See you there!

Posted on

CRM for startups: Opening the world of endless possibilities

Startups today have become a major driving force for the economies around the globe; they not only contribute to the GDP but also decrease the unemployment ratio of the country. Millennials everywhere are changing work dynamics and do not prefer to sit behind their desk, but to follow their dreams and take risks. Such shift has also being witnessed in India, a country with a majority young workforce that has seen successful start-ups such as Shopclues, Limeroad, OLA cabs, Zomato, and many more. With a lot of venture capitalists funding and backing startups, it is no surprise that a lot of people want to taste the entrepreneurship fruit.

Only last year over $ 3.84 billion was raised by startups in the third quarter. Such rising opportunities have also caught the eyes of many people, resulting in top minds leaving their corporate jobs and following their dreams. It wasn’t long before the Indian government saw this dynamic shift and became keen to bring these startups to unleash their full potential, increase employment opportunity and eventually enhance the economy of the country. It was truly remarkable seeing the government put their best foot forward with the launch of initiatives such as “Start-up India” and “Make in India” to encourage and promote start-ups in the country.

To add more to it, Hon’ble prime minister of India has worked hard to raise the foreign investment too, bringing in investors to venture into the countries brightest startups. If that is not enough, even top names such as Google have their reward set for the best start up plan from the country. And its outcome being a rapid surge in the number of start-ups increasing every year with the current statistics showing more than 4000 startups in the nation.

Startup India

With so much fuss over startup, an obvious question that pops up is what exactly makes a startup eligible to avail the benefits of the scheme? Which can be simply stated as one / few innovative minds putting up a unique business idea or development process in a form of a new business, aging below 5 years and a turnover not exceeding 25 crore rupees. The product should be innovative and commercial while adding value to the consumers. The said startup should be approved from the designated DIPP.

Benefits:

To sum up a startup under this ambitious scheme will enjoy;

  1. IT tax exemption for 3 years
  2. Easy availability of seed funding
  3. 80% return of patent fee
  4. Capital gain tax exemption and more

Since now there is a lot of focus on startups and even growing competition, the question arises: how can a startup keep itself ahead. The answer is simple: a business application platform to seamlessly integrate all processes and give greater control and visibility to the management.
CRM SoftwareCRM for Startups:

Now being compact in size, a startup can manage all the data and contacts on a spreadsheet easily in the start, however when the business grows, various process are incorporated as well as maintaining the clientele becomes a hectic chore and a proficient management of sales and customers becomes a priority. To add more burden to it, competitors keep multiplying every year, which makes retaining your customers as well as getting new ones even more tough. Thus, for efficacy and proficiency in business management, various start-ups opt in for smart business management suites like CRM.

But can CRM software solutions be helpful for startups?

Definitely yes, for a startup, building customers is among the top priorities and CRM software have their proficiency in managing and retaining customers with ease. However, its potential does not ends with it. A smart leader, who can mould out new ways of possibilities for the software, can take its usability to another level. Having said that, let us have a look at some of its cool features that have been proved helpful for the startups.

  1. Share information: When you have your teams working on different processes, sharing information amongst each other can be a tedious task and any missed data can cost you a valuable customer. Nevertheless, the CRM software can function as a platform wherein the team can share the information with ease and initiate further processes.
  1. Opportunity tracking: The saying goes as “Opportunity knocks only once” and CRM solution providers in India have made sure that you not only grab this opportunity but also nurture it until it starts giving you fruits of your hard work. Simply putting, CRM can help you find better leads and turn it into sales easily, which is something very crucial for any startup. Thus, with CRM, never miss any opportunity.
  1. Foresight: CRM for startups can generate precise sales reports on daily to yearly basis, this reports can give you a foresight of how much production is to be done and process marketing and sales strategies. It can also help you track team’s performance based on their areas of operation.
  1. Better and targeted marketing: CRM for startups can draw sales pipeline that can give information on how your marketing strategies is functioning, that can be filtered on location, products, etc. as well as analyse the requirements of the clients. Hence, it can aid you in evaluation of your marketing processes and target better prospects.
  1. Notification and reminders: CRM can automate all your notifications and reminders i.e.
  • Sending notification to your customers related to any updates, offers, packages, etc.
  • Sending reminders of upcoming deadline to submit data, pay bills, renewals, etc.
  • Email and SMS follow up to leads and prospects that can be designed with its inbuilt template designer.
  • It can also remind you for upcoming meeting, follow-ups, demo and implementation, etc.

The above-mentioned gestures can improve customer satisfaction with your start-up as well as bring in new customers. Hence, building up your start-up company in an efficient manner.

  1. Data storing: the modern day CRM software are provided with cloud server, which securely save all your data. For instance, for any mishap occurring in your company, the loss of data with others can be too much for a start-to bear. However, the data stored on the cloud are safe from any such mishaps; moreover, the encryption of your data can secure your data from online threats as well. In addition to it, these data can be made available on any device by multiple (and authorised) users irrespective of their location and time.
  1. Social Media: social media is a necessity for every company, no matter how big or small. The customers/ clients prefer following the company of their choice to get updates and stay connected to it. Moreover, social media can easily help you reach wide and better audience quickly in a cost effective manner, thus CRM software solutions like Social CRM now a days can be integrated to all your social accounts with ease, allowing you to track, monitor and stay connected to all your customers and prospects easily.
  1. Mobility: for a start-up, employing large number of employees can be taxing on their budget and you may be needed to multi task, which is not possible while sitting on a single workstation. The CRM software linked up with mobile apps and cloud servers can grant you the mobility to manage your sales and marketing process as well as manage customer complaints and feedbacks on the go.

To further continue with the list, the CRM software can increase sales, give better ROI, maintain transparency, help you set goals, and the list goes on with endless possibilities. A CRM software cannot only help you manage your start-up but also assist in every stage of its growth. Thus, a CRM software can not only help your startup, but also add wings to it to fly through the stars.

Guest Post by Kalpesh, Sage Software

Posted on

BPO Talent To Be Groomed For Inside Sales In SaaS India

With ongoing expeditious advancements in communication, social media, cloud, mobility and related technologies – sales is on a continuous path for digital transformation. This is going to place inside sales teams at a strategic position in sales and marketing process, in terms of significance. A shift is being observed from field sales model to inside sales model which is attracting field sales guys towards inside sales jobs. Therefore, the Inside Sales industry is moving towards a revolution worldwide.

Inside Sales Teams to Play a Greater Role in Sales

Inside sales is quite strategic to India’s GDP growth. Indian BPO industry alone contributes 1% of India’s GDP where professionals are majorly involved in B2C processes including inside sales. IT/ITES and software companies have been early adopters of Inside Sales process for B2B leads generation. With digital sales transformation happening for the digitally dependent buyers, the inside sales teams are going to play a greater role in sales process, as more tasks of the marketing and field sales teams have come under the scope of Inside Sales teams.

SaaS India – Early Adopters of Inside Sales Technology

SaaS, Technology and Professional Services companies in the western world are the first ones to acknowledge a digitally connected buyer by adopting Inside Sales Technology. The traditional businesses like manufacturing companies in US are exploring how Inside Sales tech may add value to their sales process.

However, in the Indian market, mainly SaaS industry is at the forefront on trying their hands on advanced Inside Sales Technology for accelerated sales. The others in the technology industry are going to follow this trend in near future in India. Traditional industries are going to take some time to change their sales processes as their buyers are slowly becoming internet savvy for business purchases.

Inside Sales to Play Significant Role in SaaS India

As per Google Accel SaaS Report 2016 – SaaS India is expected to grow to $50 billion in next 10 years while Indian SMB SaaS is expected to rise from current $600 million to $10 billion in the said period.

SaaS_projection.png

Source: Google Accel Report – SaaS India, Global SMB Market, $50B in 2025

SaaS industry has a strong need for inside sales professionals. As per the report, strong workforce in the BPO sector gives access to talent pool of around 6,20,000 Inside Sales professionals, out of which 1,20,000 are inside sales ready and 5,00,000 are skill ready.

Workforce-1.png

Source: Google Accel Report – SaaS India, Global SMB Market, $50B in 2025

I personally believe that 6,20,000 from the BPO sector, who are assessed as ready for SaaS as per report, need to be groomed for making them sales skill ready as only telecalling skills don’t make a professional acceptable for Sales Development Rep’s role in SaaS Sales.

Inside Sales Talent – A Key Challenge for SaaS India  

SDRs are expected to understand the Sales Processes. They should have the knack of using Inside Sales Tools like Social Media, Email, Phone, CRM and other smart selling tools. The working environment of B2B Inside Sales teams is significantly different from BPO scenario, where the reps are much more controlled, the jobs are temporary, the performance metrics are more around calls numbers and talk time, the customer engagements are very short lived, and end consumers are served with products & services.

This vast difference would require a complete psychological shift in the skills of a BPO professional who aspires to work in the SaaS sales space. They would need to be trained on Inside Sales function from scratch to be helpful, empathetic, B2B marketing and sales process oriented, B2B product/services domain expert, and digital sales intensive to successfully become an SDR. SDR will progress to become an account executive with quota around end closures and finally managing SDRs.

Aspirants looking to fill Inside Sales Talent Gap

There is a need to align the professionals by training for B2B Inside Sales function to serve the evolving SaaS industry in India.

I am associated with AA-ISP, American Association of Inside Sales Professionals as the President for India Chapter. The mission of AA-ISP is to advance the profession of Inside Sales. AA-ISP Gurgaon and Noida Chapter is supported by Inside Sales Box to create an ecosystem for Inside Sales professionals for businesses.

If you are a BPO/ Inside Sales/ Marketing and Sales professional or a Technology Entrepreneur, who is aspiring to stay abreast with best IS practices, discover digital sales tools & technologies, and explore jobs and business opportunities locally and globally – I welcome you to be a part of AA-ISP India.

Posted on

5 Questions You Should Ask Before Launching A Product Startup

The number of startups launching every month is growing at a fast pace. Some entrepreneurs opt for a service based model, while others like me go the product model way. Although, there is no clear winner in terms of which model is the best, right or a deal breaker, there are many factors that contribute to the success or failure of startups.

However, when I launched my startup Sainergie, an IT products and services provider, I realized that running a product startup is fundamentally different from a service startup. Apart from a few other steps, you need to take care of idea generation, design, prototype, development, testing and iterations, before you actually launch it. A sizeable amount of resources such as capital, time and energy has to be spent, believing that you are really developing an amazing product that will sell itself. Well, if it was only that easy!

There are several factors you need to bear in mind while launching a product startup. I am listing them here based on my experience.

Is there a market?

You have developed a great product. At least you think so. But, is it good enough for anyone to buy? Does there exist even a little or a niche market for your product? According to an article published in Fortune, the ‘lack of market need’ was the top reason due to which most startups fail! It may even happen that you are ahead of the market curve, that is, customers do not require your product at the time which you think is right. Or maybe, the need is there, but there isn’t an appropriate supporting technology.

For instance, Pebble, Apple and Samsung are among a few leading brands in smartwatches today. But, it was Microsoft who launched it about a decade ago, only that it failed because it was as much a matter of bad timing as that of a poor design.

So, don’t jump to the product development stage straightaway. Put efforts in conducting in-depth market research, studies or surveys to see if the time is right to bring your product in the market.

Are you trying to innovate or reinventing the wheel?

The debate regarding which is better – innovation and reinvention of the wheel, isn’t new. Every product entrepreneur delves on this question before going to the drawing board. But, let’s first understand the difference between the both.

Innovation is building a product that brings a paradigm shift in the customer behaviour. It provides a novel solution in addressing the customer’s pain point. For example, FusionCharts, the provider of interactive JavaScript charts, is one of the most innovative technology companies that disrupted the data visualization industry. Reinventing the wheel is about coming up with a new or a creative idea to change or improve a product that already exists. Here, we can take the example of TATA, which designed the cheapest and smallest car Nano to disrupt the car segment and gain 17% market share.

In my opinion, you shouldn’t be afraid of either innovating or reinventing the wheel as long as it could help your product to become a game changer. The only thing you should ensure is to keep your product simple and useful.

Do you have a sales strategy in place?

So, now you have ensured that there is a market for your product and you have a product ready to hit the shelves. Here comes the tough part – selling it. You need to have a well-thought sales strategy in place. This involves:

  • Setting deliverables (how much you want to sell in what time frame, market price, profit margins)
  • Identifying the sales territories (where you want to sell)
  • Creating marketing collateral (mailers, white papers, brochures, blogs, PowerPoint presentations, etc.)
  • Finding methods to sell (direct, retail, online, word of mouth)
  • Training the sales team (product features, sales pitch, sales targets, customer relationship)

A robust sales strategy will be your road map to positioning your product correctly and gain a competitive advantage.

 Do you have the right sales team?

A sales strategy alone wouldn’t suffice. You need talent that can sell your product with the same passion as you i.e a killer sales team that doesn’t let you and your product down.

Ideally, there is no better salesman than the entrepreneur himself. So, think about how you would sell your product if you were the salesman. Or, if you were the customer, what you would want to hear or experience during the sale. Once you learn to sell the product to yourself, you would know the right kind of people to hire. When building a sales team, ensure that:

  • You don’t sacrifice quality and fit for a quick on-boarding process.
  • Salespersons understand that selling is a pre-cursor to relationship building with customers.
  • They want to climb up the ladder, are patient with customers and are open to constructive feedback or criticism from customers.

How flexible is your product?

The customers may love or hate your product. Even if they love it, they may still give inputs on what else could make your product better. If they hate it, perhaps you haven’t done your homework well and need to iterate or redesign your product. Ideally, try to push your first iteration in the market to study what works and what doesn’t. Either way, your product should be flexible enough to change or evolve to meet customers’ expectations. Be open to customer feedback and adjust your product accordingly.

Product startups have their own share of challenges. But, with a right set of mind and determination to do the things the right way, it shouldn’t be difficult to overcome these challenges.

This article was originally published in Inc42.

Posted on

The six key pillars of software that enables Innovation-led growth

Ever wondered if a Software could help business chart the next growth curve?.

The marketplace is changing and the competition is catching up. Organisations need a new concept to break out to create the next growth curve and they depend on functions like Strategy, NPD ( New product development ), R&D Teams internally. Some of these organizations also use external consulting firms, crowdsource, outsource, merge, acquire and do many things more.

In order to bring in rigor and predictability, organisations need sound processes, but the paradox in Innovation-led growth, unlike other variants, is the need to have the right balance between creative freedom and execution discipline. Most organisations are designed for execution discipline while some are designed to be creative. But, today’s organisations need both in the right mix to win in the long run.

We need to manage Innovation-led growth like any other process and to institutionalize this, a structured approach which would balance creative freedom and execution discipline would be more effective.

Well, can a Software help with this?

If yes, what should be the pillars of such an Innovation-led growth Software?

Business would need 6 Es to Innovate.

Empower:
Organisation needs to draw the creativity and drive to make things happen.Often the best source for innovation is the team within the business. A great leader turns them into entrepreneurs who are hungrily looking for new opportunities. The key is empowerment. An Innovation-led growth software should empower teams to achieve their goals through their own ideas and efforts.

The leader sets the destination, but the team chooses the route to get there.

Enabler:
Enable employees to adopt an “entrepreneurial mindset” to showcase their ideas and ideals. Allowing them to propel innovation and show initiative is the key to a successful workplace revival and an opportunity to re-energize individual and organic organisational growth.
Innovation and workplace transformation represent two-sides of the same coin.
An Innovation-led growth software should help business in tossing the coin instead of taking sides.

Effective:
Effectiveness isn’t just a property of the idea but, more importantly, a property of the execution, and that’s where an Innovation-led growth software comes in. It should help business with it right from the word go & ensure effectiveness on all sides by having an innate ability to look at your problem from multiple viewpoints thereby ensuring a holistic overview.

Engage:
The most important part of any business idea is to maintain traction, and that requires engagement: the kind which can grab the right audience. An Innovation-led growth software should help business create a meaningful engagement with and within the audience, be it internal or external. Software should help organizations get perspectives from people who matter and thereby helping it to improve its offerings.

Evaluate:
Evaluating Innovation-led growth initiatives is something that very few organizations have understood. Most of them use the traditional criterion which works against the constructive collaboration that is required. Software should have a new set of evaluation tools that supports such a collaboration and help business in making the decision.

Efficiency:
Efficiency is the result of all the other Es coherently and cohesively coming together to function in a synchronous manner. Software should have proven techniques that shall improve the efficiency of generating new business concepts at a faster rate and continuously.

Edge:
There are few companies, which have few of the above 6 Es.Not any single company possess all 6 Es at the right proportion for the right yield. Experts who are proficient in the field of innovation vouch that iEnabler Software has these 6 pillars at right proportion for companies embarking their Growth journey. For your reference (www.ienabler.co)

Guest Post by Sridhar D.P, iEnabler