In addition to vendors of traditional on-premise products that are shipped or downloaded via web, a different generation of providers is fast emerging. They are leveraging new technologies and business models, often interchangeably referred to as cloud services, Web 2.0 or SaaS (Software as a Service). (Not all SaaS products are truly cloud based but the differences are not relevant for this discussion.)
SaaS considerably simplifies application deployment and upgrade challenges. Software is hosted at one site (vendor’s own or through a provider). This reduces development cost since the deployment environment is controlled. There is no distribution expense, though deployment charges can become considerable to support a large base of users.
The SaaS model is important for India. Making geography irrelevant, it enables anywhere, anytime apps and services for a fl at world. Indian Web 2.0ventures can now reach out to the world market without the huge cost of sales that enterprise software companies have to bear. They can compete directly against global players.
Cloud services adoption will depend on resolution of a few major concerns. One is security of personal and corporate data in the cloud. Secondly, guaranteed near 100% uptime will be critical for mainstream enterprise apps to move to the cloud. Reliable access will be a big factor in India for a few years, despite the phenomenal growth in broadband connectivity. Uptime has been an issue even in US, with large players like Google and eBay facing major outages in their online services.
The most widely used cloud service is web-based e-mail such as Google’s Gmail. The standard bearer for commercial SaaS apps is Salesforce.com, which crossed $1 billion in revenue in 2009 in just ten years. It provides web-based Customer Relationship Management (CRM) solution for sales, service, marketing and call center operations.
With over 1.5 billion people going online, SaaS offerings will only proliferate. Amazon.com, which started with selling books over the web to consumers, is now a full-service online merchandise store. Examples in India include IndianRailways.com (train bookings), MakeMyTrip.com (travel services), naukri.com (job related portal) and shaadi.com (matrimonial related).
Similar to cloud services, software apps on mobile phones are becoming more common, driven by the explosive growth in usage. In 2009, cell phone ownership had reached 3.5 billion worldwide and over 400 million in India. Cell phone growth is highest in India, with 10+ million being added each month, cutting across income barriers. The Indian mobile market is unusual in its extensive usage of texting (SMS) and multiplicity of languages. With its ubiquity, mobility and low cost, it is the ideal delivery platform for simple apps (and supporting middleware).
Though SaaS and mobile app vendors often look like a services rather than software firm, they are included in the book because software is the foundation and key differentiator for their business.
There is another reason. With its late liberalization, India largely skipped making huge investments in an entire generation of technology (land lines, minicomputers and even standalone software apps). This proved to be a boon in disguise, and led to rapid adoption of latest advances like broadband and mobile by a booming market. In similar fashion, consumers and businesses may take to this new breed of software products. Small and Medium Enterprises (SMEs) especially benefi t from SaaS by not having to invest upfront in IT infrastructure (servers, software licenses) and buying subscriptions only as required. Similarly, the hand-held is rapidly morphing into a highly integrated device, and is poised to become the key accessory for humans to interface with their environment. The vast majority of Indians will skip the PC and directly use an integrated
device at work and home.
Since the Indian psyche is different, entrepreneurs can build unconventional solutions that refl ect local reality for domestic users. The intersection of new technologies and India’s growth economy has opened a window of opportunity for new firms to leapfrog past existing players with exciting new products.
Reprinted from From Entrepreneurs to Leaders by permission of Tata McGraw-Hill Education Private Limited.