In the 80s & most of 90s, paying for software (at-least for personal use) was considered a waste of money, at-least in India. Now with most people being able to afford to pay for software as the prices have also become more reasonable, I have heard people buying licensed software more than what they used to earlier.
With a lot of software companies offering bulk-usage licenses, for the corporates, the cost of software tends to get more reasonable. But even then I would say it makes sense to treat software as a service and expense it. Though my Office 97 license still works on the old Windows 2000 box that I have at home, I will not be able to open quite a few documents created with latest versions of Word. Would I have been wiser if I had bought Microsoft Office as a service in 1997? May be, provided Microsoft was selling it that way. That way I would have always been using the latest version though I would have paid for the service year on year.
A lot of hardware is also being offered as a service (HAAS model). I strongly believe that IT investments should be treated as an expense at-least by the non-IT companies. As IT by itself does not generate any business by itself and is just an enabler, why shouldn’t it be treated as an expense like marketing expense?
Coming to India as a market for software as a service, are we ready for it? I tend to believe we are. Most of the heavily used software tools are already available as open-source. But most of these tools by themselves cannot be used by corporates to run their businesses. We need someone to use these tools to build applications & sell them. Most of these applications are continuously evolving with their hardware footprints changing very quickly. As a user, I have no control over it, but the creator of the application will definitely have. In that case, why don’t we have the creator maintain the application as well? That is how SAAS was born.
In India we are used to renting an apartment, but not renting a car as it tends to get too expensive. But we do hire a taxi or hop on to a bus. We are also used to paying for electricity, water, broadband, browsing-in-a-internet-cafe, etc based on usage, then why not software? I am sure it suits most corporates as well. But the problem is very few people are selling software as a service in India. I guess that has to change first. I strongly believe that at-least here we can lead the world by adapting the SAAS model faster than the rest-of-the-world.
I would like to invite thoughts on this from the member of the venturewoods community.
On a side note, I am the Country Manager for Transera Communications (www.transerainc.com). We make on-demand software for call centers & offer it as a service (SAAS model) in the hosted model.
- Software As A Service: Is India ready for it yet? - September 25, 2008
- Sweat equity in new ventures - October 28, 2007
1) SaaS on the web : tough for critical activities as the internet speeds and reliability at the retail end is absent. A lot of SMEs I know use stuff like Zoho CRM or google corporate mail. Lots of other stuff happen with project management, doc sharing, conference calling etc. – but SaaS on the web still needs the internet usage, reliability and speed to increase dramatically.
2) SaaS as a private srvice: Most software written by Indian vendors works this way, other than perhaps Tally or Antiviruses. An ERP package is necessarily combined with a service – and in all probability there is an onsite engineer managing a server where the stuff is installed. A lot of accounting stuff also happens this way due to either data security issues (there isn’t much focus at the vendor end to protect/preserve) or because getting a reliable line to the vendor is way too expensive.
I think SaaS at the vendor end – be it a web site or a vendor data center – requires cheap and reliable communcations from the customer end. Leased lines are still too expensive. And the web in general is too unreliable.
Security may be an issue but it’s usually related to cost. I.E. if you tell someone it will cost 5x to do somehting at your office compared to keeping stuff at mine, it’s a simpler sell. But yes, vendors must focus on security and backups etc. – and there need to be these massive underground fireproof earthquake proof data centers that can lease rack space out cheap.
SaaS vendors need to ensure that integration issues are worked out first. For instance running a SaaS based accounting service mandates that you provide an Excel export of everything. Plus perhaps an API to access data for those few people who’ll need fancy custom apps.
I agree though, that this is the age of SaaS for India.
The security part can be broken down into two parts
1. How secure the data is with the SaaS vendor?
2. Is there a possibility of a desctructive influence during data transmission?
Most SaaS applications work via multiple, mirrored data centers and efficient switching mechanism to detect disasters and redirect to the nearest available application/data source. This would also imply that client’s data is backed up at multiple locations and generally a 99% availability (application and data) is assured as a part of the SLA.
As far as desctructive influence during data transmission is concerned, the SaaS apps run on standard HTTP. The existing security available over HTTP, in the form of encryption is commonly used by banks and various other enterprises that interchange data. The same should be applicable to SaaS based data exchange/transfer.
This is a minor challenge than a barrier.
The customer’s reaction is generally mixed, when you tell them that companies such as Times Warner, Expedia, Dow Jones among others, are using SaaS for multiple business activities.
In my last post, the last three words ‘to get mitigated’ went missing. Hope no confusion has been around in the last paragraph.
What are feeling about data security in SaaS? Is this a sales barrier? What are the solutions some vendors are offering?
If we distinguish the IT needs of an enterprise into five categories, that is;
1. Stated IT Needs
2. Real IT Needs
3. UnStated IT Needs
4. Delight IT Needs
5. Secret IT Needs
SaaS lies toward the bottom (i.e. Unstated Needs to Secret Needs).
While talking to a few of my potential customers in India, I realized that the needs that were being stated to us were not inline with their immediate and long term plan i.e. “Lowering the bottom line by X% over a period of Z years”.
My team phrased a small questionaire which included utilization of the IT budget so far, Their plans to maintain/lower it further in the next two quarters, year… so on and so forth.
It did not take us a mammooth effort to realize that their stated needs were exactly what they had thought. Our interpretetion of their Delight & Secret need was ‘SaaS’ or something very close to it. Quite a few, from the potential customers side did agree verbally.
Coming to the point; Is India Ready? My experience says ‘Yes’ or may be atleast a few are ready. The learning we took from our meetings was that it is not about educating the customer on SaaS. Its about telling them “improved utilization of the IT budget”, and, YES we can lead.
Well said Shyam. From a corporates perspective, its better to buy a per month license as compared to a product license with a trailor load of baggage.
User based or monthly fee would not make much of a difference, while usage based fee would be of immense interest in India. Atleast, that is what we see.
However, the concern mentioned above such as a usage based fee for individuals like us or corporates is something that we should be looking forward for.
Adios!!
Hi Shyam,
In my experience running DeskAway (www.deskaway.com), a project collaboration service, we are seeing more and more Indian small businesses signup for the service this year than last year. They (small business etc.) cannot believe that “software” that their entire team can use can cost so little (and have a free version). Besides, these people are already online using consumer oriented web technologies and transaction-based ecom. Once the mindset, dis-advantages, broadband, security myths are mitigated its going to be a rush.
I have recently started SaaSBurst (www.saasburst.com) and would invite you’ll to contribute in tracking the SaaS industry.
Cheers
Sahil