By Nandita Singh
Business transformation in India is picking up steam. With impetus from the programs announced by Narendra Modi-led government, ranging from ‘Make in India’, 100 Smart Cities, Skill India, to StartUp India along with taxation reforms such as Goods and Services Tax ushering in a unified tax regime, India’s SME sector is becoming a hotbed of hyper-activity.
In India’s growth story, Small and Medium Businesses (SMEs) will drive employment generation, and will be a key contributor to India’s goal of becoming a $5trillion economy by 2025.
In that backdrop, almost every ICT major is after a slice of India’s business transformation market. But how do you engage and sell business transformation to Small & Medium Enterprises (SMEs), who hardly have a concept of how IT can impact and enable their business?
Barring exceptions of digital businesses, in most cases, SMEs have neither a designated IT budget for the purpose or a personnel, specifically assigned to drive value from information technology.
“SMEs are a nebulous mass of enterprises spread across the length and breadth of the country. Defining outreach and making inroads in SME segment requires a very customized approach,” says Nal (Nalinikanth) Gollagunta, MD & Country Head of Commercial Sales at Cisco India & SAARC.
Nal Gollagunta along with Daisy Chittilapilly, MD of Partner Organization at Cisco India & SAARC is leading the SME outreach program at Cisco. The company is currently engaging with 30,000 such enterprises and Gollagunta aims to double this outreach number year-on-year. “Right now, I am primarily focused on technology evangelization,” says Gollagunta explaining the Cisco approach to the market.
Of the about 50 million SMEs in India, just about 2-3 percent are digitally engaged, that too with just basic connectivity. Besides, these are geographically spread across the country. Gollagunta and his team at Cisco have sliced the market by clubbing it into clusters. “Broadly, in India there are about 18-19 SME clusters. We are focusing on 11 of these,” he says. These clusters are created on the basis of geographical proximity, though these may have a specific vertical flavor as well. A majority of these, more likely than not, are tied to an industry, as ancillary and plugged in the supply chain.
“Today, an SME is not a small shop, it is an enterprise linked to a global supply chain. It may even be competing with global or domestic players in its regional markets and will likely have unique business problems that need to be addressed with information and communication technology solutions,” says Gollagunta.
For example, for an SME in FMCG space, given that now product cycles are reduced to 2 months from what used to be an 18-month cycle, it may need faster product rollout for its distribution and sales channel. Customized solutions addressing this becomes more critical for this SME as it will not have sales and distribution bandwidth of a large player but will still need to be competitive – to survive and scale.
Cisco has small and mid size business solutions that the company customizes as per requirements and makes it available as a service on the cloud to keep cost of ownership as low as possible. “And video forms a big part of these solutions,” says Gollagunta citing examples of how video-based communications have been instrumental in cutting down product-to-market time and has been a market differentiator. Be it smooth procurement of raw material, a live product demo to the customer onsite, roll out of an incentive scheme to distributors/ retailers – you name it… and Gollagunta has a story to share.
“Today, an SME is not a small shop, it is an enterprise linked to a global supply chain. It may even be competing with global or domestic players in its regional markets and will likely have unique business problems that need to be addressed with information and communication technology solutions.”
Nal Gollagunta, MD & Country Head of Commercial Sales at Cisco India & SAARC
4G Connectivity, the big game changer
Improved connectivity in the country is enabling this transformation. “There is a pull coming from the 3G/4G telecom connectivity that has become ubiquitous in the country,” says Daisy Chittilapilly, MD of Partner Organization at Cisco India & SAARC.
Telecom Service Providers (TSPs) are a channel for Cisco SME solutions and the company is working at leveraging it in its outreach. “TSPs are more like symbiotic ecosystem partners for us, we have an offering to go with every connectivity drop – from a very basic solution to what the business will demand as it scales up. TSPs are a huge partner in this SME journey for us,” says Chittilapilly adding that TSPs have lowered the entry barrier for SMEs significantly.
According to Chittilapilly, primary challenge in the SME space comes from the fact that fundamentally the customer is changing, business models are changing, and the person making that spending decision is changing. “Therefore, our partners need to understand the business and its segments better to deliver value,” she says. Chittilapilly advises partners to work in all directions, including sideways.
As Gollagunta elaborates, taking SMEs onto a business transformation journey is far from cakewalk. But the traction is building up, and it is coming from the next generation confidante-entrant in the business who “get” the value proposition and a “buy in” from old guards who convert only when they begin to see tangible results. A splattering of transformation case studies across verticals is what will make it easier for his team. However, the Digital India buzz has had its impact. And, there is ample curiosity and interest on display at the tier 3 cities where Cisco hosted SME solution demos.
While Gollagunta & Chittilapilly fine-tune the Cisco SME outreach charter aligned with industry affiliations and purchasing capacity of these clusters, they both agree, too scientific is not the way to push forward in the nebulous SME market of India, where it is difficult to assess the scale these companies can possible acquire five years down the line. Just pushing forth evangelizing the technology is what they are focusing on. Revenue too will roll-in due course.
“There is a pull coming from the 3G/4G telecom connectivity. TSPs are more like symbiotic ecosystem partners for us, we have an offering to go with every such connectivity drop – from a very basic solution to what the business will demand as it scales up.”
Daisy Chittilapilly, MD of Partner Organization at Cisco India & SAARC