The Hindu Business Line : Software as a service a hit with start-ups

Bangalore, Sept. 30 Start-ups are leading the adoption of software and storage as a service in India. Its advantages of zero upfront investment, low requirements (it just needs a PC and an Internet connection) and flexibility make it the entrepreneur’s best bet.

Manish Agrawal heads Picsquare, a two-year-old Bangalore-based firm with a Web site that lets one order prints of digital photos. His company is made up of just 10 people, working on their laptops, designing and brainstorming. His servers sit in the US, rented at $140 per month. Storage, from Amazon.com’s S3 online storage service, is paid on a per GB per month basis.

“We are a small firm and just received funding of $75,000 from an angel investor. Our expenses need to be curtailed wherever possible. The idea of renting out servers and storage came about as we began the company. It made for an economical proposition. In India, you would have to spend around Rs 7 lakh for just the servers,” he explained.

Raman Fibre Sciences, another start-up, has opted for Microsoft’s ERP software as a service (SaaS) offering — Dynamics — for the same reason. “For a start-up, an upfront investment is an issue. The return on investment is also difficult to calculate. The subscription model offered by the software has made it easier for us to get to a running start,” said Mr Aroon Raman.

“Software as a service is still in a nascent stage of adoption in India, with few small and medium enterprises choosing it,” Mr Venkatesh Kumar Sivaraman, National Sales Manager — MS Dynamics, Wipro Infotech, told Business Line. “About 80 per cent of the companies we speak to still want to host the applications inside,” he continued. Subscribing to a three-user ERP pack (for basic material and financial accounting functionalities) costs Rs 25,000 per month, compared to the Rs 10-15 lakh upfront payment in the traditional model.

What makes SaaS and newer online models work for start-ups? “We do not have legacy software and hardware that is occupying space and needs to be used — the bane of a medium or large enterprise. We can start off with a flexible and light basic software and then add more modules to it as we scale up — perfect for a fast growing small firm,” he said.

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