How SMBs should approach IT investment - Interview

Our Bureau Chennai | Updated on January 11, 2011

Desi Valli   -  Businessline

One of the ways to keep the cost of information technology as low as possible for small and medium businesses is to look for solutions in SaaS (Software as a Service), says Desi Valli, Executive Director & COO, Net 4 India Ltd, Noida (, a company that provides CRM on a service model.

The advantage in the SaaS model is that the organisations need to invest only in access devices such as PC or laptop and Internet connectivity, he elaborates during a recent interaction with Business Line. They do not have to invest in server hardware, software licences, infrastructure that keeps these applications up and running for long hours, and manpower to manage these, reasons Desi.

“Instead, the SMBs (small and medium businesses) can focus on their core business. IT (information technology) applications such as supply chain management, sales force automation, and CRM can be taken on a SaaS environment thus reducing the risks on IT investments. Also, these services are flexible to the extent that the charges can be paid only for those many users who use the services in a particular month.” Our conversation continues over the email.

Excerpts from the interview.

Are Indian SMBs reaping the benefits of IT as much as larger enterprises do?

Larger enterprises understand the importance of automating a business process for various reasons, which include cost reduction, management reporting, and timely actions. However, most of the SMBs are run by the owner or a small set of core team members who are into everything. They are used to managing business processes through people rather than deploying automation. This has led to a scenario where IT is not enthusiastically adopted by these smaller firms. Even when they do adopt, it is primarily for word processing and a few emails.

What do you see as the right IT products and solutions for Indian SMBs?

Most of the SMBs start with accounting and financing system as the first step. That may be an obvious use. But, today, it is important that the organisations should be capable of measuring their performance, productivity, and efficiency. In the competitive world, it is highly significant that we have data on our efficiency to control leakages which could become the barrier to compete.

Hence, it is recommended that SMBs start to use applications such as CRM (Customer Relationship Management) that helps in tracking potential, existing, and lost customers and business transactions to the last digit.

Can you specify three or four things that SMBs need to do, as regards IT in their businesses?

1) Do not feel that IT is rocket science; it is simple and easy to use.

2) Do not look for a direct RoI (Return on Investment) on the first IT investment, because initial returns may be invisible and intangible.

3) Do not recruit manpower only to operate your computers, such as a data entry operator. Dirty your hands!

4) In the first go, do not take a leapfrog step. That is, do not try to automate every process in the first phase itself, because the cultural shift may become a barrier for usage by employees which may become detrimental to the overall business.

In what ways can we strengthen the ecosystem (including academia and research) to facilitate greater adoption of IT by SMBs?

More and more applications for the local market segment will bring in relevance for SMBs. Most of the approaches are to bring in a concept that was/is successful in the international market. But this may not work for the reason that the local needs are typically different from those of the international SMB market.

The corporate environment has adopted globalisation in all aspects including IT. But SMBs are still culturally local even in their business transaction models. Hence, there should be enough ground level research activities to understand the needs of the SMBs. A fit-for-all model will not work.

On the relevance of virtualisation to SMBs.

Apart from SaaS, another aspect to the reduction in IT investment can be through virtualisation. In today’s technological world, the processing power of server infrastructures has multiplied faster than the need. As a result of the one application per server concept, there is underutilisation of the server resources.

This scenario has enabled the possibility of virtualisation, meaning the same server can be used for more than one purpose and/or more than one user/owner, thus reducing the cost of investment by sharing the cost between more than one user. Virtualisation also enables the possibility of availing fewer operating system licences.

Extended tools like cloud provisioning over virtualisation help SMBs increase or decrease their resource requirements on the fly. For instance, many application tools may not require the server resources throughout a month or year; the requirement may be only for a few days. Cloud provisioning helps achieve this elasticity. An organisation, for example, that publishes school results online may require resources for only 3-4 days during the result publication time; during the remaining period the resources can be dropped down, as there may not be enough use.

Any other points of interest?

SMBs should consider using their own email IDs rather than using Gmail, Hotmail etc., Even though these email IDs suffice the common purposes, what is key is an identity for SMBs. An SMB that does not have its own email ID, like, is generally considered a smaller organisation, even if its business volume is big enough to deal with large organisations. Also, SMBs should have a website giving information about the organisation.

SMBs should consider these methods of online presence to enlarge their reach; these online, digital shops can be accessed from anywhere in the world. And with the help of ecommerce, a real business transaction can be executed.

However, it is noticed that the Indian SMBs have not understood the benefits particularly of the online presence which not only brings in new business but also reduces the cost of customer acquisition significantly.

D. Murali

Published on January 11, 2011

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