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A Portrait of the Indian Enterprise Software User

Written By: Rahim Kaba
Published On: September 13 2011

Like many markets recovering from global economic turmoil, the enterprise software market has experienced a slew of recent company expansion and consolidation ventures. In large part, this was an effort to pool resources, acquire technology patents, and expand product portfolios to capture larger portions of the market.

The Indian enterprise software market was no exception. Indian subsidiaries of software vendors like SAP and Oracle claim that they have not only grown their customer base, but also expanded their personnel and research and development (R&D) efforts. And this growth is expected to continue into the coming years as India’s economy continues to flourish. But how does growth and expansion on the vendor front relate to the needs and wants of Indian companies researching and purchasing enterprise software? What is the profile of a company in India that is looking for enterprise software?

TEC Data Analysis: India
With the help of my data guru colleagues at TEC, I examined data from over 20,000 projects in TEC’s online software evaluation system, TEC Advisor. TEC Advisor contains detailed information about enterprise software solutions—collected directly from vendors and reviewed by TEC analysts—and designed to help end users quickly and accurately compare solutions (try TEC Advisor, if you haven’t already).

The graphs below provide a glimpse into these users’ industries, the types of software they sought, and their interest in software-as-a-service (SaaS) and on-demand deployment options.

Industry Profile
As a fast-growth emerging market, India is a big player in today’s global economy. According to Wikipedia, India is the tenth largest economy in the world by gross domestic product (GDP). Entrepreneurial spirit has spread across the Indian subcontinent, and new entrants, spanning a wide range of sectors, are appearing every day. My research into this topic led me to investigate what TEC’s data had to say about the main industries in India that are researching and evaluating enterprise software. The graphic below represents data from the last two years.


Figure 1. Top 10 industries represented by Indian users evaluating enterprise software in TEC Advisor (as a percentage of all users)

“Computer, IT, and Software” includes computer and parts manufacturers, software companies, and developers, as well as IT services and consulting firms. It’s important to note that many of these companies also serve other industries outlined in Figure 1, such as manufacturing and education (see more about enterprise software for manufacturers in the next section).

It’s no surprise that this group represents the largest industry. The evolution of the computer, IT, and software industries in India over the decades is a result of supportive government policies that enabled technological modernizations to take place. This led the way for India to become a preferred location for custom software development—companies worldwide are increasingly looking to India for their outsourcing needs because of flexibility and cost-effectiveness (in the U.S., the typical salary range for a good developer is anywhere from $50 to $80 (USD) an hour, or about four or five times the cost of a developer in India).

Top 10 Software Types
Now that we have an idea of which industries end users are coming from, let’s find out what types of enterprise software they are looking for. TEC’s Evaluation Centers contain detailed information about specific types of solutions. This information includes up to several thousand enterprise software features and functions, modeled to reflect real-world use. The graphic below, representing data from the last two years, depicts the top 10 software types (as a percentage of the total number of evaluations) that users in India used to compare vendor capabilities. Here’s the breakdown:


Figure 2. Top 10 software types that users in India evaluated in TEC Advisor (as a percentage of all evaluations)

Enterprise resource planning (ERP) software for discrete manufacturing tops the list of software types that Indian software evaluators were looking for. TEC defines this type of software as one that supports a range of functionality for production planning, shop floor control, and product costing, as well as other key modules such as financials and human resources. The manufacturing industry in India is still evolving. Infrastructure and production efficiency challenges in the 80s and 90s led to significant technological innovations in manufacturing. With an increased demand for production management, manufacturers are now looking to ERP solutions tailored specifically to their sectors to help them achieve high growth and output rates.

It’s important to discuss how Figures 1 and 2 are correlated. As illustrated in Figure 1, the computer, IT, and software industry was the top industry represented by Indian companies. The data in Figure 2 can therefore lead us to infer that many of these companies have clients in the manufacturing sector—which explains the relatively high percentage of users evaluating ERP software for discrete manufacturing. Furthermore, it’s also likely that companies in the computer, IT, and software industry not only experience challenges common to their business area, but also challenges across multiple industries. For example, they may decide to adopt ERP solutions with industry-specific functionality such as those for manufacturing and services.

Accounting software was next on the list. This type of software is especially applicable to companies researching an ERP system for small and medium businesses (SMBs), and includes categories such as general ledger, accounts payable, accounts receivable, and payroll. With SMBs in India growing at an enormous pace, it’s no wonder that a relatively high percentage of Indian companies are researching accounting solutions.

Outsourcing and applications software came in at a close third. These solutions include all activities performed by outsource providers such as software development, maintenance, engineering, and re-architecting. As discussed above, this is in line with India’s large presence in the outsourcing and software development landscape.

On-Demand Software Requirements
Lastly, I wanted to examine the general intentions and readiness of Indian enterprises to implement software based on “on-demand” or SaaS deployment options. The graphic below shows that the level of interest among users in India has been gradually increasing over the years. Data for 2011 is based on the first 8 months of the calendar year.


Figure 3. Percentage of TEC Advisor users in India that requested SaaS or hosted applications during their software evaluation

The general worldwide trend for SaaS acceptance seems to hold in India. As can be seen by TEC’s data, and reflective of the hype around cloud solutions, there has been a steady increased interest in SaaS since 2008. SaaS-based solutions may be attractive to Indian start-ups and small businesses because of the numerous cost advantages associated with economies of scale. Furthermore, with customer relationship management (CRM) being the most widely adopted SaaS application and CRM being among the top 10 software types researched by Indian end users (see Figure 2), I expect that this interest in SaaS and on-demand solutions will continue in the coming years.

Obviously, this is only the tip of the iceberg. If anything, this article has piqued my curiosity even further about the enterprise software market in India. Here are a couple of open questions:

1. What are the top priorities and key functionality that users in India seek in software systems?
2. What are the top enterprise software systems they are evaluating?
3. How do the trends in India compare to North American and European markets?

I’ll explore these questions in my next article, but before I do, I’d like to hear your thoughts on these questions and what you would be interested in finding out. Please leave your feedback in the comments section and I’ll consider it for my follow-up article.

 
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