QAD has been one of the leading ERP vendors in India for a long time. Last year, the company’s Indian operations saw a total change in its top management, which was part of its expansion plans in the country. Tony Yip, managing director, QAD Asia was in India recently to announce a joint venture with Deloitte Touche Tohmatsu as part of the latter’s “Best-of-Breed” ERP strategy. Rajneesh De caught up with him to discuss QAD’s present performance and future plans in India

What is the total size of the ERP market in India and what is QAD’s share in it?
As per IDC, the estimated size of the ERP market in India is $54 million, which incidentally represents 8.4 percent of the total Asia-Pacific market. IDC also expects the Indian market to grow at a CAGR of 17.1 percent, to reach $120.7 million in 2004. With a market share of 10.8 percent, QAD is placed as the third largest ERP vendor in India behind SAP and Oracle.

What is QAD’s current installation base in India and who are its major clients here?
QAD software is in use in over 86 end-customer organisations in India, at present. We are focused on providing e-business solutions for the manufacturing segment. Within the segment, QAD caters to six verticals. These include FMCG, where we have Hindustan Lever which was the first company to implement ERP in India, and QAD’s first customer here too, besides Godrej Soaps. In the Food & Beverage segment we have Bacardi, Fosters and Haldiram, while Nicholas Piramal and Knoll Pharmaceuticals are our pharmaceutical clients. In the automobile segment, we have Tata Johnson Controls and Lear Seating, Raychem RPG in chemicals and Lucent Technologies and Krone in the electronics segment.

How is QAD positioning its different products in the Indian market?
We believe India’s mid-size and small manufacturers are now ready to exploit the collective experience in the marketplace to successfully implement an ERP package internally, and it is this segment that we are now targeting. ERP packages, like QAD’s MFG/PRO, have been installed in India for over 10 years. The penetration level of ERP in the mid-size and small manufacturing segment is set to grow rapidly. ERP vendors that have mid-size specific packages, a large pool of skilled implementation skills, a track record for rapid implementations, will be extremely well-positioned to grab a large share of the mid-size market.

QAD has specific solutions for mid-size and small manufacturers. These include the MFG/PRO eB bundle, and eQ Supplier Visualization. The eB bundle consists of a package of application modules, databases, industry templates, and 4GL tools, that allow the target company to install, implement and transact on MFG/PRO in a period as low as 90 days from the start. In addition, our partners Deloitte and Thirdwire have launched an ASP version of MFG/PRO, thus allowing mid-size and small manufacturers to reap the benefits of our ERP without having to first make up-front investment in the IT infrastructure.

What are the dynamics behind the joint venture with Deloitte?
We have formed the joint venture with Deloitte as part of their Best-of-Breed strategy, whereby a user can be provided with different ERP modules from multiple vendors, instead of a single vendor. As part of this scheme, Deloitte is providing our MFG/PRO as the best manufacturing module currently available. With an average implementation cost of about Rs 80-90 lakh under this model, we plan to leverage it to increase our market share in India.

What has been the evolution trend for ERP in the last 2-3 years? How has the ERP market been performing over the last couple of years?
If one looks at the evolution of the ERP market, it has matured from the early adopter stage to the late adopters stage, and is now moving into the early mass-market stage. The early 1990s saw the arrival of a few large ERP software vendors in India. At the time, large Indian conglomerates and stand-alone companies were attempting to build systems and processes to maximise operational efficiencies and expand both domestically and overseas. These companies were the first adopters of MRPII/ERP packages. During the mid to late 1990s, the demand from the first of the mid-size companies began to surface. The larger ERP vendors realigned their product, marketing, and service offering to address the business requirements of this segment.

Today, the market for integrated ERP applications is maturing in India, driven by changes in the business environment such as liberalisation, de-regulation, disinvestment. Companies realise they need to optimise the allocation of capital and resources, just as much as they need to expand new markets. The other drivers for the ERP industry growth will be the increasing level of investment in IT in India, the Internet boom and the potential of increasing the benefits by integrating with upstream and down-stream applications like optimisation, supply chain planning and execution.

How would you predict QAD’s future in India?
Currently, we have five employees in India which will go to seven within the next two months, and increase substantially in the next one year. As of now, India contributes 5 percent of our Asia-Pacific revenues, which we expect to double in the next one year.