Indian SMBs take on the world

Things have never looked better for India’s small and medium businesses in fields as varied as auto ancillaries and textiles and they’re all powered by IT, says Prashant L Rao

An SMB is an SMB, right? Wrong, definitions of what constitutes an SMB vary depending upon whom you’re talking to. International definitions generally do not fit as they would put most Indian companies into this slot, including some pretty large ones. Commonly adopted methods of defining an SMB usually try to measure its number of locations, number of computers, number of IT users and so forth. A CII survey found that over half the SMBs surveyed believed that they were making good or excellent use of IT. More than a third of SMBs spend more than five percent of their turnover on hardware, software and IT staff.

The large enterprise market is tapped out

Why is the SMB market significant? There are many reasons. The first is that the large enterprise segment has been tapped out for the greater part. Any further sales to India’s biggest organisations will be incremental or maintenance related. So where does a vendor turn? The short answer is ‘to SMBs’. This has lead to the creation of solutions aimed specifically at SMBs which has whetted their appetite for IT.

Full speed ahead and damn the torpedoes

IDC projects that IT spending by Indian SMBs will grow by 21 percent compounded annually from 2004 to 2008. This beats the projected numbers for China by three points. SMBs have already made their presence felt. 20 percent of SAP India’s revenues come from these companies. ACCPAC believes that no less than 20,000 SMBs can be tapped in the country. When a player like Brocade that’s traditionally stayed in the large enterprise space starts releasing SAN switches aimed at the SMB segment it is time to sit up and take notice.

SMBs want a faster RoI

When it comes to deploying IT, SMBs can’t afford to write off failed implementations or wait years for RoI to materialise. They want their returns and they want them yesterday. That’s why you will find that enterprise solutions tailored for this segment are easy to deploy, manage and attempt to provide a speedy RoI.

Although they may be classified as small or medium, no company thinks of itself as small. These players have global ambitions and they aren’t shopping for cut-rate solutions; solutions for large enterprises have to be reworked at lower price points while maintaining decent performance levels for SMBs to buy in. Low-cost SANs are a good example of this trend.

All for one, one for all

When it comes to printing, all-in-ones are the devices to watch in the SMB space. These print, scan and copy gadgets have taken off from the starting blocks like sprinters and the market more than doubled year on year in 2003. SMBs happen to be the biggest buyers of these machines.

Logging on

Bandwidth isn’t going to be a problem as SMBs execute their plans and think global. There’s a smorgasbord of access options out there—everything from cable to DSL to old timers leased lines, ISDN and dialup. The applications driving the need for speed (bandwidth) include Net Telephony, wireless access and video conferencing. In some cases it’s the need to shuffle large CAD/CAM files across the land.

The Micro-verticals have it

Time was when ERP was the preserve of the big boys and you wouldn’t find an SMB even contemplating deploying one of these solutions. That’s all changed and ERP vendors (they call themselves EAS vendors nowadays) are bending over backwards to come out with entry-level software suites tailored to the needs of specific vertical segments that are competitively priced to boot.

Wired or unwired?

While the jury’s still out on wireless, SMBs appear to be going in for wired networks at the core with wireless being used in specific locations where wired networks are either unfeasible or inconvenient. The low speeds and higher costs of unwiring the network need to be addressed before wireless gets to be ubiquitous.

Open that source

After long years when an SMB had the rather bleak options of not using software or pirating it, there’s a viable third choice. Open source software (OSS) has finally matured to the point where it’s ready for prime time. Software such as Apache, Sendmail and MySQL backed by the likes of Red Hat, Novell, IBM, HP and local players such as Netcore are pushing the Penguin into the SMB spotlight.

Secure that point

Indian SMBs continue to rely upon point solutions to a large extent though managed services are slowly gaining traction. Most security solution providers have come out with software that’s specifically targeted at SMBs and priced accordingly. Anti-Spam is the new category here and integrated appliances are a big hit.

Pop goes the server

A transition is on from high-end desktops togged out as servers to ‘real’ servers based on the Pentium 4, Xeon or Ultra SPARC. Standard Intel Architecutre Server (SIAS) prices dropped 25 to 30 percent in 2003 and there’s no longer a reason to compromise on server hardware. When an MNC SIAS box is available for sub 60K (the price of a decent notebook), it’s hard to argue with that.

Mr SAN-man bring me a dream

How times change. The storage area network (SAN) used to be the most expensive storage infrastructure that an organisation could aspire to buy. Now it’s another mid-priced solution bundled in a box ready to deploy for SMBs. Low-cost SANs have been building momentum for a while and this year we expect SMBs to buy them in bushels. IP-SANs are making their debut as well, but with the plummeting prices of Fibre Channel-SANs, it’s anybody’s guess as to which of these technologies will win in the end. Most likely it’ll be a mix of both depending on which is more important—price or performance.

Branded power protection

The days when assemblers had a stranglehold on the UPS market are gone for good. Branded players have slashed their prices and they’re going head to head with the grey men. With the SMB and SOHO market for UPS’ growing by about 40 percent (units) as per IDC, it’s not surprising that mid-range UPS units are getting a lot of attention. The PC market hit three million in 2003 and vendors believe that the attach ratio of UPS to PCs is as high as 50 percent. The action’s moving to B and C class cities as UPS vendors get busy.

The story’s just begun

The SMB story is just starting to unravel its tangled skeins. There’s a long way to go and we believe that India’s small and medium businesses are going to do the country proud. With a little help from IT, they are going to take on the world’s best and make us known for something other than software.

prashant@expresscomputeronline.com