Hardware

IT as an enabler

Computerisation continues to grow in small businesses. Small firms that have already invested in IT are upgrading to keep up with the rapidly changing technology environment, says Vinutha V

Small businesses are investing in IT to increase production, sales and profits, geographical coverage, organisation productivity, and create new markets. IT is seen as a tool to be profitable through resource optimisation and by making systems efficient. The first step is to switch from a manual to a computerised process. Small firms are increasing the number of desktops, notebooks and handhelds and are moving towards server upgradation.

Desktops transform manual processes

The adoption rate of desktops has increased in small firms. In order to automate, they aim to replace their entire manual data updation tasks by using desktops. Since they are increasingly using e-mail and a few high-end applications such as SCM, dependence on systems is growing. Competition among manufacturers of desktops and lower tariffs of critical components like microprocessors, memory and other peripherals have led to the drop in prices of desktops. The factor spurring the adoption of desktops in services, FMCG and manufacturing is the need for automation to deliver high-quality products and services. Desktops form the intelligent interface for internal communication about a customer order or co-ordination between third parties in the supply chain. They have become critical tools to supplement the skills needed for planning of projects. PCs and other technology tools have become intelligence-gathering vehicles of the workforce, enabled by the Internet.

"In BFSI, security considerations are high and hence notebooks (being mobile) are viewed with scepticism" - Harish Kohli General Manager Acer India

The value added tax (VAT) will also spur investments in desktops. BFSI and education seem to be large adopters. “As far as BFSI is concerned, many banks are now going into phase II, which is core banking. The high growth rates across all segments will add to the demand. In education, institutes are increasing their student intakes. Hence, we find repeat purchases there,” points out Harish Kohli, General Manager, Sales and Marketing, Networking and PC Client Group, Acer India.

Brands hold sway

The adoption of branded systems is a trend that is being witnessed in small businesses. Of the 174 respondents in the survey, 74 percent trust branded players and are using branded desktops. Most small businesses feel that the driving factors for investing in branded PCs are better products (including service support) and technology, lower TCO and maintenance costs, though the initial cost of acquisition is high. The bridging of the price gap between branded and assembled systems has contributed to the adoption of branded desktops among small business firms. Some companies have launched sub-Rs 10,000 desktops in order to give an impression that even branded players can offer low-cost desktops. However, this phenomenon has not had much of an impact in the desktop market.

Oswal Woollen Mills purchases desktops to meet operational requirements. It prefers branded PCs—HCL and HP. “Branded PCs are stable and their maintenance costs are low,” says K Sukumaran Nair, Systems Executive, Oswal Woollen.

Users say that sourcing of hardware from authorised dealers became easier and branded PCs were consistent in performance. Globus Stores, a retail chain, is increasingly depending on desktops for its day-to-day activities. “The lack of a cost differential between branded and assembled PCs has tilted the balance in favour of branded desktops. Certain quality standards are assured and hardware is sourced from authorised dealers. Additionally, branded desktops are reliable as they give consistency of performance,” says Meheriar Patel, Deputy General Manager and Head, IT, Globus Stores. Globus chose IBM/Lenovo machines for making its hardware purchases. However, it does not rule out the possibility of purchasing computers of other brands in the future. For companies like Saipem India, it’s corporate policy to use branded desktops. Hence, Saipem sticks to brands such as IBM, HP, Dell and Acer.

On the other hand, companies that run basic applications and have few users opt for assembled desktops. Richmond Hotel prefers assembled desktops over branded ones. Says Rajesh Kannan, System Co-ordinator, Richmond Hotel, “We not only get about 20 percent cost advantage in assembled desktops but are also satisfied with the performance. The quality of components that are used in assembled PCs are similar to the ones in branded systems but the brand name (of the components) may differ.” Kannan is also satisfied with the efficiency of services of assembled PC makers.

PC as a learning tool

In the case of education, the increased adoption of desktops across the country is the acceptance of PCs as a learning tool and as an information resource. Its uses are many—from Internet-based education to distance learning to collaboration with various institutes to using the PC as a teaching tool in schools. Mukund Ramaratnam, Director of Marketing and Business Development, AMD India says, “In education, entry-level PCs based on AMD Sempron processors, or low-power platforms based on AMD Geode processors appear to be preferred, due to their cost-effectiveness, good performance and low-power consumption. States such as Assam and Punjab have been successful in computer-based learning projects.”

Latest configurations are in demand

Of 180 respondents, 65 percent prefer Pentium IV or AMD processors and the rest use Pentium III or Pentium II or the AMD equivalent. “Buyers are careful in their hardware investments as they want value for their money and preferably over a longer period of time, say four years. For example, they prefer AMD’s Athlon 64 processors due to their performance and its 64-bit platform which will last a while. We don’t think it makes sense to buy older platforms as these are or will become obsolete,” says Ramaratnam. Small businesses are also aware that these platforms are fully compatible with popular Microsoft software applications, and this is important in their decision-making.

x86 still the best

Most small businesses rely on basic IT infrastructure such as PCs for their data processing requirements. However, as businesses grow and applications become more critical to operations, organisations would need to put in place robust infrastructure to support their business needs. This means investment in the appropriate servers, access devices and networking equipment. Considering the scale of operations of small firms and their concerns on the cost front, RISC-based systems do not seem to be their requirement. “In general, x86 servers let you run typical applications a small business firm needs for day-to-day business, whether Windows or Linux-based. OEMs such as IBM, Sun, HP, and HCL offer AMD Opteron-based x86 servers to their customers. These x86 servers are being demanded by their small business customers because of scalability, performance, and energy-savings involved while being available at a price considered affordable as compared with rates prevailing several years ago,” Ramaratnam notes.

Price sensitivity has been the primary factor that has driven small businesses to x86-based systems. According to the survey, small businesses have made large investments in x86 servers. This fact is further echoed by the IMRB findings. Of 174 respondents, 78 percent are using x86 servers, and Windows 2000 is the preferred choice of OS across all the verticals. Further investments in the x86 server market will continue in FMCG, consumer durables, manufacturing, auto components, chemicals and BFSI. “The TCO is low in x86 servers and the availability of trained manpower on the Microsoft platform is definitely higher than with other OSs, especially for small businesses. Additionally, x86 is considered as the industry standard with an open architecture. Ease of application development and deployment, render this a popular hardware option in this space,” says Ashok Pamidi, Director, Commercial Accounts and SMB, TSG, HP India Sales.

"There have been improvements in performance, scalability, availability and reliability of x86 servers" - Viswanath Ramaswamy Country Manager, xSeries IBM India

Among server vendors in the x86 category, IBM is the preferred partner for small businesses. Of 136 respondents, about 46 percent prefer IBM and 40 percent, HP. Small businesses say that branded servers are superior in technology and vendors offer support and warranty and the TCO is low. Viswanath Ramaswamy, Country Manager, xSeries, IBM India says, “x86 supports Windows which in turn supports more applications than any other software. There have been rapid improvements in performance, scalability, availability and reliability. Additionally, skilled resources to manage x86 servers are easily available.”

Investments in RISC will rise

A small percentage of small businesses are buying RISC servers. Of the 174 respondents, only 16 had purchased RISC machines. Within verticals, RISC servers are popular in BFSI, FMCG, services, education and textiles. A majority of small manufacturers aren’t buying RISC servers.

However, going forward, there will be increased spending across verticals—FMCG, textiles, BFSI, services and chemicals on RISC hardware. RISC-based servers are still the first option for mission-critical applications. Even small businesses in verticals such as BFSI and services running computer-intensive server applications such as data warehousing, decision support or large enterprise resource planning tasks are able to take advantage of the processing power of RISC servers. There will be increased IT spending by all these verticals due to compliance requirements. Small firms are poised to become large corporate houses in the future and various re-engineering processes and tools will needed. “Currently, these tools are popular on RISC due to their scalability. Hence, these organisations prefer to deploy non-x86 (Itanium-based) servers as their main backbone servers,” according to Pamidi.

75 percent of respondents in the education vertical feel that IT adds value to processes followed by BFSI with 63 percent. In education, RISC vendors have traditionally offered many sops to institutes—assistance in setting up labs, free software tools and so on, which accounts for the popularity of RISC servers there. In the BFSI vertical, RISC servers have been popular due to computing and availability requirements that could traditionally be met only by RISC platforms—server farms and grid computing are still restricted to niche verticals, while blade servers are restricted to niche applications.

Says K P Unnikrishnan, Marketing Director, Sun Microsystems India, “RISC servers also provides superior throughput due to their basic architecture giving customers operational efficiency and stable performance. RISC servers can do more in less time. Hence, these servers are popular among BSFI, FMCG, services, education and textiles.” In banking, several thousand customers could access the core banking system concurrently and RISC servers are used in these environments. These situations are not common across manufacturing organisations.

Notebooks for the top management

Usage of notebooks is seen only among employees, who are mobile and higher up in the hierarchy. Even the number of notebooks is low and small businesses stick to branded notebooks. Take for instance, Saipem that is using 20 notebooks from Dell and HP for its mobile workforce and is happy with their after sales service. M Balasubramanian, Senior Manager, ICT Department, Saipem India Project Services says, “Branded systems come with advanced technology, competitive price, good after sales service and performance and minimum downtime.”

Bundled with high-end applications and flexible in usage, the penetration of notebooks is expected to be the highest in services (healthcare, logistics, hospitality and advertising agencies) followed by education. The flexibility of notebooks is a key factor in the healthcare sector. “Notebooks are provided to doctors due to their portability and we stick to branded ones, because service is guaranteed throughout the country and they are reliable,” says Rameshwar Naik, Chief Manager, EDP, Breach Candy Hospital. Engineering and management schools are increasingly making use of notebooks. These institutions feel that a notebook is an effective communication tool. As most students use notebooks as an input device or participate in online discussions, an entry-level notebook is sufficient for their needs. Education as a sector is showing a huge appetite for notebooks as campuses become Wi-Fi enabled.

Manufacturing and BFSI low on notebooks

"Branded notebooks are trusted as they undergo various tests which may not be the case in assembled units" - Sanjeev Menon Country Manager Notebook Business Unit Lenovo India

Investments will continue in most verticals except manufacturing and BFSI. If the services vertical shows interest in notebooks, manufacturing and BFSI are conservative. Mobility, which is the key to laptop proliferation in other verticals, is not a critical requirement for manufacturing and BFSI. They are more into stationary desktop usage. “In BFSI, the security considerations are high and hence the notebooks (being mobile) as desktop replacement are viewed with scepticism. The client-server model in banks means that laptop usage is not encouraged. It is used in non-banking sectors for office applications or for personal requirements,” reasons Kohli.

Small firms look at notebooks which are inexpensive and offer new technology. Most vendors have brought down prices of entry-level models. Higher-end notebooks have newer and faster technology such as wireless connectivity, TFT screen, DVD combo drive, data protection and security features in their latest notebooks. It is believed that small businesses represent a substantial opportunity, as this segment prefers notebooks for its sales staff and middle management. Users contacted showed no interest on going in for assembled notebooks over branded ones. As per the survey of 180 respondents on notebooks, 25 percent prefer IBM (Lenovo) followed by HP with 23 percent.

Sanjeev Menon, Country Manager, Notebook Business Unit, Lenovo India says, “Unlike desktops, the technology that goes in notebooks is entirely different. Branded products are trusted as they undergo various tests and may be absent in assembled ones. It entails 20 different tests including tilt, drop and acoustic test. Even the composition of materials used in branded notebooks is unique.”

Handhelds emerge as strategic tools

In India, technology to be effective needs to be on the field and distributed not centralised in a room. A suitable example for this is handhelds. Handhelds are being used in areas such as e-governance initiatives and by the enterprise segment. Large enterprises are geared up to use them but handheld vendors say that the awareness in small businesses and usage is increasing to some extent. Swami Manohar, Founder and Chief Executive Officer, PicoPeta Simputers says, “Small businesses need efficiency and productivity. Handhelds become useful for such companies as these devices are cost effective compared to notebooks and fulfil the need for connectivity and data collection.” Some of the handheld applications popular with small businesses are data collection, inventory-level checking, market surveys, sales force automation and micro banking. Mark Mathias, President, Encore Software says, “In verticals such as textiles, FMCG and logistics, handhelds are needed and mobile computing is unavoidable.”

Handhelds hold out promise for small businesses. Globus Stores uses Symbol scanner machines and Datamax handhelds for barcoding. “We want to give a good customer experience and the handhelds are loaded with POS software. These handhelds are helping us in planning activity in a better manner,” adds Patel. As per the survey, users in sectors such as textile, services, manufacturing and FMCG are optimistic on the usage of handhelds. “We are evaluating brands such as Nokia and Kyocera handhelds in the near future. We find that using handhelds saves time and is easy to handle, carry around, speak into, send attachments and be in touch,” says Balasubramanian.

However, certain hindrances haunt small businesses. Rapidly changing technology is a major concern. Apart from this, uncertainty on return on investment in technology is another concern. Despite such hurdles, these companies feel that IT is an empowering tool which will help them in achieving their goals.