Indian SMBs to Spend $640 Million on Packaged Software in 2007
Spending on databases, accounting, networking, productivity and system software will account for more than 90 percent of the total software spending by SMBs this year. SMBs prefer to pay only for the features and modules they use.
"We expect the Indian IT market to maintain this bullish trend because of increased IT awareness among SMBs," said Nirupam Chaudhuri, Research Manager with AMI Partners. "SMB users have become more alert and they know what they need to be able to accelerate their business. A small percentage of IT-savvy SMBs have progressed to the third wave of IT adoption and are now demanding tailor-made solutions with superior support services."
AMI defines the third wave of IT adoption as a stage of "Extending the Enterprise", where due to adoption of advanced infrastructure solutions there is improved collaboration and closeness to business partners.
Small businesses (SBs, or companies with up to 99 employees) posted a 23% rise in software spending while medium businesses (MBs, or companies with 100 to 999 employees) showed 30% growth in software spend last year. "Channels continue to dominate the Indian distribution ecosystem and users remain strongly influenced by the way an ISV or an SI counsels buyers in typical deals for solution pieces, support infrastructure and technology lines," Chaudhuri said. "Vendors maintain close monitoring of their own - as well as their competitor's - channel quotients and set up new alliances to target new geographies and niche verticals."
Generally, investment in packaged software is driven by business needs. Specific requirements decide the modules or packages for implementation. SMBs are also most concerned about rationalization of investments. Having state of the art technology with the latest security features is viewed as a major factor in overcoming competition. Vendors can no longer push anything and everything as a package to users.
"These days SMBs need to be convinced on all the features a software package contains, and are only willing to pay for features they plan to use," he added. "In keeping with this trend, vendors have also launched solutions and packages in which pay-as-you-use features are incorporated, thus allowing SMBs to access only the modules they've paid for solutions."
Thus, such analytics applications are gaining traction. There is an increased focus on factors such as employee productivity, enhancing customer interaction systems, automating and streamlining operations, round the clock connectivity, information protection, etc. These factors are in turn driving adoption of the appropriate packaged software and solutions. Even the decision-making to procure such solutions has transformed into a shared and systematic process. Middle management and product heads have important roles in deciding the solutions the company will invest in.
"Hosted applications have surged as well," Chaudhuri said. "Recent advances in security and a growing level of awareness of the benefits of hosted applications have gone a long way to reduce inhibitions about information security. The prevailing low bandwidth costs have added impetus to the adoption of such solutions."
--For more on the channel in India, go to www.crn.in