|
|
If there is an award for preserving historic business practices and customer service methods I will recommend Indian Railways without hesitation.
Today I went to Egmore Railway station to send off my mother. There were multiple entry points to platform, but the platform ticket counter was in the farthest place from Parking. After reaching the counter there was a long queue and it took me over 10 minutes to buy a Rs.3 Platform ticket that will give me rights to enter the station. As usual Indian Railways had just one counter for so many customers, no vending machines (I read in news they piloted a vending machine program and even a vending machine program Mobile SMS but withdrew them soon). The person in the counter followed what I suspect to be a British leftover way of issuing the tickets. He collected money (and gave change as needed), then picked up each ticket from storage one by one, affixed a rubber stamp to mark “MS” (indicating Egmore station), then another rubber stamp to mark today’s date and time on the back and then checked all of it before handing it over. He repeated this process over and over again for hundreds and hundreds each day. No change in the process for last 100 years old. I am sure no other business process in the world has been so untouched by Technology
I was left furious on the inefficiency of this process & the enormous waste on people’s time, but then I was reminded this is Indian Railways – the preserver of History and British legacy. Probably this is how they ensure their political correctness by ensuring employment for everyone they have in their rolls.
I have been listening to the Audiobook version of this book “The Steve Jobs Way: iLeadership for a New Generation” for last few weeks during my everyday commutes. The book is written by “Jay Elliot” who was Senior Vice President of Apple computer reporting directly to Steve Jobs, not in the recent decade but during Apple’s early days. Owning a MacBook Air (running Windows 7), iPhone and an iPad like many others I am eager to understand the success of Steve Jobs and his presentation skills are legendary. So when I saw this book in Audible listing I immediately bought it.
The book covers extensively Steve Jobs early days in Apple building Macintosh, but has very little on his days in NeXT or after his return – which is the most exciting period. The book is not a complete biography of either Apple or Steve Jobs or about Jay Elliot, though it attempts to be one when talking about the early days of Apple. The book is about the lessons on management Jay Elliot was able to distil from observing Steve Jobs. It goes into length on how Steve Jobs directly managed the team, selected the members, interior of the office (large atrium with a tree) and how he never took a “NO” or “Not Possible” as an answer from the engineers or anyone else.
In the first few chapters, Jay Elliot gives a brief about his childhood days in his ranch in California. He writes about how in age 15, he could single-handily fix his old 1932 Ford Model-A car and how Henry Ford and team had the wooden slabs in which the original parts came used to build the structure pieces for the floorboards, seats & the interior, the part numbers were etched in easy to find places and the car required no manuals to take apart or to be put together. When talking about how to design and use your own products, Jay Elliot mentions about how rust happens in almost all cans of Gillette Shaving Cream cans, all along I thought I was the only one who was having this problem. He continues to write on the Importance of the first experience of the user when he/she takes the computer or device out of the box, how quickly they can start using it.
Jay Elliot lists many of the abilities he has observed of Steve Jobs that led to Macintosh success. Steve’s obsession with perfection, no compromise attitude, identifying the most brilliant people and going for them (including going for John Sculley), caring for his people, attention to detail, wanting to have the best for the company and the product he is building. It seems Steve Jobs build a whole new factory and assembly line different from rest of Apple for manufacturing Macintosh. In the Mac early days, Steve motivated his people by calling them “Pirates” and not as Navy!. Steve has a power of vision that’s almost frightening, that power sweeps aside any problem or hurdles. How Steve Jobs accepted technologies that were not build in-house like Canon, Japan for Apple Laser Writer and the Celebrity status reception he got during his first visit to Sony, Japan. How Steve persisted on getting Regis McKenna to do the Advertisements for Apple and how he went ahead even with Apple board’s refusal on the1984 most popular TV commercial of Macintosh by Chiat\Day agency. Steve is first a consumer, the most demanding consumer and his Buddhist faith probably has lead him to have a minimalist approach to the products he design – simple, intuitive user interface and features. Steve believes every user wants to feel successful, feel good about using the product Jay Elliot talks briefly about how Steve Jobs hired John Sculley, got kicked out himself from Apple, how he passionately build NeXT & Pixar. How Steve betted his whole fortune on Pixar and the first Toy Story, which then became a huge hit and paying him and Disney a windfall. The book then talks about (again very briefly) about how Steve Jobs returned to Apple, build successful products like iPod, iPhone & iPad one after the other, how he will not ship something until the technology is ready.
The author goes into length to praise as Steve’s brilliance on getting into retail and opening the Apple Stores in 2001, then on entering into Music Retailing and iPods. The author showers lavish praises on Steve Jobs to an extend of becoming an unashamed fanboy. At the last chapters the Author talks about his latter years experience of starting Migo & Nuvel.
If you are interested on how Apple got started and early days then a good book to read will be iWoz by Apple Co-founder Steve Wozniak.
I have been attending this yearly event by Nasscom – Emergeout Concalve in Chennai. This year it happened today in Hilton, Chennai – this was the first time I am going to this hotel since it was opened few months back. The hotel was nice and functional, but I couldn’t find any character or inspiration in the design.
Mr.Som Mittal in his speech mentioned Indian IT products are being recognized slowly, for example Scope International of Standard Chartered Bank worked with NASSCOM in adopting Indian IT technologies. 12 products were showcased and 7 got selected.
Keynote speaker was Mr.Krishnamachari Srikkanth who started slowly in his speech but picked up speed and hit the balls all over Hilton. He over-shadowed everyone else in the panel discussion that followed up, but it was enjoyable and unpretentious. Krish Srikkanth in his speech talked about:
- Being positive, energy can’t be created or destroyed it can only change
- Be bold, play natural, be different. Human nature is to put down on difference
- Enjoy what you are doing and don’t worry about results.
- More important listen to your heart, don’t go fully based on data & Analytics. Your heart and consciousness is connected to super consciousness and super computer called God. Leaders take decisions through heart not by rational.
- Don’t use complicate words like pedagogy and all that. Keep things simple
- Fortune favours the brave (தில்லுக்கு துட்டு). High risk high gain
- When Leader messes, every one is happy
- In Cricket Technology can fine-tune a natural talent. It can’t create talent when it doesn’t exist
In the panel discussion one of the speaker “Ramki” says currently Cricket fans chase information and websites. Why not the information chase or reach users automatically?. One think I didn’t understand in the panel discussion why have a moderator with a star speaker like Kris. The moderator was completely unable to steer the discussion or add value. The next two panel discussions that followed were not inspiring for me, so I left the event during lunch time.
In my firm Vishwak Solutions we conduct periodic programs on various topics for self-improvement, health, technology & productivity. Last month we began a pilot program called “Vishwak360” the objective of which is to expose everyone in the organization to every department & its function – to give a 360 view of what’s happenings. I delivered the first talk and I spoke on Software Licensing – probably the driest subject, when selecting the topic I decided if I can get the audience interested through this then all the subsequent talks are going to be lively & enjoyable.
Over the years software licensing has become very complex and it need not be so. To navigate this jungle you need to understand why it originated, what is IPR (Intellectual Property Rights), different forms of IPR (Trademark, Copyright, Patent), Enforcement & finally different types of software licensing.
I am not sure how came across this book, but I am extremely glad I did. The book is “Delivering Happiness” by Zappos.com CEO Tony Hsieh. When I bought the AudioBook from Audible.com I knew very little about Zappos other than having heard about their legendary Product Videos in their site and that they were bought by Amazon in 2009 (which implied they should be super smart on e-commerce & warehousing).
The book starts with Tony Hsieh (pronounced as shay) talking about his childhood and teenage misadventures and business ventures. Tony’s narrative style, especially listening to as Audio grabbed my interest. I was reminded of similar incidents in my own school & college days and it motivated me to immediately make a list of events of interest in my own growing years, thank you Tony. Then Tony talks about his founding days of LinkExchange, I remembered I was one of the early users of the service and loved it for generating traffic to EasyTools.com in those early days (~1998). He then goes on to sell LinkExchange in two years of founding to Microsoft for $265 Million after realizing the culture of the company deteriorating so badly that he couldn’t get himself up from bed to work one morning. Many entrepreneurs won’t have the luxury that Tony got of selling it and starting new – so it is important to listen to the second part of his story of how he build a fun & energetic culture in Zappos.
It was news to me that Tony didn’t start Zappos, instead it was by a young first time entrepreneur Nick Swinmurn. Tony Hsieh got involved in Zappos initially as an investor through his venture fund “Venture frogs” which had invested on Zappos, then after the Dotcom burst Tony became more hands-on and then to risk his entire LinkExchange fortune on Zappos – fascinating indeed. Many entrepreneurs including myself can easily relate to the struggles the company has gone through in early days from 2000 to 2003, but the growth story from 2003 to 2009 (when they hit a Billion Dollars) was like a fantasy come true. Tt would have been great to learn about those years had Tony chronicled them in detail (in preface of the book he did say this is not a Biography of Zappos, but I wish it was). Tony wants us to believe it was all due to the Culture he created in Zappos. May be it was the culture primarily, but I feel it got to have been helped greatly by other factors as well – their technology, marketing, warehousing capability and so on.
The book then focuses on what is happiness (sounded to me like a PR creation and retro-fitted in later years, though nothing wrong about it), what Tony has learned on the subject from research he read, Employees talking in their own voice on how Zappos culture impacted their happiness & well-being. Some of the things about Zappos stands out clearly & uniquely and those are certainly inspiring. They have something called as a culture book – you can see videos of it online and can even request a free copy of it (they ship anywhere outside USA to international as well). Their risky move from the “hip” San Francisco to Las Vegas (of all places on earth). The ability of Zappos to maintain their independence even after their sale to Amazon. Their willingness to share their ideas on Culture & Delivering happiness to rest of the world – through tours of their offices as part of Zappos Insights, through this book and now they even got a bus tour as well.
After listening to the AudioBook I have bought few copies of the paper-back from FlipKart.com to gift it to my colleagues for them to enjoy and learn. A great management book that is fun to read, which can bring happiness to employees around the globe if only every CEO under the sun reads it.
I am half-way through reading the book Googled when it struck me the thought that has become this post. Reading the book you are awe-stuck on Google’s initial years, the story of how the founders acted, their extraordinary vision & brilliance, their boldness touching arrogance are all unbelievable. Though many of us who were over 20s when Google was founded has lived through their growth, still when you read it chronicled we realize that this is a company that was so disruptive, so unconventional, so transformational in the first years of its life itself. Then suddenly when I started thinking about Google in the present term (2011), I felt not so cool or exciting about them.
The thoughts that go through my mind as I now think of Google are:
FaceBook is the new darling of the Silicon Valley. You have read stories about the Google struggling to retain their brightest people and fresh A-Grade talent are choosing FaceBook over Google.
Google’s strength always has been the amount of information it has – about People their interest, what they search, when they search, what advertisements works and so on. Now FaceBook seems to be doing one-up in this, FB knows more about individuals – they know who my friends are, what they like and they know that in real-time from my updates. And people spend good part of their day in FaceBook, where as in Google they visit & immediately leave Google.
After their initial wave of product releases (or acquisitions) including Adwords, AdSense, GMail, Google News, YouTube, Blogger, Picasa, Google Books, Google Maps, Google Chrome which were innovative & in rapid succession, you are finding things have become slow. (Let us look into new innovations in later points). The last major release I remember of Picasa, YouTube, Google News or GMail were years ago. Blogger is certainly aging and crying for an update whereas WordPress is shining with new features all the time. Google Docs is evolving ever more slower. There has been incremental updates like Microsoft has been doing for last 2 decades with Windows & MS Office, but nothing that’s disruptive like Apple is able to come out with each release.
After the initial lead I am not finding Google Apps to be offering any compelling value over competition. Microsoft has been successful in stemming migration to Google Docs, infact Microsoft has grown its revenues from MS Office pretty well over the last few years much more than expected. When it comes to cloud you hear Amazon AWS, Windows Azure & SalesForce more often than Google App Engine.
Apple which was basically a Hardware/OS firm is now the biggest media retailer (Music, Movies) and is one of the the biggest Online Services firm from new markets that it created from nowhere (Books, Apps) – where as Google is nowhere in any of these. I have used Android Marketplace and it pales in comparison even to Microsoft Zune/Windows Phone Marketplace and certainly not in the same league as Apple App Store in terms of technology, user experience & developer experience. Android is also plagued with the problem of heavy fragmentation and so far no plans from Google to address it for benefit of developers & users.
When a company like Google which has grown exponentially every year for last ten years in terms of revenues and resources (people & infrastructure) it is natural to be having big expectations and innovations coming out every year. In recent years, Google has come up only with Android which has become a hit. Google Wave was a disaster, Chrome OS is having release delays & predictions from IT pundits of being born dead, Orkut is an also run, Open Social a failed show of strength and PayPal clone Google Checkout has had few takers. Many of the recent announcements from Google have not got the same WorldWide PR attention like in the earlier days. The next wave of growth in Tech World is undoubtedly the Social & Cloud – Google is not the leader in any of this.
It is not surprising to hear bad things about Google especially from Steve Ballmer and then from Carol Bartz – who both have called Google a “One Trick Pony” at various times, but I find it to be more true than ever. Google has been very successful in defending its turf on Search for almost 10 years now, it has been constantly improving it, it has got releases in quick successions and almost always the product turned out to be superior in technology than the competition. Bing! is catching up (due to Yahoo! acquisition & fairly good product) but still Google is able to maintain its lead comfortably. The entry barrier in this field is phenomenal for any entrant here.
So what will the next ten years of Google will be – that’s the billion(s) dollar question. One thing we can be certain is that the road ahead for the incoming CEO Larry Page from April 1st is not going to be smooth. All the best for Mr.Page
Yesterday NASSCOM Emerge Forum had organized a talk titled “Software Delivery Supply Chain – Achilles’ Heel for India SME Focused Software Product Companies” by Mr.Kumar Vembu, Founder & CEO of GoFrugal Technologies.
Brief given by NASSCOM before the talk: Indian SMEs have a huge, unsatiated appetite for IT solutions. But, we are yet to see a large India SME focused success story among the software companies, with the exception of Tally Solutions. Many software companies that attempted to address the Indian SMEs could not succeed. Is software delivery supply chain the Achilles Heel ? Given the extra-mile Indian SMEs expect the software vendor to walk, in order to learn their needs and implement the solutions, software delivery supply chain is a potential landmine.
Brief about Mr.Kumar Vembu: Kumar Vembu is the Founder & CEO of GoFrugal Technologies which specializes in retail, retail distribution and supply chain management solutions. In a short span of 6 years, GoFrugal has established itself as the leader in retail business management solutions for the micro, small and medium enterprises in India. Kumar Vembu is a co-founder of Zoho Corporation and was the President & COO of the company from its inception since end of 2004. Earlier in his career, Kumar has worked in the USA for Qualcomm & Intel Corporation and in India for HCL – Hewlett Packard and the TeNet group, IIT Madras. Kumar completed his B.E in Electronics and Communication from A.C. College of Engineering and Technology, Karaikudi.
One complaint I always had about NASSCOM was that it was focussed and working only for the IT Biggies, kind of an elite club. Over the last few years with EMERGE Forum and EMERGE Conclave NASSCOM seems to be realizing and addressing the needs of SME’s. This talk in Chennai by Mr.Kumar was certainly beneficial for the participants. In the one hour talk Kumar was down to earth, used no slides and everything he said seemed to came from a man of profound thought & immense experience. Following are from my notes of the talk, so I have left the notes in the same voice of Kumar and so all references to I/We mean Kumar and GoFrugal. I may not be accurate on capturing the facts & figures, so please bear with me.
GoFrugal has over 12,000 retailers using it in last six years.We have over 50 people across India on the feet and about 30-40 in support. Overall GoFrugal is over 220 people strong. We acquired RayMedi Pharma Software product company which had 200 customers at the time of acquisition. We are present in thirty cities. Our Software runs on Windows and SQL Server 2008 Express Edition which goes up to 10GB and is free. Though product has user interface in multiple indian languages, many of the users only use English.
While selling to India SME’s the relationship and face value of the people interacting with clients are more important than technology. From Day 1 we do agile software development, may be we overdo agile. We do what customers ask, some time customers ask wrong things and we may end up doing wrong things. The retailer first wants you to automate what he is doing then want to look at better ways and industry best practices. Which means even if it is a bad practice our software has to do it, we need to do it. 70% of a retailer’s time is spent on present and past problems and the rest 30% is spent on creating problems for the future. We develop our software faster so we introduce more bugs, so any new problem we are responsible. In this product space in comparison to India market there is Sage which has over six million customers, there is Mind your own business in Australia, Intuit Small business, China has a company that has over 100 million users.
In Tamil Nadu there are 3-4 main business communities. Money lending business focuses on distribution and those who have time in their hands take up retail business. Every 50-60 such retail owners form a virtual family/clan/native-place cluster. Everyone in the cluster are all connected very well and they are connected for long. There is one thought leader in each cluster who decides and set the direction. Any new cluster the first few customer is very difficult to get, only after that you you can penetrate rest of the cluster. Companies like TVSE have tried and failed in this space, so the memory is fresh with the cluster. For marketing we participate in many industry events regularly, one time attending is not enough. Traditional marketing, having senior vice presidents who call field people and pushing them doesn’t really work. Indian market is very slow to penetrate.
As Software vendor you should service them first without asking money, which comes much later. Even with attrition at their (retailer) end the software should be easy, robust and also software should prevent people from doing mistakes. They want the Software product company’s owner to come in person and attend issues, the owner coming and showing attention is more important than solving the problem. The challenge is to match the cottage industry response but a professional service. Our ‘Assure’ program gives them guaranteed support time. One full time person from our side calls 20-25 existing customers and explains the remote support feature in the software and that you will get 10 times quicker/better service than someone coming to your door. Today only 8% of our Desktop version users use the remote support feature. If they have data connection in their PCs they can chat online for support. We have a 24×7 support centre in the town of Kumbakonam backed by a small Dev centre there. All our field staff use laptop & data card.
For FMCG there is a one way channel of distribution. Consumer feedback doesn’t go back to the manufacturer. This model works for Tally as well, because of their training partners and now it is a science. Our Entry level product for a single computer is free, first one is Rs.15,000 and comes with 6 hours of user training. All said from our customer’s point of view we are over priced. Our conversion has been good from free to paid. There are about 1200 configuration settings in the software and so for us the two way feedback is very important. Time is not valued and you can’t expect them to pay Rs.3000 for a days training. The person training from our side has to know business and also the product. Channel is apprehensive on learning and getting trained because they have no brand as brands like Polaris, SIFY or Tally go. Customers are not capable of self learning. We have put up thousands of video on YouTube on how to do things in our software. The time spend on creating the videos is more than what all our customers put together would have spent on seeing it and there are videos on many of the Indian languages.
Corporate deals we do with companies like Asian Paints give us the scale, with each deal giving us over thousands of seats. Volume makes it possible to match the costs and pay industry salary. We recruited people who may not have great communication but they are Good IQs. Bigger guys don’t want them due to their lack of great communication. Engineers don’t have appetite to learn business, they can’t do taxes. We have 20-30 entrepreneurs who don’t have engineering degrees. They have developed their own software may be with Visual Basic and they have worked with customers already.
(You can read my past post titled “Running a product business in India” here)
The last few days were quite eventful for me. As one of the Charter Member of TiEChennai I volunteered to help Raghu Rajagopal who was heading the team for the software (content) for TiECon Chennai 2010. TiE is a Silicon Valley USA based Entrepreneurship fostering association boosting over 11,000 members in 13 Countries and Chennai’s chapter is one of its vibrant. I took on the task of helping to identify and co-ordinate for the Tamil panel, which was a first in TiECon Chennai. It was a panel that show-cased success stories straight from the gut of those fearless entrepreneurs from the state. The journeys covered were path-breaking, across industries, started from scratch but today enveloping across the nation. The panel was moderated by none other than Chennai’s own illustrious star Mr.Y.Gee.Mahendra (YGM).
|
2.15 PM to 3.15 PM
|
Break Out 2
“Unnaal Mudiyum Thambi”
|
Panel Discussion in Tamil
Moderator:
Mr. Y.Gee. Mahendra
Dramatist, Actor, Comedian
Panelists:
Mr. A. Padmasingh Isaac
Founder Chairman, Aachi Group
Dr. A. M. Arun
Chairman & MD, Vasan Healthcare Pvt Ltd.
Mr.C.K.Kumaravel, Founder & Managing Director of Naturals Unisex Salons & SPA
|
Mr. Y.Gee. Mahendra kick started the session by saying all the three entrepreneurs met the very basic needs of man – Mr.Isaac of Aachi takes care of stomach, Dr.Arun of Vasan Healthcare takes cares of health, Mr. Kumaravelu of Naturals Saloons satisfies everyone’s ego. Detailed coverage can be seen in this blog. My sincere thanks to all the 3 Panellists and to Mr.YGM for accepting our invitation and sharing their valuable experiences.
Rest of TiECon 2010
- Lifetime achievement was awarded to Sanmar Group Chairman Mr.Shankar
- Best seller author Gurucharan Das says recruit on attitude, train them on skills.That is the dharma of entrepreneurship.I act because I must
- Where is money panel said in India there is an inverted pyramid of investments, less number of early funds, flush of funds for grown businesses
- Ajit Balakrishnan, Founder Chairman of Rediff says that for broadband in India to reach 100-200Million penetration it should be offered at Rs.200 per month, that is the sweet spot. He adds that original content’s time has come – AOL,Yahoo! is getting their hands on it now, it is going to be big, but no one knows how big. Ajit says in a mature market like Japan Mobile Web browsing is multitude times more than Desktop, future is for Non-PC devices. I couldn’t agree with him more on all the points.
My blog post on TiECon 2008 here.
Today one of my friends called me for a routine catch-up, he is is running a start-up firm in Rajasthan (India) developing software products . We discussed many things, including on how difficult and virtually impossible it is to run a software products firm, based in India – historically there has been literally no domestic market that is willing to open their wallets to buy your products (even Developer products) . This is unfortunate as India boosts millions of Software Engineers, Developers and Professionals servicing the US & clients around the world. This is an audience that preaches to the world the importance and benefits of Software. But when it comes to Indian “Enterprises” buying software it seems to be a completely different world. At my firm “Vishwak Solutions” we have been selling “Developer” Tools for over a decade through our brand EasyTools.com, but so far we have probably sold just a single copy (or may be two) to customers in India, all our meagre sales have been from US, Europe, Australia and everywhere else except India.
The prevailing tax regime in India doesn’t help either in improving the scenario. For almost last two years, all packaged software including those from Microsoft, Adobe are being taxed with both Central Service Tax @10.3% and local state government VAT @4% (or higher). Only in India, you will have a sale transaction classified by Tax authorities as both a service & goods. The unified tax GST is being elusive with Central & State government on logger-heads. It appears no one in Central or State governments want a simplified tax regime that removes all ambiguities and makes doing business easier, making the ground highly conducive for corruption & inefficiency at every levels. Lastly refunds from Tax authorities in India is virtually impossible.
I won’t attribute the lack of growth in Software Products sales to be a pure Indian phenomena alone (though in India it is evident and never existed in the first place). Globally what used to be a thriving business of Shareware, where small (SOHO) and part-time developers could develop, sell and make a decent earning selling PC Software today is virtually dead. It has morphed and taken a limited new birth in the Mobile Phone industry, thanks wholly to the widely successful Apple’s App Store. A distant cousin of it is the growing Games for Gaming console business. But the original PC software that targeted consumers and businesses is simply not there anymore. You need to divide the market into three to understand what’s happening.
The lower level (sub $100 priced products) is non-existent due to two forces. One the basic operating system (Windows or Linux or Apple Mac) itself over the years filling the gaps that existed in previous versions with each subsequent release – for example Music Player, CD Burning, MP3 Ripping, Photo & Video editing, Defragmenting, Disk Partitioning and so on. Second most of the needs and features that were fulfilled by Desktop Shareware tools are now available on the web for free. And when it comes to Online tools, only one business model seems to work so far and it is advertisement (which too favours the bigger players). For making advertisement model work you need to run a loss-leading business for a long time to generate sufficient volume which requires deep pockets or good portfolio of external investors willing to write huge cheque in every round of funding.
The classic failures in this space is Netscape Browser, WinAmp Music Player (its parent Nullsoft), struggling WinZip or InstallShield. Only exception I can think of in this space is the Antivirus vendors like Symantec, McAfee or QuickHeal – but I am not sure how long this window of opportunity will exist too, most of these players I believe are doing well due to their enterprise business and not due to their consumer business.
The medium level (anything where customer investment is $100-100,000). This is normally the most active region of software product business, which provides the core profits for the Small & Medium sized firms. In the last decade most of this space is occupied by Free (as in Free beer) Open Source software. Think of classic LAMP stack components like the MySQL Database and PHP Language for this space. More easily recognizable examples in this space is Content Management Systems (CMS) and Blogs which are now dominated by OSS (Joomla!, Drupal & WordPress). If anyone today builds a CMS or Blog engine that is just a plain/basic CMS or Blog engine, there will be no uptake from customers. The basic features have been highly commoditized and people today expect it to be available in the underlying framework or free. In my opinion this is where Drupal or WordPress shines as a free platform to build on. But as the product gets specialized to a particular Industry say with Workflows, templates, forms & other features for that Industry, its revenue/yield moves away from Zero dollars. But to do these feature additions, the investments required too grows exponentially and you need to keep doing this every year – the market place just don’t give you enough time to recover your original investment, it is a continuous investment, investment & investment cycle.
Apart from availability of Free software, the reason for failure here by firms is due to fast raising complexity and hence cost of developing software. In the last 15 years after the Web (HTML, XML, JavaScript) programming model, there has been no fundamental innovation on how software is being developed or deployed. Cloud Computing I believe is an evolution rather than a revolution way of software deployment & hosting. The development tools have grown to IDE, Intellisense levels and then stagnated there for years – this is true for .NET, Java or C++ or Adobe Flex. All alternate programming tools/frameworks/approaches/modelling tools have failed or haven’t caught on for wider usage to have any impact. On top of this, is the raising cost of Salary levels for Software Professionals like in developing countries like in India – how long can you sustain 20-30% annual salary increase, productivity doesn’t grow that much each year.
Lastly, to market products that costs say $20,000-50,0000 (the medium in this space) and to reach these customers the cost of marketing has been ever increasing. Simple tools like Google Adwords alone don’t work for this space. You need dedicated marketing teams, social networking agencies, real-world events and distributors. All this costs many times more investments than just product development. And closing a sale in this space doesn’t happen over a week or so they take anywhere between 2-4 months, the recent recession in US & Europe have increased the purchase decisions timeframe as well.
If you are thinking about Subscription based online services in this space, then I can only quote SalesForce or Google Docs or Linked-In as successful here and they are obviously few. I have heard about stories of companies in Israel who are playing successfully in this space by licensing their innovation and IP to bigger software firms rather than reaching to customers directly. I need to do some research on this trend, if you know any details please post it in the comments.
The Top level ($100,000 and more) there is very little to say as there are only handful of players here today – Oracle, Microsoft, IBM & Adobe. Over the last two years they have been moving towards increasing their services revenue and expecting less of product licensing. IBM and Oracle are pretty aggressively pursuing this trend, Microsoft & Adobe seems to be getting to terms to this inevitable trend. RedHat & VMWare seems to be doing good as well in pursuing services revenue.
Coming back to the conversation, I had with my friend. We continued talking that to survive in the #1, 2 space you got to be extremely aggressive and expand your market share very very quickly. Release a suite of product variations very quickly. Go for the kill or get killed. Try out online subscription models as well. Get an external investor sold on your idea ASAP.
I shared with him the following practical pointers to doing software exports in India:
1. If he hasn’t already to get IEC Code (Importer Exporter Code). To import or export in India, IEC Code is mandatory. No person or entity shall make any Import or Export without IEC Code Number.
2. Apart from any private banks he may be banking, to open an account with the near-by Public Sector Banks. This will help with getting loans on favourable terms and government interest subsidies for Small & Tiny sectors, and good relationship with the local branch & manager – which can give lot of intangible benefits and connections.
3. Book-keeping or accounting in India is just not as easy as entering values to Tally. So have at least a part time accountant to do that.
4. Have your part time accountant to file Service Tax, Income Tax, TDS returns every month or quarter on time. Penalties for non-compliance can be very harsh. Have your Auditor to review and submit you a report that all returns are submitted correctly and on time, you can pay your Auditor a very nominal fee per month for him/her to spend those few hours every month.
5. Have accurate invoices for all foreign exports, even though done online through a intermediary, printed out in paper and filled properly. Failure can make proving that Service Tax or VAT not applicable for them will be very difficult. Proving your case to tax authorities on these matters in India is nothing but impossible and drains your energy and time. Tax authorities here are certainly not tax-payer or business friendly, especially the smaller firms.
6. Take insurance coverage for all your critical assets – Computers, Servers & other items as you see fit.
References:
1. Detailed summary of hurdles an entrepreneur must overcome in order to incorporate and register a new firm in India
2. My own blog post on Doing business in TamilNadu
3. My blog post on Mr.Bharat Goenka’s (CEO of Tally) talk in Nasscom Emerge
4. My blog post “IT Job Market in India & Industry trends”
Update 9/Nov/2010: Today’s Economic Times newspaper carried two articles relevant to this discussion.
1. Product companies wilt as IT buy favours majors
Unlike in countries such as the UK, where the government wants small and medium businesses (SMB) to account for a quarter of the IT spending by public sector organisations, many Indian start-ups cannot even bid for government technology contracts despite having relevant, and at times, better solutions.
“If you can’t get us to sell in India, how do you expect us to become successful global firms,” asks Sanjay Nayak, CEO of Tejas Networks
From around $1.89 billion in revenues during 2008-2009 , the Indian product firms’ revenues fell to $1.64 billion during year ended March 2010, says Browne & Mohan, which analysed 418 top product companies across Chennai, Bangalore, Pune, Delhi, Thiruvananthapuram, Bhubaneshwar, Chandigarh, Ahmedabad and Hyderabad.
2. Moving Indian product story into next orbit
I saw this book in a local bookstore the other day and immediately bought it in my KindleDX. With KindleDX I read it in two parts – the first few chapters I had the book read out to me using the Text to Speech while driving to work and back, the second part I read out the text (as a book). Either ways I enjoyed the book “Employees First, Customers Second” by HCL Tech CEO Vineet Nayar. The book talks about the concept of a value zone, the importance of empowering the people in the value zone, how the layers of management in an organization though needed adds little to the end value that goes to a customer, innovation happening from ground level employees, benefits of employee self-service portals and tools. Of all the concepts in the book, the idea of “Value Zone” did capture my imagination.
I always feel that CEOs of Indian Firms are not as forthcoming in sharing the story of their journeys (success or failures) in form of books as much as their American counterparts. For an Indian business, the story of how a firm in India made it to the top is more relevant than the hundreds of stories of Fortune 100 firms in USA. This book addresses this need quite nicely.
|
