There is no need for evangelizing the need for technology adoption in any business. But despite all awareness, Small and Medium Enterprises are quite reluctant to adopt the latest IT tools that can give them an edge over competition. We got together a group of experts to discuss the level of technology adoption and the availability of affordable tools for them. But before the discussion on cost-effective business solutions began, there was a need to define an SME.

Alton Viegas, MD, Vitage Group: Very little is talked about what technology is appropriate for the SME sector. SMEs' issues could be, for instance, how to manage the workforce? How to manage a team? How to enhance productivity?

A company has to define its SME segment. It is difficult to make a judgment based on certain parameters given by IDC or Gartner. In countries like Taiwan, China and Malaysia they aim at a turnover of about a million dollar.

In India for instance, if you look at different industry segments, a large builder may become a big corporate customer for a cement company, but for me he may be a small customer. It would vary so it is the individual companies who have to work together to define their own SME segment that would give you clarity. We go with a definition of a company with 100 employees and with Rs.50 crore turnover.

Santhosh L, CEO, Hew Software: If you take our example, our question is what kind of a market do we target for our sales force automation software? Reebok is a global company, as everyone knows. But if you are selling them something here, the target team will be small. If you are selling licenses, it is valid that you should define your space in which you want to operate.

Anil Kumar, CEO, Astha Technologies: There is no standard definition to work with. For some time, we can work at a certain level and then move on. So perhaps the definition of a standard SME is to just get into the market. Its strategy will be very different after a year.

Santhosh: You can be corporate or a large customer if you mean Rs 5-10 lakh business for me. I will be a good SME customer if I have 50-100 users. Reebok is an MNC, but in Bangalore it could be smaller than an SME. So it's different definitions in different segments or for different product lines

Alton: We can safely say that a company with above 1000 staff is not an SME. But Gokaldas Images in Bangalore operates from some 24 factories, each employing more than 300 people. So it may be better to focus on IT usage instead of talking of employees.

Santhosh: Since I have been selling software in India I can say one thing, there are lot of positive effects my customers are experiencing because of their association with companies abroad. The new age companies are purchasing lot of software today because they are exposed to modern technology. But old economy companies don't interact much with foreign clients. Their management style may remain traditional for some more days. But if you look at companies like Tyco Electronics, which is our customer, not more than four regional managers handle the company in India. So what is your cost of selling and what are the profits you are looking at?

Alton: Technology awareness is a big question. Bangalore is an example of high technology awareness. It is easy to assimilate technology here. Despite that, usage of technology is low in SME sector. Everyone uses technology to its lowest capacity. In the banking sector, they used something called advance line posting machines. It was a great thing for the user, but we don't know how much it benefited the customer.

Guruprasad Rao, Finance Head, Zudha Technology: The Tally software has helped immensely to build awareness. It is a simple accounting software residing in the background, but it has changed the total working environment. But initially, the accounts departments had resisted computers in their division.

Alton: Before accounting it was word processing that replaced typewriters with computers. But the cost was always a big question. A few years ago a PC would cost a lakh. Most SMEs operate from a single machine with one operator using it in an exclusive air-conditioned room.  If you are hungry for information you will realize that you need to put things together to become more efficient. I heard that about 400 clients have been signed up for SAP implementation last year. They had just 200 odd clients in over 10 years of performance among larger Indian SMEs.

Santhosh: We are investing in sales force automation because there is a felt need. Tomorrow every organization will be forced to it.

What are the problems faced in IT implementation?

J V Avadhanulu, Director, D-Link India: IT needs certain infrastructure like communication equipment, be it EPABX, fax or may be voice mail. They also need a network of PCs, a set of servers and finally software. From an SME point of view, the EPABX is an expensive hardware with a 100 line or a 50 line exchange. Most of them do not have a cost effective voice mail system. Network is one of the things which is always growing and you need a good network administrator. In the SME sector, it is difficult to get a proper network administrator. And broadband, too, hasn't become very popular with SMEs. So many people opt for leased lines and it is an expensive form of communication.

Santhosh: Ultimately you know there is a need for system. A stand alone package like Tally can work, but if you are looking at sales team putting their production plans, then you need to have stable infrastructure. That becomes expensive and that's where the ASP will come to rescue. Initially SMEs wont go in for full-fledged IT implementation. But if it back fires, then the decision doesn't go forward at all. That's why there are so many stalled projects. I feel the connection for SMEs would be the ASPs, at least in the near future. The cost of experimentation should be kept minimal. Then they will graduate into all possible applications.

Manju S Murthy, CEO, WDC Solutions: In each of our organizations, there are huge problems associated with viruses. If you have broadband connectivity, then you need expensive firewalls and a person to maintain it. All IT companies have such problems.

JV: There is another fundamental problem in the traditional SME sector. In India, voice communications are completely decoupled from data communication and only large firms can bridge this gap through their broadband connectivity.

Anil Kumar: Therefore if you have a very strong Internet Protocol infrastructure, then you can go for voice over IP. But if your IP infrastructure is unstable, you can't afford to discard the modem for your PC or give backup for your network.

Alton: One of the basic problems is that companies need to first streamline their operation. IT processes are not going to happen until your internal processes are in place. Most of the SME operations today are not yet properly replaced. So even if you put an IT solution there, you are going to encounter failures. That's why you will find that people in SMEs are very careful about implementing IT solutions.

Anil Kumar: The secondary problem is connected to resources. Most of the problems do require technology, but there is no holistic solution. What you said about unavailability of solutions and right human resources is right. For example, we are a small organization and we consume a lot of IT. I have been fighting within our organization for buying a D-Link networking product. But people said it will not work out. After much investigation on Cisco, 3Com and D-Link equipment, finally D-Link prevailed.

Alton: There is no thumb rule in IT. The field being so vast, obsolescence plays a large role, cost plays a heavy role. It would be difficult for any SME to take a correct decision. Bangaloreans are lucky that they can at least cross check with experts. From my experience, I know that most SMEs are willing to pay much more, but since they don't know what they are spending for, they end up wasting their money in useless resources. 

Being in IT sales for 20 odd years, I can say that customers don't trust the IT vendor, because it is an expensive proposition. So there has to be a talk about ROI and Total Cost of Ownership. In its absence, how does the SME decide what kind IT solution to use?

Anil Kumar: I have a choice of choosing from sales guy A, who has one solution and sales person B presenting another solution. How do we decide when neither is giving us a holistic solution?

JV: Suppose you set up network infrastructure, what is in the server room is still a mystery. But what's on your desktop is not a mystery. The other confusion is what software do you need to install. In the traditional SME offices, there will be modem from a particular vendor, phone from some other vendor and a switch from another vendor. Probably there would be no VPN or security. There will be 2-3 servers depending upon different needs. It could have a separate EPABX and a separate voice mail fixed to a PC.

Guruprasad: We are using Bizi, one of the biggest competitors of Tally. It is a good software. I am evaluating that software since I am an IT sales person myself.

Alton: We have nowadays simplified our work to a large extent. Still if a person is not IT savvy, it's not easy to understand technology. People should spend some time to understand technology, understand the need for that technology and they should be able to give their opinion and be very open about it.

Santhosh: An indication of MNC entry into SME business are the 200-500 installations of SAP and Oracle. Since reputed firms are getting into the SME space, the acceptance is higher and the cost is considered secondary. People are today aware of what SAP can do to their business.

Manju Murthy: It could be great for a large corporate, but if you are an SME you are not sure it will give you adequate returns for your investment. Since the ROI to the top and the bottom line is not quantifiable, the sales guys don't assure anything.

Alton: Ask any ERP consultant, 90% of the firms are not yet ready with their internal processes. So the right application becomes very critical. CEOs are not as worried about the infrastructure as they are about implementing the application. At the same time, it has to be flexible and sustainable. I have seen that most of the people who have implemented some application have burnt their fingers. So when it dies, so will the idea of getting IT infrastructure at your firm.

What are appropriate IT solutions for SMEs?
Manju Murthy: The cell phone has become a standard device. If you are an organization with a large sales force or if you are a service provider, then a mobile phone with an ASP kind of service works better.

JV: You need to access data when you are traveling. Otherwise how will you catch up with the work piling at your desk? The laptop is the only such popular device right now.

Feasible technology offerings are Voice Over Internet Protocol and network processors. Most of the devices between the WAN and the LAN were built with custom hardware in earlier days. Network processors make it possible to build them with standard processing hardware that is much cheaper. With these devices, you can have one box doing the functions of the routing, firewall and Virtual Private Network, instead of having different boxes with multiple choices. Ideally it should also give you the function of voice communications. If I have VOIP, then when I am traveling my phone number will remain the same wherever I go since it is IP based; and if you have VPN you can access data too. Moreover an IP phone can talk to another IP phone without any legal issues involved.

So through VOIP and VPN network with PSTN support, data mobility is feasible. We released a product recently that is based on a network processor having a routing, firewall, VPN and a two-channel VOIP plug in. We are close to achieving it; all you need is a low cost IP connection at the endpoint. 2005 is supposed to be the magic year when the number of IP phones or IPBX shipped will equal the number of traditional EPABX. When that happens, the IP phone cost will come down drastically.

The biggest benefit you get out of it is unified messaging. You can reply to your email through voice mail and vice versa. That will make a huge difference in day-to-day office life.

Alton: The basic network for an office can be partly wired and partly wireless, but base has to be wired to a large extent. You need a good telecom facility; VOIP would be ideal if you want integrated solution. Then you need a file and print server, which would do the basic data collection with a backup device. You need a Wide Area Network that will give you access to Internet. You need an Operating System that can also be open source. You need a robust messaging system that lets you establish communication with branch offices. You need good automation tools for basic functions. If you need global connectivity, you can get your website hosted and a web server application. You can add infrastructure as your need grows.

What are the technology options for SMEs?
Alton: Today convergence is vital. So depending on your investment, you can integrate voice and data.

JV: It is also a question of market segmentation. Traditionally, it would have been highly unlikely that more than 10% of companies in Bangalore would actually have a firewall or a VPN. It is because of lack of an affordable solution. Some of them could have a Linux based PC firewall, but most of them will do without. You will see lots of solutions in the market by 2005 such as an all-in-one affordable box, where you have everything right from router, to firewall to VPN to IPBX. Added to that, if there is a little magic called ‘quality of service,' it would be greatly affordable to everyone.

The second thing that will make this happening is the Ethernet connection to office premises. It could happen in two ways: either you have something to run internet in your premises which is taken care of by the service provider; the other is new technology which is standardized, just recently called Ethernet in the First Mile. That can make your modem disappear. You can also build in some features. If your VAN connection fails, it switches over to the backup connection. Just like your UPS switches between the mains and the generators without your notice. Another aspect is because of the standardization in SSL-TLS browsers, you can make such boxes administrated and manageable from anywhere in the world without having a system admin to manage it. Have you observed that when your PC fails, it is difficult to get your AMC guy to come and service it? Similarly if your modem or router fails your business will stand still until the repair happens!

For the complete version of this enlightening panel discussion, mail us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it \n This e-mail address is being protected from spam bots, you need JavaScript enabled to view it "

 Issue BG43 Oct04

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