SMBs: Small to create Big Opportunities for the Software Industry

India with a wider base of more than ~46 million small and medium businesses (SMBs) is one of the fastest growing SMB nations globally. India’s vibrant SMB sector has played a key role in creating jobs and has the potential to generate employment opportunities for more than 50% of the labour force still working in agriculture. Technology adoption is considered to be a major catalyst for the growth of SMBs. Indian SMBs are continually adopting technology in some form or the other, though in a limited sphere, not realising the full potential that it can bring as a game-changer to the existing ways of doing businesses.

In collaboration with Nielsen, NASSCOM facilitated a detailed survey and in-depth analysis of the SMBs’ current business software ecosystem encompassing – current adoption status, assessment of key stakeholders, triggers and inhibitors for software adoption as well as barriers. The overall objective of the study was to apply deep learning’s around barriers to software adoption to develop a set of recommended solutions to address these obstacles. At the same time, the study also aimed at identifying significant opportunity sweet spots

The survey was carried out across 10 Indian cities, covering over 1,000 SMB firms across locations (Bengaluru, Mumbai, Jaipur, Patna, Ludhiana, Delhi, Cochin, Kolkata and Pune). The sample size was further segregated into three categories (a) Users of business software (b) Intenders, and (c) Non-intenders of business software

Some of the key characteristics of SMBs:

  • Mostly self owned businesses; most decision makers have a minimum graduate degree
  • ~7 out of 10 decision makers are <40 years – reflects a good proportion of young and dynamic entrepreneurs
  • Serve mostly urban customers; spread across local and outstation regions
  • Cash &cheques – main methods of transaction; limited reliance on credit cards, internet banking etc
  • Favorable disposition towards software but with limited automation in day to day operations
  • Prefer ‘easy to install’ software
  • Existing users are highly positive towards efficiency gain from software adoption

The study focused on business issues and SMBs’ attitude towards software adoption:

  • SMBs with turnover of INR 3 – 10 crores are positively disposed towards adopting software; larger ones (turnover <INR 100 crores) are embracing IT for improving efficiency
  • Accounting software is the most commonly used by SMBs (>65 per cent are aware and use these in their daily operations)
  • Relatively low awareness and usage of advanced solutions like ERP, BI, analytics etc
  • High cost of hardware & software, lack of funds and technical know-how are the biggest adoption barriers
  • Lack of need is the problem perception for non- intenders

Experts View - Selling to SMEs and Startups
Ambarish Gupta, CEO, Knowlarity

Marketers tend to fall prey to the glamour of signing on a big name client, while giving the cold shoulder to a category that shows, in my opinion, greater promise of developing a long-term relationship. SMEs and start-ups might not have the budget or the inclination to provide you with that juicy deal that'll set you up for a bonus come end of the year, but handled carefully, can provide great benefits in the long run. Some of the reasons why SMEs and start-ups deserve the same attention you'd give to a big corporation:

-  SME or startup might build a large section of their business around your product - giving you a much higher sales potential in the long run.

- Bigger businesses, might give you the lock-in to a long-term or high-value deal, but it's not likely to be on your terms. On the other hand, dealing with a startup puts you in the driver's seat.

- Customer feedback is a vital part of success and with smaller organizations, you get to closely develop your product - in partnership - as the market evolves

These are just a few of the reasons why you shouldn't ever dismiss the chances of getting a small startup or SME as your client. Of course, selling to SMEs also requires a slightly different approach:

- Personal attention matters more so than with big companies which tend to take a more organized, hierarchical, and systems-driven approach to procurement and purchase

- Social media has been touted as the new equalizer and indeed, is far more effective at reaching out to smaller businesses than to established firms - the lack of an hierarchy and more agile decision-making makes startups a great target for social media campaigns 

- Just as you can expect a quicker response to your sales pitch to a startup, you also have to react fast to any queries or demo requests. Bigger companies might have their own systems that take time and allow you greater leeway, but when dealing with startups, you have to match their agility.

Again, these are just a few differences involved in marketing to SMEs and startups. Play your cards right and you could sign on a few startups that, in a few years, could be your biggest -and most valued - customers. 

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