Achilles’ Heel for India SME Focused Software Product Companies
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.
The 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, the 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 the 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 come 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 in 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 the product has the 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 is more important than technology. From Day 1 we do agile software development, maybe we overdo agile. We do what customers ask, sometimes 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 the 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 mark, t 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)