With a market size in excess of Rs 700 crore, the enterprise application space is an area that partners can't afford to ignore. While these are early days for vendors to have a full-fledged strategy to drive business through the conventional channel and mid-sized solution providers, they have already begun the process. Partners now need to upgrade their skills and infrastructure to make good this opportunity which is sure to become far bigger in the days to come.

With India Inc having left way behind the ghosts of economic downturn, enterprises have gotten into the spending mode like never before. This includes big bucks now being allocated for IT, which carries a good mix of hardware as well as software. For many organizations, where basic-level IT infrastructure is already existent, the next step is to put in place applications which can actually help them improve processes, efficiencies as well as the general health of their business. And hence it doesn't come as a surprise to find out that this segment of enterprise applications, also referred loosely as back-office software is witnessing good q-on-q growths. According to DQ estimates, the enterprise application market made up for 25% of the overall packaged software sales last fiscal, which translates into a business worth over Rs 700 crore.

While majority of this business is derived from solutions like ERP/ERM (enterprise resource planning/management) and SCM (supply chain management), applications related to CRM (customer relationship management), BI (business intelligence) and PLM (product lifecycle management) too were on an uptake.

However, what was significant that the major players in this space like SAP, Oracle, Microsoft, Business Objects, etc were no longer pushing their sales only through global implementation partners or even tier-1 SIs. In a bid to expand their business into SMB segment as well as target customers in non-metro locations, their collaboration with tier-2 SIs and focused channel partners got more evident.

“To be able to move up the value chain of solutions, tier-2 and tier-3 partners will have to increase their competency levels” -Alok Gupta, CEO, Softmart Solutions

SAP, for example, is collaborating with many tier-2 SIs for marketing as well as implementation of its solutions largely targeted at the SMB. In fact, for the BusinessOne solution, which it would be launching shortly, it plans to enhance its partner engagement levels. Microsoft, which traditionally has a partner-driven business, is not making any exception for its business solutions which are sold under the Navision brand. There too it is closely working with a focused set of solution providers.

The booming SMB market also presents an exciting opportunity for large vendors to come up with solutions especially designed for the needs of customers in this space. And a lot of action in this arena is expected to happen over the next couple of years.

TO THE NEXT LEVEL
For channel players, who for long have been looking at newer growth avenues, enterprise application business comes as a great opportunity to upscale to an altogether different level. Some of them already have already got into this business line while many others were seeing doing basic-level groundwork to be able to offer these solutions in the near future.

"Increasing number of organizations are now adopting solutions like ERP and CRM. Also this space is now being contested between an larger base of vendors. This brings us a wider scope of offering these solutions, which start right from low-end modular applications to high-end integrated enterprise-wide solutions." G Ramanan, Director, Appsoft Consulting, a Chennai-based partner.

Further, for partners the right space to target for offering application software is SMBs. This is largely because the majority of vendors already have large implementation partners to address the potential in the large enterprise space. Also the resources and skill-sets required to meet highly complex needs of large enterprises is something which traditional mid-sized solution providers can't really spend upon.

"A lot of SMB customers are fast realizing the benefits of implementing an ERP or SCM solution to enhance their productivity and strengthen their back-end operations. It is in this space that application vendors need to be aggressive. Having said that, the issue out here is also the cost of these solutions and not many SMBs in India can afford to spend so much. The role that small or mid-sized partner organizations play is by providing these customers affordable solutions," says Deepak Marwah, Country Sales Manager, Navision Software India.

Elaborating on the various activities that a partner can perform in this space, Ramanan cites his own case and explains, "There are customers where we perform the role of management consultant, help them in identifying their requirements, organizing their IT infrastructure, evaluate the product vendors and identify a suitable product. We also take care of implementation and transfer the knowledge back to their teams to maintain the application. And then there are clients where we just take up maintenance of the software."

VENDORS GET PARTNER-CENTRIC
Realizing that by themselves, vendors can't address a vast majority of prospective customer base, their intent of partnering with traditional channel players is becoming more obvious and also inevitable to an extent. Further, many of the large integrators these vendors work with get involved only in pre-sales and implementation stages and have good reach only in big cities. This also prompts vendors to tie with mid-sized solution providers to address service and support issues as well as tap opportunities in B and C-class cities.

Among vendors, SSA Global is one such which is currently exploring the possibility of working with smaller or mid-sized partner organizations. Says Ravi Kathuria, Director, Marketing and Enterprise solutions, SSA Global, "We are in the process of tying up with traditional hardware resellers who are looking at newer areas in order to improve their margins. They can help us identify the prospects since they maintain close relationships with a broad customer base and are well-versed with their needs. They become account managers for us and we work together to close the deals."

However, Ravi adds that all the hardware resellers or systems integrators may not be geared enough to sell enterprise applications yet, but that it will happen with time. "At present, they need monitoring, extensive training and skill enhancement from vendors. Once vendors can assure a substantial margins to these partners, there's no reason why they will not want to upgrade themselves," adds Ravi.

Sanjay Deshmukh, Business Development Director-South Asia, Business Objects while admits that there are tremendous opportunities in the SMB space for tier-2 and tier-3 partners and that the company is open to work with them, too feels there are certain inherent issues with the same.

"First, their current implementation skills are very low and not really enterprise in nature. Also it has to be of a value to be good enough from a business proposition point of view. The implementation cycle that they can manage is also very short not going beyond two-three months," opines he.

However, he is of the view that the opportunity in store for smaller partners is where enterprise customers want to upgrade their existing applications to be able to address the demands of their growing business. Sanjay feels that a mid-sized solution provider can easily chip in to facilitate these upgrades.

For vendors like Citrix, which has traditionally been working with channel partners, thrust is more on training and empowerment than merely expanding the channel. "We are constantly working towards educating our partners to sell our solutions. We even recently announced three levels of accreditation programs for our partners in the country. Under this there will be three different levels, starting with the solution integrators followed by gold partners and silver partners," says Kishore Badami, Marketing Director, Citrix Systems India.

"As far as issues of support are concerned, we work very closely with partners providing them extensive training and adequate infrastructure for demos and prototypes. We have also lowered the initial investment cost for end-customers and positioned our offerings for the SME segment in an affordable manner. Our latest entry-level solution for SME is available at an initial cost of about 8.5 lakhs, which is fairly affordable for them," says Sanjay.

FILLING THE GAP
To address specific needs of the SMB market vendors are also coming up with smaller and cheaper solutions, which are nothing but scaled-down versions of their enterprise offerings. However, given the fact that most of the SMBs have their unique way of functioning and non-identical processes, these solutions sometimes fail to meet their specific requirements.

This is a rapidly-emerging gap and it is here that the tier-2 or tier-3 partners can look to fill the same by doing lot of customization work. However, they would need a lot of technical and infrastructure support from the vendors.

In view of this, vendors like SAP, Oracle, Microsoft, and IBM are encouraging partners to come up with solutions to run on their technology platforms to bridge this gap, in order to strengthen their presence in the customer base.

“Traditional hardware resellers can identify business prospects since they maintain close relationships with a broad customer base” -Ravi Kathuria, Director, Marketing and Enterprise solutions, SSA Global

Vendors on their part are also working very closely with partners especially to do evangelization and impart training. Ramco for instance, is driving a lot of these initiatives. "Training and knowledge transfer are the most essential components of association with partners. The knowledge transfer is done through training programs for both sales and implementation. The implementation team comprises of Ramco and partner members, so that the experience is completely shared and the partner is made capable of executing projects on its own," explains M Ravindran, Business Development Manager, Ramco Systems.

Further during the sales cycle, Ramco brings together its partners to put up a joint show to the customer, to showcase their solutions and capabilities. It also hosts its prospective partners at its R&D center, for getting them a hands-on experience of the system and solution.

However, for partners, the key to survival in arena of enterprise verticals to identify verticals where they can confidently pitch in the ready-to-implement solutions from vendors as well as offer customization around existing solutions. A lot of companies in the mid-market segment are in the process of scaling up their operations and are looking to deploy applications which would not only enhance their productivity and help them grow but also are customized to their requirements as well.

Sanjeev Bhavnani, CEO, Vishesh Infotecnics-a company which has evolved from being a run-of-the mill SI to an application vendor in its own right, has some valuable experience to share. "Domain expertise is an utmost criteria for a partner to venture out into this space. Unless a partner is capable of delivering up to the customers' requirements, he cannot survive in the application space. Also partners should be able to work on an O/S platform from the scratch, when it come to developing niche solutions," explains he.

INHERENT CHALLENGES
There are several prerequisites, which a partner needs to fulfill to be able to enter into this space. First, the partner must possess a domain expertise to understand a customer's requirement properly. This is especially true of small-sized customers whose prime concern while going in for an enterprise solution deployment is to get the best ROI on the investment they are making. Besides this, a strong marketing arm and adequate sales force is also required by partners to be able to penetrate deep into the market. The success of a partner largely depends on how fast can he reach the market and his delivering capabilities.

Among the most common challenge that partners have to face is to put in place an infrastructure as required by the vendor, in terms of trained manpower and basic IT setup. Also another concern they would need to address is to recruit and retain trained manpower. Says Ramanan, "Implementation of the software requires combined skill of programming, functional, project and people management. Here the challenge is even more considering that you will have to balance your resources along with that of customer and the vendor."

Also the partners have to currently leverage on vendor's brand name to offer solutions to customers. "The tier-2 and tier-3 partners at this stage can only sell solutions as products developed by vendors and the large tier-1 partners like Wipro and TCS. These products or solutions are more or less customized to meet customer requirements. However, to be able to move up the value chain of solutions, these partners will have to increase their competency levels," explains Alok Gupta, CEO, Softmart.

Along similar lines opines Sanjeev, "Small partners may have to face certain entry barriers in the sense that they should be sound both technically and infrastructure-wise to be able to drive the whole thing. More often than not they have to fight for the customer's trust. However small a customer may be, it will always want to deploy a solution of a reputed and established vendor or would at least look for vendor backing for the service and support issues."

According to Sanjay, the very reason vendors in this space will recruit partners is to reach out to smaller accounts which cannot be serviced by the vendors directly or its larger partners. "However, we would also essentially require our partners to generate leads from their side. The partners should not expect the business to be brought on a platter by the principals," says he.

While agreeing that the partners have today evolved with time and exposure to the business dynamics, namely competitive pressures, increasing specialized demands of customers, Sukhdeep Singh, Director-Marketing, Oracle India feels there is still scope for perfection in the way partners business function. "These are pertaining to the levels of service delivery, new capabilities, systems and processes to improve the flow of human resources, attracting and retaining people with the right skills, understanding and utilizing the right marketing initiatives, among others," feels he.

However, majority of the vendors while admitting that enterprise application, while being a very new and different ball-game for traditional channel partners, does hold a lot of promise for them. Though these are early days for partners to really expect multiple customer wins and large business, what is definite is that with increasing adoption of these solutions across SMBs, they have a much bigger role to play in the days ahead.

Until then, they could work upon gradually building up their infrastructure and skill-set base. Also till such time this area becomes as mainstream as their other business lines, they should focus on understanding their customers' business more better and even further strengthen their existing relationships. So that when the customer gets ready to deploy an ERP or CRM, the partner becomes a logical choice for implementation or post-sales support.

KUSUM MAKHIJA with inputs from Goldie in Bangalore and S Gopikrishna in Chennai

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