Venguswamy Ramaswamy knew he had his job cut out when he heard the chief of a small business in Madurai say, “I do not know Computer RAM. I only know Lord Ram!” In his tour of 40 cities across India, meeting 250 entrepreneurs running small and medium-sized business, in about two-and-a-half months, Ramaswamy, Global Head of TCS' first, branded foray into the small and medium business segment, saw the opportunity staring him in the face.
Obviously, the CEO of a small-sized company (or any size for that matter) does not want the burden of managing his IT. Says Ramaswamy, “One other CEO I met said that the extent of automation in his company was that they were able to network 10 computers.” So, wouldn't such a CEO be happy to hand over the entire management of IT and all IT resources to someone whose core competence is IT? And wouldn't the CEO be even happier if he is charged monthly or on a per-use basis for these services?
Most companies that are beta (or trial) clients for TCS' SMB offering, titled iON, that eWorld spoke to, seemed relieved to have a name like TCS handle these technology headaches for them. Two issues struck a chord with the CEOs of these companies: that they don't have to allot capital expenditure for these solutions and hardware any more; and, that even with monthly payments, it turns out cheaper to outsource their entire IT operations than invest in solutions time and again.
But isn't that what the challenge for TCS is all about? After all, TCS has only focused on the export market, and that too predominantly on large companies — large, by Indian standards. Wouldn't it face the challenge of reduced margins considering that Indian rupee buyers are (at least seen as) tight-fisted? And, does it have the wherewithal to service numerous small clients in a large geography such as India?
Ramaswamy didn't think these were obstacles. So far, for iON, TCS has worked mostly directly with clients that it has run pilots with. But, it has set up a network of about 80-odd partners who act as channel service providers (CSPs). Ramaswamy says that even here, the small-sized client has a contract directly with TCS. So, TCS becomes accountable for delivery of services. Given that, this is not a pure franchisee model where the latter is typically accountable to the client and not the original provider such as TCS.
Employees of franchisee partners are trained by TCS. Says Ramaswamy, “We assess every sales person in the partner company… our clearance is a pre-requisite for him to sell to our clients.” Not only that, a sales person in every such partner company signs a ‘Tata Code of Conduct' which governs their behaviour, he says.
Customisation?
The bane of the small-sized buyer market is that no two buyers are the same. To address a large market and to customise solutions for individual companies may be too much of a challenge for TCS. To work around this, TCS has developed a core bundle for each of the sectors it is targeting, including Manufacturing, Education, Healthcare and Retail. Then, there is an add-on bundle that comes at an additional cost. Some tweaking or customisation is possible. For example, he says, the hardware and networking layers are not part of the core for the education sector. In manufacturing, this could be part of the core. Here, a smart-card solution to manage attendance in the shop floor is an add-on — which some may choose to use. On the other hand, ERP packages are a must for a retailer and are hence part of the core.
But would TCS break up the core for any requirement of a customer? Ramaswami feels, “Core cannot be unbundled. We cannot offer value then. It's like having mobile phone without contact address facility.” But that is not to say that customisation is ruled out. Some players are unique — even within the retail vertical, textile retailers may behave differently from the rest. He says, “We can configure the software to suit certain unique needs. For example, some may treat inventory as ‘first-in, first-out'. Others use ‘last-in, first-out'.”
With such insights, TCS has obviously spent a bit of time learning from the industry what it wants. Sure enough, the creation of intellectual property (IP) started in 2008. The next year saw a few customers go live on the solutions. 2010 was the time for Channel partners to get into the picture.
Given the time that Ramaswamy and his team have spent meeting people across the country, what learnings did he derive from these and which was later embedded in the product? “Learnings were there throughout, since August 2008, through which time we have refined solutions and capabilities on an on-going basis. But if you ask me to point to one significant learning, that is to answer the question: how do you manage change in SMEs? That is the biggest challenge — such an organisation is not used to transformational change.” TCS has found that convincing the top management, such as the Chairman of the company and working downwards, helps. The fact that TCS helps save anywhere between 35 per cent and 40 per cent makes a difference to the companies that don't have great cash flow to sustain quality IT investments, he says.
To drive this in its clientele among small companies, TCS' head of Change Management who is part of the delivery arm, works with large customers in this space — large meaning, Rs 200 crore revenues and above.
What sells this whole concept quickly to clients, he says, is that the time to deploy is minimised. “That is the only way we can scale and run fast. It is not difficult to get customers with this pitch.” Of course, one big challenge would be when companies don't have their inventory items codified. That, he feels, delays implementation.
TCS' iON has set itself an ambitious target of 1,000 customers by this calendar year-end, and revenues of $ 1 billion in the next five years. Early this month, iON had 135 customers.
Client-speak
The most enthusiastic among users of iON that eWorld chatted up was Manavrachna International University in Faridabad. About 12 years old, the institution brought TCS into the picture about a year ago when attempting to automate the admissions process. The primary focus was to enable online admissions, including the setting up of payment gateways for fees payment and the like.
Says Prashant Bhalla, Senior Vice-President at the University, “There are about 30 modules for the education sector. We have implemented about 50 per cent of what we wanted to use. The HR module is fully functional for us.” The next part of automation, on which work is currently taking place, is on the delivery side of academics. Here, the timetable and planned sessions are all available online and students could register for, and attend, these courses online.
The institute has plans to launch a students' portal this month. As a pilot, it ran an examination for 3,000 engineering and technology students online, using TCS' TouchStone assessment platform. The results, says Bhalla, are instant. The examinees were given objective and short-answer queries and automated evaluation was possible for these. This is to be expanded to other faculties in the University, he says. The idea is interesting, given that each student would have a different question paper.
The university spends about Rs 50 a student per month on this. According to Bhalla, “Upgrading the software, management of the software, security concerns and recurring development costs are all major issues that are avoided on this model of pay per use.”
In the Healthcare arena, Prettislim Health Clinic , a wellness health provider in Mumbai, has opted for the iON experience. The six-year old wellness clinic has had TCS on board for about a year.
To begin with, the Clinic is happy at having clients' data at hand on the system. For the coming fiscal, the Clinic plans to go live on the HR and Finance functions too and integrate all of these. Dr Puneet Nayak, Director, Prettislim, feels that with four users on the system, it is economical for him to opt for the pay-per-use model that TCS offers. “It costs me Rs 5,000 per month per user. If not for TCS, I would have ended up paying Rs 4-5 lakh as capital expenditure on all these.”
Dr Nayak feels that he does not have too many software or solutions options for his industry. “We can hardly be expected to build sophisticated software ourselves. There are few options available when it comes to third-party solutions that are effective.”
Asked if TCS is able to customise its solution for a small player such as Prettislim, Dr Nayak said that there was no customisation, but that the IT major took feedback from such customers. This feedback, he is hopeful, would mean better features in future versions. For example, the current level of sophistication in the software “makes it ideal for Spas and Gyms in the wellness sector. But clinics like ours need a case history for each patient. TCS is working on that.” He also adds that TCS is pretty active in problem solving.
Prettislim deals with 500 new clients each month and the average duration that the client interacts with the Clinic is between three and five months.
None of the handful of iON clients that eWorld spoke to took all the services that TCS offers them on a monthly basis — such as the hardware, the software, the network equipment and the like. However, Dr Nayak may end up taking hardware and network equipment on a pay-as-you-use model from TCS when it is time to replace his older machines.
In the manufacturing vertical, Rialto Enterprises , which makes products for FMCG majors such as P&G, is relieved to find a provider like TCS. Says Chander Swamy, CEO of Rialto, in the pre-TCS days, buying and hence spending on a software piece was only one part of the headache. “Six to eight months after we implement something, the average vendor tells us to change this or that. Buyers typically buy software piecemeal and then integrate.” To change something after all that effort was surely tiresome. For Rialto, dealing with TCS is a welcome change from running among software, hardware and network vendors. Asked why he chose TCS, he says, “We had nothing to lose. They had to prove their ability.”
He says the average, stand-alone ERP software would have cost his company anywhere between Rs 40 lakh and Rs 1 crore on mere Capex. With TCS, he has 25 users on the system, all at the cost of a maximum of Rs 1 lakh per month. Rialto uses many modules from iON, from the HR management system right up to the final invoicing, he says.
Asked if he had a second chance to do this all over again, what would he do different? Says Swamy, “I wouldn't get the managers in, in the early stages.” Early stage in a software development cycle is typically requirements-gathering from the client. Swamy says he would rather have shop-floor supervisors give their inputs first and would then bring the managers into the picture.
Apeejay Oxford Bookstore found problems of scaling the software when the bookstore began to grow. Says Apeejay Group's Chief Technology Officer, Subhashish Saha, “We were working with a local software vendor, but were looking for a branded, stable company.” Oxford, he says is a small company and hence could not make big investments. For this reason, the ‘cloud' model that TCS offered on a pay-as-you-go basis appealed to Saha. Most international vendors, he feels, make the right noises about client being important but end up stuffing their solutions down users throats. So, working with TCS has given him the comfort of working with tools that are open source and not proprietary. TCS has created a web-store for Oxford, too.
Apeejay group's IT department has about 30 people with a couple of managers. Saha has entered into a five-year contract with TCS and spends about Rs 1 lakh per month for Oxford. “Savings are clearly in the range of 50 per cent,” compared with other options he could have exercised, such as buying, installing and maintaining up-to-date software. For now, Oxford uses its own IT hardware and networking infrastructure, having invested in these earlier. TCS has so far serviced Oxford directly. Asked how comfortable he is with a franchisee partner of TCS, Saha is cautious when he says, “We need to see how it goes. The service level agreements are all directly with TCS,” and that gives him a certain comfort.
Saha says hosting a system on the ‘cloud' is not all smooth sailing. Early days see numerous teething problems. “You don't see your service provider, physically, in the cloud model. So, the first few months can be difficult. But it settles after that.”
On the Cloud, security is always a problem, since any smart hacker can access all data relating to a company in one go. Saha is not so worried as to not consider the cloud at all. “On the security front, we have done penetration testing and application security testing. We offer analytical reports based on data to big clients of ours. The data is with TCS which shares logs with us every 15 days. We test the network infrastructure for security every six months.”