SaaS landscape in India

SaaS Landscape in India

July, 2009

This report is solely for the use of Zinnov client and Zinnov personnel.
No part of it may be circulated, quoted, or reproduced for distribution
outside the` client organization without prior written approval from
Zinnov
Zinnov Management Consulting Pvt. Ltd. (Confidential)

Agenda

About Zinnov

The SaaS Market In India

Key Insights

Zinnov 2

Agenda

About Zinnov


Key Insights

Zinnov 3

Zinnov is a consulting firm that prides itself for having grow through a
commitment to excellence in solving business problems of our clients

About Us

Founded in 2002 Our Typical Engagements
• Zinnov was founded in the year 2002 with the • We work with MNC companies ( IT&
focus of providing services in the area of Manufacturing) looking to leverage India
Globalization Advisory to fortune 1,000 • We work with companies to help them enter
companies India as market, leverage India as a talent
destination, and India as a R&D hub

100 150

80 Client Engagements 150
100
60

40 73

20 43
25
12
2
0
2003 2004 2005 2006 2007 2008 2009(E)
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Our consulting focus areas follow under 3 heads, all which are focused
on addressing unique business problems faced by clients

Consulting Focus Areas

Globalization Market Expansion Human Capital
Advisory

Globalization Strategy Opportunity Assessment Global Talent pool Analysis

Globalization Roadmap Customer Insights Workforce planning

Partner selection Go-To-Market Strategy Compensation and Benefits

Operations Optimization Blue Sky Product Ideation Flexible Work force Tool

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Our indicative client list speaks volumes about our growth and our
capabilities in delivering value to our clients

Vertical Client

Software
Products

Hi Tech

Manufacturing

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Agenda

About Zinnov


Key Insights

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The domestic market for SaaS is estimated to be about USD 50 million and is
currently dominated by Collaborative Applications and CRM workloads
Workload-wise Distribution of SaaS Market in India, 2009

Total Market: USD 50 - 56 million

Workload Total Market in 2009

Collab. Applications* USD 18.9 Mn

CRM USD 16.2 Mn

ERM USD 4.8 Mn

Security USD 1.6 Mn

Others USD 7 – 14 Mn

The SaaS market in India is extremely nascent with a total market size of USD 50-56 million. Three key workloads,
Nascent Market-With Couple Collab. Apps, CRM and ERM together contribute 80 percent of the market. With the market being so nascent,
of Early Movers there are a couple of early movers who have cornered a large share of the market. These include Salesforce.com
and Ramco Systems
Note: Confidence Level for Market Size is 85 – 90 percent, * Collab. Applications – Collaborative Applications include web conferencing, productivity suites etc.
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Source: Zinnov analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)

Currently only a handful of the top global SaaS players are
focusing on India Market

Focus of Top SaaS Index Players on Indian Market, 2009

Company India Focus Company India Focus

NetSuite
Intuit -

Omniture
Blackboard

RightNow Technologies
Concur Technologies -
Salary.com -
Constant Contact -
salesforce.com
DealerTrack Holdings -
SuccessFactors

DemandTec -
Taleo Corporation -

Kenexa Corporation
The Ultimate Software Group -

LoopNet - Vocus -

Source : Zinnov Analysis Zinnov 9

Some of the major challenges that SaaS providers face in India are
lack of knowledge about Indian workflows, lack of IT support etc.

• Focus of companies in Indian market is
• Broadband penetration & reach is
relatively new and lacks scale
abysmally low. Number of active
• Most of these firms don’t have the
broadband subscribers in India is 5.52
commitment/money to bank roll and
Million as on Dec 2008
scale these experiments

Broadband Lack of
Penetration Scale

• Current pricing model used by
• IT talent in non-IT industries is limited.
companies is very high compared to
The salary differential is extremely
high, which is a constraint to IT
IT Talent Shortfall Constraints Pricing paying propensity
• Availability of pirated software that
adoption
solves customers business needs

Product
Localization IT Support

• Most MNC’s products in the market
• IT support is essential for success of
are global products with minimal R&D
SaaS. Since the revenues in SaaS are
spend for India market requirements.
recurring, lack of support affects the
None of the Products are mapped to
longevity of a customer
Indian Work Flows

Note: *Broadband is defined as an internet connection with speed equat to ir greater than 256 kbps
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Source: interviews with Company Stakeholders, TRAI, Zinnov Analysis

Despite these constraints we believe SaaS is likely to grow in India
over the next few years

Evolution of
Telecom
Service
Providers into
SaaS Carriers

Pricing & Drivers for SaaS Growing
Support Basic Internet
Innovations adoption in India Infrastructure

Unique
business
model
Innovations

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Source: interviews with Company Stakeholders, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)

Mobile Revolution
Mobile revolution and entry of large Telecom players will drive
SaaS adoption

What does it offer? What does it offer? What does it offer?
Looking to enter the SMB market with Airtel plans to offer SaaS to SMBs and is Free branded laptops free with hi-
Novatium. Novatium is a Chennai based in talks with Oracle, SAP, Microsoft, speed Internet data card service
start up that has launched a netPC and Google and Jamcracker to offer branded Reliance NetConnect
provides hosted applications on different applications on a pay-per-use. It has entered into a strategic alliance
subscription basis. The service is Airtel aspires to become the CIO in the with leading IT giants Acer, Asus, HCL,
currently available for consumers, but cloud. Already tied up with Google Intel, and Lenovo
is being launched for SMB’s. Apps for its broad band users The scheme is priced as low as Rs.1500
per month (excluding Service Tax) for
two years with no hidden costs.

What does it do? What does it do? What does it do?
Novatium provides a complete range of BSNL launched 3G in March 2009. Plans Tata Communications, is just one of the
services in network computing and to operate 5 million lines spanning all players with plans for WiMax, a super-
specialize in delivering customized district headquarters and important speedy version of wireless broadband.
solution to enterprises. They offer the towns by end of this year. Investment The plan will cost more than $100
extra edge, ensuring success in every outlay for the same is Rs.2700 crores. It million and span 115 Indian cities. The
field of specialization. has tied up with Nokia, Sony and goal: to provide 20 million broadband
Samsung to provide handsets that have connections by 2010.
Currently selling to consumers and has been priced at Rs.7000
2500 customers pan-India

Source: Zinnov Analysis, Secondary Research Zinnov 12

Mobile Revolution
Airtel Cloud computing offering with Net PC, will attract low cost
online PC users from SOHO, SMB and Education areas

Background and Product Details Other Details
Product Launched May, 2009 Technology –
Partners Airtel (broadband), Novatium(Hardware), Microsoft (Software) – Windows XP for client customized
Accessories 15-inch LCD monitor, keyboard, mouse, companion by Nivio
Availability Delhi, Gurgaon and Noida – Linux-based server
Product Pricing 7,999 (INR)
24 hours
– Companion connector
Installation Time
Availability Airtel Stores and NEXT Electronic Stores
Support – It supports multiple USB
peripherals (USB pen drive, USB hard disk,
Different Monthly Plans
USB printer, digital cameras, etc.),
Monthly pricing speakers and microphone
Packs Common facilities Differentiating factors
(INR)
Home 699 MS Office standard
Power Consumption – 5 W only
10 GB Space
MS Office standard with Admin
Professional 3 GB Data Transfer 899
rights Competitive Products –
Online Desktop Service
MS Office Premium with Admin
– BSNL
Business 100% Data Security 1199 rights – MTNL

Partnerships

Access Device Google Apps OS/ MS Office ERP/CRM

Source: Company Websites, Novatium Sales , Media Zinnov 13

Mobile Revolution
Nokia is leveraging mobile as an access device to provide CRM
solutions on an independent operator model

All new orders can be
Both the supplier as well as
received as a message in the
the agent have access to their
inbox. The status of the order
orders right in their mobile
can also be tracked
every time

One can view his network
consisting of first level and
second level partners on the
mobile

Key Features Key Advantages Nokia India is piloting a
Share and update product information Mobile CRM of textile
Portable access to business data
Create and distribute purchase order Less paper work
distributors. Such solutions
information Less errors that are easy to use and
Create and send dispatch details Shorter sales cycle are cost effectively a likely
Keep track of orders Secure platform for data storage to be disruptive in the
A directory service wherein published
company information can be accessed market

Source: Nokia Tej website, Primary Research Zinnov 14

Growth of Basic IT
Increasing IT and internet penetration will also help in increasing
the adoption of SaaS solutions in India
PC Users in India, 2006-08
(Millions) Active Internet Entities* in India, 2005-08
(Millions)

Mobile Phone Subscribers in India,
2006-08 (Millions)

Note: Active Internet Entity – Individuals/Establishments with an internet connection
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Source: MAIT, TRAI, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)

Growth of Basic IT
India is increasingly becoming a global hub for data center
services, and this will further drive SaaS adoption in India

Indian Data Center Market, Global Perspective, 2009 Vertical Play of Indian Hosting Service Providers & Global
Comparison, 2009

India Global

• The Indian datacenter market is estimated to be between USD
1 – 1.2 Billion which accounts for about 8% of the global
market

Data Center Space in India, 2007 – 2011E (Thousand square feet)

Note: * Does not include captive data center space (Captive data centers include those being outsourced to system integrators)
Zinnov 16
Source: Data Monitor, Zinnov Analysis Zinnov Management Consulting Pvt. Ltd. (Confidential)

Growth of Basic IT
Data center players like Tata Communications and Reliance, have
a significant Indian and global play
Tata communications, largest player in the market, has 22 data center worldwide with 7 data centers operating in
India. It has Tier-3 data centers with 1 million square feet capacity. Services include co-location, managed hosting
and storage. The flexible on demand model allows clients to purchase as per capacity and then adjust as their
business evolves.

Reliance has over 500,000 square feet of hosting space. It has 6 Tier- 3 data centers in India with a customer base of
500. Their hosting services include co-location, application hosting depending on basis of the services required by
clients.

Sify has 200,000 sq ft of hosting space in 4 Tier-3 data centers. It offers co-location, dedicated and shared hosting
services. First in country to deploy Gigabit Switch Routers in its backend infrastructure

NetMagic has 5 data centers across India and US and 1 virtual data center in US. It has a customer base of 600. It
has close to 100,000 square feet of hosting space

Ctrl S’s services include infrastructure services such as co-location, managed services such as managed backup,
dedicated hosting, hosted exchange and disaster recovery. First in India to deploy water-cooling technology, which
would save 30% of its energy cost annually. It has 30,000 square feet area of hosting

Net4’s services include virtual private servers, server colocation, backup and recovery and managed services. It has
data centers in 8 different locations. It has a hosting space of about 30,000 square feet

Source: Interviews with Company Stakeholders, Company Websites , Zinnov Analysis Zinnov 17

Business Model Innovation
Companies such as TCS with their ITaaS model are likely to be
disruptive in the market and would increasingly drive adoption

What are the benefits of the model
ITaaS Stack

Stack based business Single
L6 Business Intelligence model to deliver IT Stakeholder End to
for SMB End
enablement to SMB’s Solution
L5 Custom Apps – Inventory Stack
Management SaaS driven
IT on a Tap

L4 Business Apps-HRMS
model Benefits of
Engagement
New Model of SMB
through ICT
L3 Email, Office Apps Lifecycle
Remote tech
support to
L2 Networking Equip. bring down
Open source
products-low end
TCO
cost
L1 Hardware

Business Impact

Industry Vertical Focus Anchor Clients, Low Price points

• Manufacturing • 18 Anchor clients in
manufacturing, have tied up
• Health care with Industry associations
such as CODIASSIA, AEPC
• Education
• Retail • Entry price point as low as
Rs.500 per user per month.

Zinnov 18

Business Model Innovation
School mate is another example of a unique business model that
provide staff augmentation support along with SaaS offerings

SchoolMate Model
IT + manpower

The Lack of IT talent is a
major constraint for IT
adoption in Schools.
Schoolmate with its unique
man power supported
Parents
managed service model is a
breakthrough innovation in
Information
the market
Payment

What is the Model all about? Uniqueness of the Model

Computeriz-
Communica-
ation of day
tion of
SaaS + Support + Man power
to day
activities information to
parents
Reduces IT
Staff
requirement The New Schoolmate will deploy a technical person in
of SMB Information each school, who will work fulltime on
Model covers, health, SchoolMate implementation in the school
fees, reports
etc
Technical Staff
for each school
who manages Online. On site
ICT, and data support model
entry
Zinnov 19

Pricing Innovation
Ramco is an ERP solution provider that has launched disruptive
pricing model to drive adoption of its solutions

Ramco Model

Paying Propensity for ICT
solutions in India is limited,
and to acquire and grow
Payment clients, pricing innovation
is essential. Ramco & NIIT
provide Payroll solutions to
the Indian government and
charge them per pay slip
Pay Slips generated

Hosted
Solution

• Ramco has an hosted ERP solution that is called Ramco OnDemand

• NIIT is its technology partner and they have developed an HR module on top of
Pricing
Ramco OnDemand Innovation
• This solution is hosted on the government managed CDAC data center
Driving IT
• The solution is being used to generate & manage the government payroll. Adoption
Government is charged on the number of pay slips generated and not on the regular
model depending on ‘number of users’

Zinnov 20

Agenda

About Zinnov


Key Insights

Zinnov 21

There are 4 essential aspects that players need to address before
looking to grow in the SaaS market in India

Product Customization is Sales & Marketing Client Channel Partners are Telecom Players are an
Essential Acquisition spend will be essential for achieving scale essential cog in the
high in the market ecosystem for growth &
client servicing

•Indian small businesses do •Globally sales and marketing •Partner eco-system focus is •Telecom players such as
not follow global best spend is about 50 percent of essential in India. It has Airtel, Reliance, Idea and
practices in business process, the overall budget for key helped initial market leaders BSNL are essential in the eco-
and hence global products SaaS players like Ramco systems to build system. Not only do they
without customization do not an early mover advantage lead SaaS adoption through
fit their needs •In India the MSME has increased broadband
identified 1200 •India has a wide business penetration but they can also
•Most Indian sales forces manufacturing clusters. In landscape and requires act as effective partner for
have hierarchical reporting, addition there are multiple communicating with clients payments
however this is not a other verticals such as retail, in at least 8 major languages
standard feature in many SFA education, etc. with each if not 22. This requires a •Clients prefer to pay via,
products currently in the having limited levels of IT strong local channel partner Demand Draft, Cheque or
market. Companies thus pay awareness eco-system to scale wire transfer and tracking
an additional fee to be able effectively in the market payments is a challenge.
to use the feature. For •The need to create IT Telcom players can be
example, ZOHO charges USD awareness through events, leveraged as a payment
20 per user per month to demos and a lot more off line channel to increase efficiency
enable users with hierarchical modes than globally accepted and reduce overall cost of
reporting online modes, will product delivery
substantially increase the
spend on S&M to acquire
clients

Zinnov 22

It is also essential to look at innovative channels to engage
customers and grow business in the Indian Market

Strategic Alliances

• Salesforce.com and Google have formed a strategic
alliance for Salesforce Group Edition featuring Google Ad- Partnerships with Telecom Companies and ISPs
words, which provides every element of the customer
lifecycle, from advertising, creating leads, closing business • Google has tied up with Airtel to launch Airtel Live to
and retaining customers in one integrated solution distribute Google Apps (Gmail, Google Docs, Google
Calendar, iGoogle) to Airtel broadband customers

• Zoho partnered with Google to enable Google users to
access all Zoho services with their single Google ID • Tata Communications has partnered with SugarCRM
to offer hosted CRM solutions to Indian businesses

Integration with Social Media • Several companies such as Trend Micro, F-secure,
have partnered with Tata Indicom to provide on
demand hosting, backup and security solutions
• Zoho has launched Zoho applications (Zoho Writer, Zoho
Sheet and Zoho Show) on the Facebook platform,
enabling users to chat and work together through the • Indian gaming company Indiagames has tied up with
social network several ISPs such as Airtel, MTNL, Tata Indicom to
deliver Games On Demand
• Salesforce has launched an application on Twitter which
enables salesforce users to engage with their client base
faster and more efficiently, either individually or en
masse

Zinnov 23
Source: Company websites, press releases Zinnov Management Consulting Pvt. Ltd. (Confidential)

To succeed in the India market its essential that firms look at the right price-
value mix, followed by a solution centric approach

Basic Principles

Child Birth at Homes at Stay 5 Star at
Cars at Call at Rs.1
Fly at Rs.1 Rs.1500 Rs.300,000 Rs.1499
Rs,100,000

Zinnov 24

Thank You

69 "Prathiba Complex", 4th 'A' 575 N. Pastoria Ave 21, Waterway Ave,
Cross, Koramangala Ind. Layout, 5th Suite J Suite 300
Block, Koramangala Sunnyvale The Woodlands
Bangalore – 560095 CA – 94085 TX – 77380

Phone: +91-80-41127925/6 Phone: +1-408-716-8432 Phone: +1-281-362-2773
Zinnov 25

SaaS landscape in India

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