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Are global IT solutions affordable?

Vendors can give software on a rental basis to make it cost-friendly for smaller fry, reports Ganesh Natarajan.

india Updated: Nov 06, 2006 19:49 IST

A recent CII seminar on IT for the automotive manufacturing sector threw up an interesting debate on the affordability of world class IT solutions for small and medium businesses.

While the Marutis and Bajaj Autos and Mahindras of the world have successfully built their information architectures on the excellent bedrock of a industry strength ERP solution, the affordability of SAP or ORACLE as a core ERP platform and the add-on costs of customer relationship management and supply chain management packages are high enough to make people wonder if they are in the manufacturing business or the IT usage business.

There is a solution to this dilemma and that is in the form of applications hosting and 'pay-per-use' services.

Industry research leader Gartner has pointed to "Software as a Service" as the key trend for today and predicts that a large number of independent solution vendors will start providing their software on a rental rather than purchase basis to cost conscious buyers.

The logic for this is two fold – the obvious one is that offering a hosted service will greatly expand the user market and wean even those who are using cheaper solutions to use the best business solutions available in the market.

The second and possibly the less obvious advantage is that hosting obviates the perennial problem that small companies face in hiring and retaining the right quality of talent to manage their in house applications

What are the applications that are finding the most traction amongst CEOs CFOs and CIOs of organisations in India? Sales force planning and control, accounting and human resource management are still the most common generic horizontal functions that are being hosted by Application Service Providers (ASPs) giving a huge opportunity for software vendors to stretch the market for their software.

The very fact that even the big boys of ERP – Oracle and SAP are now taking this opportunity seriously and announcing plans for the Indian market means that the time is coming when quality of software will no longer be a differentiator between the big and small players in any industry.

Who can use a hosted service? Almost any company which has a clear understanding of its business processes and has an optimised set of applications that can be automated through the use of a generic package.

The hurdle to be crossed after that is not the system itself but the cultural barrier of being reluctant to allow control of applications and sometimes data to pass to a third party after having been held close to the decision makers in the organisation for so long.

There is a need to be judicious in the choice of applications to be availed of as  hosted services but once this is done, meticulous planning and collaborative working with the service provider in the initial stages of hosting, and extensive training in usage of the application can ensure that both from the availability and the total cost of ownership perspective, pay-per-use becomes the best decision a company can make for using IT.

Ganesh Natarajan is Deputy Chairman & MD of Zensar Technologies Ltd

Email Ganesh Natarajan: l.jayaram@zensar.com