While niche marketing is theoretically easy, putting it into practice is hard since it calls for the sacrifice of walking away from the biggest market segments. Is it worth it? Shipra Arora finds out

Yash Nagpal feels that with ERP poised to take off in a big way in the SME market, the next 2-3 years are going to be exciting for Navision

Navision Software India, the enterprise applications solutions company, was set up with the aim of providing a much-needed choice to the small and medium enterprise (SME) segment, which till then had to choose between software packages designed for large enterprises or very small homegrown applications—there was no middle path available.

The vision of Yash Nagpal, founder of Navision Software and now its managing director, was to establish the company as a niche player in the Indian market. And back in 2001, it was the first company to provide globally branded products specifically targeted at the SME segment, something it plans to continue doing despite gaining strength and muscle ever since its worldwide operations were acquired by Microsoft. With the acquisition, Navision India (NI) became a Microsoft Business Solutions Distributor in the country.

Business model
In addition to its unique positioning strategy, the company has also differentiated itself from competition with its business model.

It operates in the following manner. The core product is developed at the head office in Denmark. It is then localised for the Indian market by NI’s software team. (Providing local reach is one of the key guidelines shaping the company’s business model.) From there onwards the company operates through its network of solution centres, which it has set up across the country. These centres are essentially partners who are responsible for selling solutions, developing vertical solutions, implementing solutions, and providing the first level of support to customers. The solution centre partners hold the key to NI’s strategy as there is a lot of value-addition provided by the centres in order to make the product a complete end-to-end solution. NI has even gone to the extent of providing its partners access to the source code. This enables them to offer seamless integration and development within the standard package. In addition, the solutions are designed to help end-users move along the upgrade path.

The centres are also involved in developing specific vertical solutions. They have developed and are currently offering solutions specifically targeted at segments such as tea estates, construction, law firms, the seeds industry, shipping, and media, entertainment and advertising industries.

For its part, NI is involved in the following functions: product localisation, new versions and releases, recruitment of personnel for Navision solution centres, account management, finance, administration, technology, product training, strategising and national sales.

In addition, the company also looks after the development and marketing of its products/brands nationally, pre-sales support to its solution centres, and post-implementation support. Presently, there are around 70 solution centres which offer Navision’s products. The company plans to add another 70-80 more in the coming years in order to help strengthen its presence in India.

Products
NI’s solution strategy revolves around its SME positioning. According to Nagpal, an SME faces constraints in terms of funds. It also needs a package that will suffice for the lifetime of the company.

The solutions have been designed keeping these criteria in mind. They are cost-effective, require lower implementation time (around eight weeks), and lesser deployment of manpower and other resources. NI’s solution offerings are spread across two product lines: Microsoft Business Solution (MBS)-Navision and MBS-Axapta.

MBS-Navision is an integrated business management solution designed specifically for the unique needs of growing SMEs. The solution builds and expands on the strong foundation of Navision Financials (released in 1995), a business management solution. Some of the key features include financial management, supply chain collaboration (including manufacturing and distribution), CRM (including marketing and sales service management), and e-commerce. The MBS-Navision version 3.6, earlier called Attain, covers functions related to export-import orders and incentives, letters of credit, and all aspects related to sales tax, excise, and tax deducted at source. MBS-Navision is also VAT-compliant. The solution is available on Microsoft SQL server and the MBS-Navision [NS1] database server, and runs on Windows, IBM AIX and IBM i-series.

MBS-Axapta is an ERM solution developed specifically for mid-market enterprises to seize business opportunities and gain a competitive advantage. According to Nagpal, the Axapta solution can be modified to support unique business processes quickly and cost-effectively. It includes integrated functionality across finance, supply chain management, e-commerce, customer relationship management, human resource management, balanced scorecard and knowledge management, business analysis, and multiple languages and multiple currencies. The solution is available on Microsoft SQL Server and Oracle databases.

Hiccups
Despite the niche focus, the journey has not been very smooth for Navision. The company entered the Indian market at a time when the industry was still reeling under the slowdown in IT spending. Add to this the fact that Indian companies, especially SMEs, were still below average on the maturity curve on IT usage. “Though there was a lot of excitement and activity in the country relating to IT, most of it was directed towards the overseas market. The domestic market for IT has been weak, with not much happening on this front,” reminisces Nagpal.

Though Navision was the first to introduce globally-branded solutions for the Indian SME market, the company was met by the harsh reality of unwillingness among companies to invest in IT.

Navision has secured only 50 customers since the start of its operations in 2001. Though this may seem a reasonable enough number, it is minuscule when compared to NI’s worldwide customer base of over 2.5 lakh companies.

Future
Navision is now trying to apply the lessons of its initial experience to evolve growth strategies for the future. This will be effectively complemented by the weight of Microsoft’s name. Indeed, the dynamics for the company have changed since the acquisition by Microsoft. With NI becoming a representative of Microsoft Business Solutions in India, the company is now one of the largest vendors of software for the SME segment.

Though he declined to put numbers to the financial and funding benefits that will accrue because of the acquisition, Nagpal maintains that the primary benefit will be better support in terms of platforms, technologies and brand values. Till now, almost three million pounds—invested by Nagpal himself—have gone into activities like brand building and training of personnel for the solution centres. The company plans to continue investing, but this will be largely directed towards setting up branch offices.

Nagpal feels that the next two to three years are going to be very exciting times, with ERP poised to take off in a big way in the SME market.

Says the man, “SMEs are carefully watching how the market is shaping up. They are aware of the need to become competitive, and will walk the path if given the right choices—which is what we are offering.”