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Call of the Web

Indian SMBs are ready to ride the online wave with the likes of Google offering buoyancy. Heena Jhingan explores the various options that are available in the market for entrepreneurs intending to take a business online

It is now an obvious reaction to consult an Internet search engine when you are on the lookout for information regarding anything under the sun. The Internet has woven such an intricate maze all around that it is difficult for an individual or business to escape from it. The Web has become a single stop shop for all kinds of information, be it something about a place at the other side of the globe or the florist nearest to your location, so much so that even small businesses now want to carve out a place for themselves on the Web.

The Indian SMB market is now witnessing a new 'get online' revolution, with large players like Google and BigRock designing attractive 'go to the Web' packages for this sector.

Google recently announced an initiative to help Indian SMBs get online with a free Web site, personalized domain and hosting. It has also tied up with Web hosting provider HostGator for the project. Initially, Google's focus will be on targeting 500,000 small and medium businesses in India and bring them online in the next three years. There are over 800,000 small and medium enterprises in country leaving ample room for other players to compete.

“SMBs have been an important focus area for us and we have launched a number of initiatives in India to support SMBs who are already online. Our partnership with HostGator will be a game changer as our consumers will now have access to better information of local businesses while business owners will benefit as their customers will be able to find them easily. We look at it as a win-win proposition for everyone,” said Rajan Anandan, Managing Director and VP Sales and Operations for Google India.

Another player in Web hosting space, BigRock is offering Web site packages that include a .com domain name, e-mail and Web hosting integrated with an interactive Web site builder for Rs 499 and Rs 399 for a .NET Web site.

"An online presence provides credibility to firms. There is a need to shift the balance from credibility to trust." Bhavin Turakhia Founder & CEO, BigRock

BigRock Founder, Bhavin Turakhia said that the SMB market was a multi-million opportunity.

“The number of Internet users in Indian has doubled in less than two years and the number is expected to grow five times in the next four years. De facto, these enterprises will like to invest in ways and technology to go online,” Turakhia said.

Incidentally, though the process to increasing connectivity is going quite fast and there are many small enterprises and businesses sitting on the fence watching how to making use of the opportunity, the growth of Web sites has not happened at the same rate as the increase in Internet usage.

“For every 100 enterprises there are three that have a Web site but times are changing and there is not an iota of doubt that every business, small or large, wants greater visibility and better customer connect,” he added.

"The Internet is becoming a disruptive factor for SMBs from the perspective of Cloud computing, mobility and Web-based channels." Nischal Khorana Head Consulting - ICT, Frost & Sullivan

The analysts believed that this was the fallout of several other changes over the last few years. Nischal Khorana, Head Consulting - ICT, Frost & Sullivan, said that the SMB segment had evolved in a big way.

A transformation in the way that SMBs operate in India from being largely owner-driven businesses, working in silos, to a state where there is greater professionalism has come about due to changes in market dynamics. A new generation entering the workforce and management, one that’s better educated, mostly from B-schools, is now driving parents' businesses. These factors are forcing SMBs to take a fresh look at customer service and operations.

“The new age SMB model is a break from the traditional one and, in this backdrop, you need IT to gear up and grow. SMBs today understand and respect the fact that IT is a key pillar of their growth. They realize that they will have to invest in IT to compete and that is where the whole Web angle comes in. If you look at the Internet, it is becoming a disruptive factor for SMBs from the perspective of Cloud computing, mobility and critical Web-based channels to reach out to customers,” explained Khorana.

Tools and platforms

It is interesting to see that creating a Web site today can be a done within hours. This is mostly because of the availability of pre-designed, 'Do it yourself' tools that do not require much of IT know-how. There are several companies that have been early movers on the Net and these have gone ahead in constructing a Web portal on their own, independently buying a domain name, and taking care of the design and features themselves. However, the hosted offering come with support and ease of use and do away with the bother of buying domain names, investment on infrastructure and maintenance, making things easier for a small business owner.

Turakhia pointed that the SMBs today are equally conscious of their online appearance and they wanted their sites be feature-rich and interactive.

The Google offering includes features that support addition of photos and logos, even integration with social media platforms.

Social Media has become a marketing tool for SMBs as it helps them gain visibility without incurring cost. Facebook has ‘Facebook for Business’, an online education center of sorts for small businesses. It provides step-by-step guidance for how best to use Facebook's marketing tools specifically, Pages, Ads, Deals, social plugins and Sponsored Stories to maximize social media reach for a business.

“A Web presence provides credibility to firms. There is a need to shift the balance from credibility to trust. Now in many cases, the Web is a level playing field, quite similar to the way that judgments are made on the basis of a company's office location, on the Web it is in terms of applications and tools,” Turakhia said.

Khorana stressed that from the Cloud perspective, it was a well-established fact that SMBs were obvious targets. For example, the Cloud offers enterprises solutions like UC and CRM at a much lower cost. Then there are SMBs looking at the Web as a significant channel to reach out to the customer. He added that there were SMBs using mobility for employees and then there were SMBs using mobility to improve customer service. A car dealership could be using mobility to improve customer service and it might be leveraging an application provided by the manufacturer.

Models and sustainability

Google’s announcement is an invitation to every small company with the dream of getting its share of online real estate. Some companies could be skeptical about the free offering. Khorana cleared the thought behind the move. “Companies like Google are trying to increase their footprint and gain a first mover advantage. The idea is to gain presence and then monetize once these emerging businesses grow and their spending capacity increases and their comfort levels with the IT deployment increases. Therefore, sustainability is not a concern,” he said.

All the players in the ecosystem, be it domain provider or hosting partner are trying to create a large customer base and are experimenting with bundles of offerings to get maximum number of companies on board.

There are various innovative ways that these players are toying with to lure SMBs. Vendors understand the importance of partnering with these small players both in terms of growth and spending.

“The vendors need to try innovative engagement models for the SMBs. We are seeing a lot companies trying out innovative ways of licensing software products that they sell to SMBs wherein you can de-risk or share the risk by assuring that as the SMBs grows his extent of technology acceptance grows accordingly. For example, in construction companies many people buying number of licenses according to the number of projects,” Khorana informed.

Turakhia added that Big Rock has tied up with local search engine JustDial and Sulekha.com, an online and mobile Classifieds and Yellow Pages service to reach out to a larger base of SMB customers.

The disconnect

Vendor nervousness while handling a small business is understandable. The basic roadblock is in defining a SMB. Experts say that the SMB space is a universe in itself, there are multiple segments—upper, mid and lower SMBs, each with very different needs. Also, SMBs have different requirements depending upon their vertical.

“We must appreciate that rather than following a standardized approach it has to be a well segmented SMB strategy and this is what most IT vendors are working at. There are clusters of SMBs spread across India, which need to be serviced through right kind of channel partnerships. Also, it is important to gain the confidence of the SMB that the online journey is going to be an investment rather than an additional cost. A large vendor might have a brand name and expertise but SMBs would any day prefer a player that offers them adequate attention and customized solutions; a player has to strike a balance between brand, product offering and provide adequate attention,” Khorana said.

It is just the beginning of a new race, with companies trying to exploit the first mover advantage to capture a potentially rich market. It will not be too long when the industry will see vendors trying ways to differentiate themselves in the SMB space. They have already begun finding their own sweet spots and clusters, so fierce competition is unavoidable. Once this market gains traction, the industry will see a greater need to differentiate. The existing players should be prepared for the churn that they might face in the next two to three years.

heena.jhingan@expressindia.com