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Key Players in SaaS Market India
5.7 2.7
FY2010
3.5
Citrix Google Microsoft Netsuite Oracle Ramco Rightnow Salesforce.com TCS Webex Zoho
FY2013E
FY2015E
FY2010
FY2013E
FY2015E
12
10 8 6 4 2 0
FY2010
FY2013E
FY2015E
FY2010
FY2013E
FY2015E
FY2010
FY2013E
FY2015E
Amazon Web Services Cynapse Google App Engine Force.com IBM Netmagic Solutions Orangescape Rackspace Reliance Data Center VMWare Windows Azure Wolf Frameworks Zenith Infotech
Note: *Hardware Includes Desktops, Notebooks, Printers, Servers, Storage & Security, Networking Equipments & Other Peripherals Source: NASSCOM Strategic Review, 2009-10 & 2010-11; IDC, Zinnov Analysis
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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
Indian SaaS Market: Customer & User Segmentation, 2009 100% 80% 60% 40% 77% Customers
69%
Users
20%
1% 2% 0% Micro Share of Competitors in the Indian SaaS market, 2009 SMB
11%
Enterprise
XXX 4%
XXX 3%
Data Security Concerns Reliability Issue Lack of Customization Resistance to Change Lack of Brand recognition for new players Lack of market reach Lack of training & tech support Broadband Penetration
Improving IT & Communication Infrastructure Increasing need for cost optimization Pricing & Support Innovation Development of Support Ecosystem Increasingly leveraging reseller channel
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India contributes only a small fraction of global revenues for Google, but offers one of the fastest growing markets
Google India Google HQ Headcount Google India is the largest outside of the US headquarters for Google (10.1%) Hiring standards in India are same as that of the US and engineers in Bangalore have the freedom to move 2000 19,835
to other Google R&D centers worldwide Google engineers can rise to the level of a vice president based on technical accomplishments without even owning a management degree
Google India Revenues contact Zinnov for complete report Google India makes approx. USD XX million, less than 1% of the global revenues . But the revenues have been tripled over the last 2 years Majority of Google India revenues come from online advertising, whose market in India is about INR 1,250 Crore (5% of the total ad-spend in India) and 80% of that market is drawn by Google The country is a top priority market at the board level, no significant revenue impact but the India business is regularly reviewed by the board 4/5 top leading web properties in India are controlled by Google (Orkut, Google search page, YouTube and Gmail) The 5th seat is captured by Rediff in India Average Indian users spend about 30% of their online time on Google sites 3 times the world average Category Search Social Networking Maps Photos Blogs Multimedia Email Google Products Google Sites Orkut Google Maps Picasa Network Blogger YouTube Gmail Google India Share of Time Spent 88.4% 68.2% 63.9% 16.2% 47.6% 82.8% 46.8%
Marketing
Google marketing the offering by providing Rs.2500/- worth of free ad words vouchers for SB customers. Being distributed through multiple marketing channels like HSBC Bank, DELL, Airtel, TradeIndia. Exploring marketing partnerships with Tally, Utilities services providers and India Post. They have also looked to leverage DHL as a possible partner.
Sales
Currently just one product marketing manager supported by a 50 Member tele-sales team from partner site. Tele-sales team does account training, activation and proactive support. Reactive support is driven by Google Hyderabad office Google has been trying to leverage the VAP channel to bundle ad words and sell the same to their customers along with websites they develop. Channel partners are given 5% commission for this.
Payment options
Google currently provides INR billing with internet banking, credit card and cheque payments
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Over the years Google India has driven several localized initiatives targeted specifically for the Indian user
Entertainment
Through YouTube, Google has also ventured into the entertainment business. The IPL on YouTube was a key moment. Not only was it a global board level decision, but also elevated the level of dialogue. It went to 200 countries and is already the most viewed live event Google has done The premium sponsors for the live online streaming of IPL matches are Royal Challengers, HSBC Bank and Hewlett-Packard. Airtel, Coca-Cola and Samsung are also participating. Google has also struck up lucrative deals with UTV, Rajshri Productions etc. for the YouTube
Google is planning to launch a mini version of the Nexus One phone in India that may not have all the features but it would certainly be less-expensive than the US model
Google Indias R&D chief, Prasad Ram, claims that no more than 7% Indians are proficient in English. Google looks at the Indian language market as a huge opportunity and offers search in 9 local languages
Google Indias biggest revenue contributor have been in search advertising in verticals like airlines, travel and banks. However, education and auto has started to show signs of growth for Google. Google expects to grow in verticals such as FMCG, education and Government in 2010
SMB Focus
Internet penetration is increasing in small and medium enterprises that do not advertise in general. However, the internet is a natural cost-effective way of connecting and partnering with these SMEs in small towns Partnered with firms such as TradeIndia.com to offer Rs. 2,500 worth Google Ad campaign free for subscribers Zinnov Confidential
Zoho has been focusing on providing free subscriptions with a limited number of users, to reach a critical mass of user base
Solution India SaaS Revenues Market Share
Zoho
Product : Zoho CRM, Zoho Meeting, Zoho Project Management, Zoho Business Suite (email and office CRM USD XX Mn XX% suites) Business Suite USD X Mn For other case studies and insights, please contact Zinnov for complete report Customer & User Base Distribution
Sales Strategy :
Zoho offers free versions of its applications to induce usage Zoho has also run innovative advertising campaigns using auto rickshaws as mobile billboards, having Zoho posters on them, showcasing the different features available
Channel Partners :
4 active channel partners; Pegasys, Bennett, KVP Business Solutions and SNR Technologies
Min: xxx
xxx XX (XX) XX (XX) Web Marketing Channel Partners
Weak
Max: xxx
SaaS Product Sales Team : Indian Customers (Users) CRM: Indian Customers (Users) Business Suite :
Direct
SEO
Zoho has not yet been able to capture a paid userbase in a large quantum
Delivery Platforms
Strong
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Telecom, IT-BPO and Retail have the highest spending on IT as a percentage of revenues, however
IT Spend as percentage of Revenue Across Verticals
IT Purchasing budgets in 2010 vis--vis 2009
Telecom IT-BPO Retail Transport/ Logistics Healthcare/ Pharma BFSI Automotive Manufacturing Energy 0%
0.9% 0.9% 0.6% 0.7% 0.6% 0.6% 0.8% 0.6% 0.4% 0.4% 1.7% 1.5% 1.4% 1.3% 1.2% 1.3%
FY 2010 FY 2009
1%
2%
3%
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Government, Telecom and BFSI are highly mature with their IT adoption and show higher potential towards cloud adoption going forward
IT Maturity of various verticals in India FY2009 Potential for Adoption of Emerging Technologies
Telecom: New pricing changes, number portability, per second billing, new entrants and expansion of circle by existing players Government: Estimated spend of $ 9 billion on Government to consumer (G2C) projects (state/ central level) including hardware infrastructure and public services (Department of posts, railways etc.) Banking: Implementing and maintaining core banking solutions (esp. by public sector banks, mobile/ net banking, reduce transaction cost, compliance Insurance: Claims management, policy administration, underwriting and sales/ CRM, premium payments/ renewals Retail: Supply chain automation/ management, warehouse management, inventory audit/ loss prevention, online retailing, BI and networking Healthcare/ Pharma: Servers and Data center for hospital upgrades, HIS, Electronic records, image archiving, data storage/ mining, telemedicine, remote diagnostics, etc
Based on the IT Maturity, Vertical-wise IT spend and Adoption Potential Government, Telecom, BFSI and Manufacturing emerge as the top verticals for further analysis
Note: Public Sector Enterprises are spread across verticals other than Government Source: NASSCOM Strategic Review 2010, Zinnov Analysis
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India Landscape
Macro trends suggest a significant increase in overall IT adoption is impending in India (1/2)
PC and Mobile Penetration in India, Millions 1,000 800 600 400 200 0 2009 2015E 400 Internet and 3G Subscribers in India, Millions 400 300 200 100 0 Active Internet Users* Broadband Subscribers** 58.1 8.0 66.4 1.5 0 3G Subscribers 2001 2003 2005 2007 2009 2010 2009 2015E
Mobile (US)
826.9
Million Subscribers
Absence of legacy systems will allow market to jump technology curve and results in first mover advantage
100.1
500
added per month in India, 8 million new mobile shipments per month ~25% of all phones sold in India are smart phones
MVAS related revenues to account for 20% of operator revenue, a 2 fold increase since 300 2006 in India
Wireline (India)
292.3
200
Wireline (US)
129.5
100
Note: *Includes all devices; **Bandwidth of 256+ Kbps, includes Broadband Wireless Access; ***Micro, Small, and Medium Enterprises Source: Telecom Regulatory Authority of India (TRAI); Union Budget FY2010-11Transcript; IDC; FICCI BDA Report 3G and BWA; Gartner; Data monitor; NASSCOM Strategic Review, 200910 & 2010-11; Zinnov Analysis
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India Landscape
India witnessed a surge of almost 40 percent in its mobile internet traffic from Q4 2009 to Q1 2010, leading to the highest mobile internet traffic in Asia
Active Mobile Internet Users
Mobile Subscriber Base
3000 2500
2,838
471 Million*
655
650
404 298 185 161 133
Thailand
500 0
India
Wireless data subscribers in India increased from 101 million in QE Dec 2008 to 149 million in QE Dec 2009
100%
80% 60% 40% 20% 91% 89% 91% 93%
Surged by the total number of additions in mobile subscribers in India over the quarter the mobile internet traffic is soaring
In March 2010, smartphone traffic share of mobile internet traffic in India was 26%
Note: *As of Sep 09; **AdMob serves ads for more than 18,000 mobile Web sites and applications around the world and provides metrics based on this data Source: AdMob, TRAI, I-cube
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India Landscape
In order to leverage on the huge telecom subscriber base and to compensate for the low rates of basic call tariffs, telecom players in India are increasing focused on the applications space
Telecom Service Providers App Stores
Bharti Airtel launched their own app store, Airtel App Central earlier this year Airtel App Central provides 1250 applications across 25 different categories including games, business, social networking etc as well as India-specific religious applications The cost of the applications is either added to the subscribers bill or deducted from the available talk-time, with the applications costs starting as low as INR 5
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Reliance Communications has a total subscriber base of 100 million across its GSM & CDMA networks It has entered into a deal with GetJar to provide access of 65,000+ free applications to all its 100 million subscribers via its VAS platform R-World GetJar offers applications that work with almost all handsets and OS including Symbian, Blackberry, Windows Mobile, Java & Android
Vodafone has launched its application store for Indian customers with 800 applications available currently, of which 25 percent are free The paid applications have been reasonably priced between INR 5 and INR 30
There are an estimated 50 Indian companies employing 1000 developers engaged in applications development across platforms
Note: *Assuming 1 USD = 50 INR Source: Company Websites and News releases, Zinnov Analysis
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Flexibility in terms of on-Demand scale up/ down with no upfront capital investment makes the cloud offering highly attractive for the enterprises
Drivers for Cloud Solutions in India
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This will help to meet customer expectation very effectively Sukanta K Nayak, AVP, IT, Usha International
Easy Exit for customers in case of failures Vikas Prabhu, CIO, The MobileStore
90%
69% 68% 64% 45%
Softwareas-aService (SaaS)
Unified Communications
Virtualisation
Open Source
It has potential. As the capex dollars are diminished, IT management is going to look for on-demand models for keeping the costs down
Its an innovative business technology with significant benefits coming from the absence of the client/server software installation or maintenance
Source: *IDC Indias Identifying Opportunities in the Current Economic Scenario report (March 2009), dqindia.ciol.com, BizTech2.com, expresscomputers.com, networkcomputing.com, Zinnov Analysis
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Data Security and Lack of customization are reported as the biggest challenge in the adoption of Cloud computing in India
"Security is the biggest concern. Barring core applications, other productivity applications such as CRM and email can take advantage of this technology, Ajay M Patil, the vice president of IT at Bharti AXALife
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We faced challenges in terms of training the users to the new technology Venkat Iyer, director, business technology, Pfizer India
Compliance & Governance Concerns on Data Security Apprehensions on SLAs and Reliability Lack of Customization Risk of Vendor Lock in
25%
Costlier in longer run
20%
18%
14%
Poor Connectivity
Existing Legacy Systems
Data Performance Data Transfer Data Lock-in confidentiality Unpredictability Bottlenecks and auditability
For large organizations, the Value for Price model is yet to emerge Upal Chakraborty, CIO, DLF
CIOs need to keep in mind levels of complexities of his business processes as well as customization required, since the SaaS model may not permit too much customization N. Varadarajan, GM, IT, Madras Cements
Security, uptime and SLA will be the important aspects of the deliverables J Ramesh, CIO, MIRC Electronics
Source: *Saltmarch survey of 1100 Indian Business Technology professionals 2009, dqindia.ciol.com , BizTech2.com, expresscomputers.com, networkcomputing.com, Zinnov Analysis
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