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EXPRESS COMPUTERS
IT/ITES, BFSI and Professional Services lead the pack
A
Rs 100 Cr plus turnover and yet no fixed budget for
IT—that’s the tale at your average Indian MB. While, the IT
deployments are becoming more sophisticated MBs need to come
out of the shell and follow in the footsteps of LBs in
adopting technology for business growth, writes Varun
Aggarwal
Medium
businesses (MBs) are preparing for the next round of
spending on IT in 2008-09—with not only desktops, notebooks
and printers, but also connectivity and server deployments
becoming a fact of life at most MBs.
While, the technology adoption greatly increased while
moving from small businesses (SBs) to MBs, the IT spend in
terms of percentage of total revenue decreased in the case
of the MB segment. While SBs are on an average spending one
percent of their earnings on IT, MBs are reluctant to shell
out anything more than 0.55% with an average of 0.41% across
verticals.
We had observed that SBs do not have a proper IT team in
place and that no IT budgets are present in this segment of
Indian industry. In the MB segment, most of the respondents
had a well placed IT team. The level of IT adoption varies
across industry verticals. Let us look at the different
sectors and understand how IT savvy they are.
Utilities/ Transportation/ Real Estate/ Construction
This industry vertical turned out to be the least IT savvy
of all. Be it servers, security or software—the Utilities/
Transportation/ Real Estate/ Construction sector was a
laggard with regard to most technologies. On an average
companies in this vertical spend Rs 35.8 lakh on IT, 0.24%
of the turnover.
Looking at server adoption in this sector, Windows servers
show a 67% penetration compared to 88% in the wholesale/
retail sector and 82% each in both manufacturing and IT/ITeS.
The overall server deployment in this sector stood at only
88% while all the other sectors had more than 94% server
deployment.
However, with multiple offices in different locations, the
need for connectivity was felt the most by companies in this
sector. That’s why this vertical emerges as a leader in the
adoption of ISDN, with 48% of the respondents confirming the
deployment. The scenario; however, is dominated by the use
of leased lines with 61% adoption, and DSL with 41%
adoption. The adoption of Wi-Fi is the least among all
verticals.
T S Rajagopalan, Director, Caliber Construction Co Pvt.
Ltd., said, “For accounting software, we use only Tally. For
networking software, Windows-based software is used and as
far as the hosted application is concerned, Web-based
servers run these.”
Base = 194
Manufacturing
"We
spent over Rs 2 Cr in 2007 on basic IT infrastructure. Now
we are planning to invest in bar coding and a virtual
private network from Reliance to connect all of our branch
offices"
- Yogesh Chaudhry
Director, Jaipur Rugs
Most manufacturing units in
India are often quite old and traditional in the way that
they function. The MBs in manufacturing also fall under the
same category with less importance given to information
technology. This sector is one of the lowest spenders on IT
with an average budget of only about Rs 67.6 lakh. However,
one area on which most manufacturers appear to be investing
in is enterprise applications. About 68% of the respondents
in the manufacturing sector already have ERP
deployments—something that is now considered a de-facto
standard in this industry vertical to ensure better
operational efficiency and a streamlined business. It’s also
the highest rate of adoption of ERP across verticals; only
BFSI comes close with 64%.
Bihar Sponge Iron Ltd. has over 200 employees yet there are
only 15 desktops in the organization. The company spent
about Rs 10 lakh on its IT infrastructure in 2007 and there
are no plans for any big deployment this year.
Susheel Kumar Bachheti, Assistant Manager, EDP, Bihar Sponge
Iron Ltd. said, “Our work does not require much of IT and
therefore we have only 15 workstations. But as regards
connectivity, we have in place a Gigabit Ethernet LAN, and
we are also using a DSL connection by Airtel offering a
speed of 512 Kbps. Our basic requirement from Internet is
communication through e-mail with our branches.”
In terms of security, the company has deployed only the
basic security solutions. Presently they are using an
anti-virus solution from Symantec.
Apart from the basic infrastructure like desktops, notebooks
and printers, the major technology areas upon which
manufacturers spent most of the money were servers,
connectivity, software and Internet applications. For the
year 2008-09, the top priorities listed by the respondents
in manufacturing sector are laptops, notebooks, laser
printers, accounting software and LAN.
Wholesale/ Retail
The scenario is not very different in a medium sized
wholesale/ retail organization as compared to its smaller
counterpart. Technology has not yet taken priority in this
much-hyped industry vertical which is the second lowest in
terms of IT spend with companies in this vertical spending
an average of Rs 56.4 lakh or 0.32% of their turnover on IT.
The survey respondents in this sector had an average of nine
offices in different locations. While this sector scores
lowest on leased line adoption (58%), is scores
second-highest in terms of DSL deployment (71%) behind
IT/ITES (74%).
Jaipur Rugs is a 250 strong company that sells carpets and
rugs globally. According to Yogesh Chaudhry, Director Jaipur
Rugs, “We spent over Rs 2 Cr in 2007 on our IT
infrastructure. We try to ensure that we use the best of
technology and leverage it as far as possible. We already
have basic IT infrastructure in place—with multiple servers
running Windows and Linux, Wi-Fi connectivity and a Gigabit
LAN. Now we are planning to invest in bar-coding and a
virtual private network from Reliance to connect all of our
branch offices.”
M K Retail is another company that vows by technology for
its operational efficiency. Imtiaz, Manager- IT, M K Retail
said, “We have already implemented ERP software. 80% of the
deployment has been completed, and only the financial module
is pending. We are now in the process of upgrading the
inventory control software. There is no hosted application
as such that we use at present.”
Some of the areas that most of the wholesale/retail
companies are focusing on are desktops, notebooks, network
software and Windows servers.
BFSI
The BFSI sector has been very keen on the adoption of
IT—with high investments going into building a robust IT
infrastructure and ensuring its safeguard. The survey
respondents in this sector spent on an average Rs 83.7 lakh
on IT in 2007-08.
Kotak Wealth Management comes across as a good example of a
well-integrated IT infrastructure. The company has around
400 employees with an IT team of about 10 people. The
company has deployed about 15 servers that run on different
platforms depending on the applications running on them.
In terms of security, the Kotak Wealth Management has in
place almost all the security solutions from Trend Micro.
“We rank security very high on our IT priority list. Today,
given the way we have built out security infrastructure I
can say that we are 90% secure. As regards the 10% that is
left, we do regular checks and take measures to ensure that
the security is not breached,” said Nagraj Poojari, Manager,
IT, Kotak Wealth Management.
The company also follows a strict security policy. According
to its terms and conditions, employees cannot access
personal e-mail accounts, certain Web sites are also
blocked, and there is limited access to USB drives. The
company has recently installed security software called Safe
Boot in all the laptops. This software asks for password
when the laptops boot, and if a wrong password in entered,
the laptop is locked.
At Kotak Wealth Management, connectivity is given its due
importance. The infrastructure includes, Gigabit Ethernet
LAN, a leased line to connect to 13 branches across the
country offering a speed of 2 Mbps, three DSL connections,
Sify, MTNL, and BSNL, each with a bandwidth of 1 Mbps.
Talking about their investment plans, Poojari revealed, “We
are now planning to invest about Rs 25 lakh on a NAS server
for our growing database and about Rs 1 Cr to switch from a
large number of desktops to notebooks for marketing people
who are constantly on the move.”
Pioneer Fincap Pvt Ltd., is a division of the Pioneer Group.
It deals in insurance related products. Based in Delhi, it
also has three branch offices in the vicinity. The company
has 100 workstations and at its head office in Delhi. This
company also places security on number eight on a scale of
10. Kapil Gupta, Linux System Engineer, Pioneer Fincap Pvt
Ltd. said, “On a scale on one to ten, with the higher number
assuming greater importance, we rank security at number
eight. Having our infrastructure secured is our prime
concern. We have around one hundred workstations in our
office at Delhi, and all have anti-virus installed. We also
use firewall at the server end. In addition, we have blocked
access to personal e-mail, and even the use of USB drives is
not permitted. The access to certain Web sites has only been
given to senior employees.” The company has 100 employees
and two branches, both in Delhi.
As regards the connectivity infrastructure, said Gupta,
“Connectivity is the most important aspect in out IT
infrastructure. In fact, the nature of our business is such
that it thrives on connectivity. Presently we are using a
DSL broadband connection from Airtel having a speed of 1
Mbps. In addition, we are also using a Gigabit Ethernet LAN,
and Wi-Fi.”
Base = 194
Professional/ Other Services
Before making any business decision any company in the
services, industry looks carefully at its impact on their
customers. The companies in this sector are taking best
steps possible to ensure a robust IT infrastructure that can
help them fight their competition and ensure that they are
able to keep their customers apart from making new ones.
The services sector companies are investing a lot in
technology with the average IT spend of respondents in this
industry vertical found to be an impressive Rs 99.9 lakh
which worked out to about 0.52% of the turnover. That’s all
the more impressive when you consider the fact that some
sectors (Utilities) are investing as low as 0.24% of their
turnover into IT.
An interesting example is that of Intercontinental
Consultancy and Technocrats (ICT) Pvt Ltd, which is a
company in the design consultancy business. ICT has an
employee strength of about 1,200 globally with over 375
employees and 350 personal computers at its corporate
headquarters in New Delhi.
D. Vasudevan, Senior Vice President and Head, Information
Technology Services, Intercontinental Consultants and
Technocrats Pvt. Ltd. said, “We have mixed use of operating
systems that are both Microsoft Windows Server as well as
the Linux OS. Microsoft SQL Server continues to be the
popular database for our applications. We use open source
for mail server and Web server applications.”
Vasudevan added, “As far as accounting software goes, we
prefer to use the enterprise version of Tally for financial
accounting. For all other accounting purposes, we use our
own software that has been developed in house. As far as
networking software goes, we use the Microsoft Windows
Server platform and Office XP desktop on client machines
over a secured Local Area Network (LAN). As far as hosted
applications are concerned, we have a number of specialized
engineering applications hosted on the server in addition to
library management and HRMS applications.”
“For accounting software, we use Tally 7.2 and 9.0. We are
using Windows Server 2003 for Networking Services. We are
also using applications like Wireshark for Network
troubleshooting. For hosted application, we have our Web
site on Linux. We are also hosting Intranet (ICT Internal
Employee Web site) for corporate news and information. In
ICT we have a large library of books, manuals and research
documents. We have hosted an application through which
employees can access library services.”
As regards its security infrastructure, it has deployed
every solution that has been included in the survey. The
list includes anti-virus, anti-spam, anti-spyware, IDS, IPS
etc. “We recently upgraded our security and ensured that we
have all relevant solutions in place. We also follow a
strict security policy. We have blocked access to all music
and video sites, personal e-mail, and USB drives. Only
senior employees can use USB drives after a virus scan,”
said Vasudevan.
Key observations
* Indian Medium Businesses or MBs (companies with Rs. 100 to
300 Cr. turnover) are keen to strengthen their basic IT
infrastructure that acts as a support to their ambitious
growth plans
* Almost 80% of MBs surveyed mentioned that they plan to
hire newer employees in the next 12 months, thus creating
huge employment opportunities.
* Almost all of MBs have a basic IT infrastructure in place
including desktops, printers and basic networking. Now the
stage is set for a greater deployment of existing
technologies as well as adoption of more advanced
technologies like WAN, VPN, network-storage, enterprise
applications
* At present, the spending on advanced applications like
Enterprise Software, WAN, Security and Storage is still low;
however, there is likely to be a rise in their expenditure
in the near future as the medium businesses strive to reach
the higher technology adoption levels of large businesses.
IT/ITES
The IT/ITeS sector fulfilled expectations and was the top
spender on IT. Despite the impact of a fluctuating dollar,
IT/ITeS companies are forecasting high growth in the current
year. An average company in this sector spent over Rs 1.09
Cr to quench its thirst for technology. Although that still
worked out to less than one percent of the average turnover,
this was nevertheless significantly higher than that of any
other industry vertical. Right from the basic infrastructure
like desktops, printers, connectivity to enterprise
applications and emerging technologies, the IT/ITeS sector
was the front-runner in most technology verticals.
However, there were a few IT companies that preferred to
fulfill most of their IT requirements in-house. Comnet
Vision, a New Delhi based IT services company houses 80
employees at two offices in Delhi. The company runs just one
Windows server, which takes care of all of its requirements.
Most software that is used is built in-house including an
office automation suite as well as customized ERP and MIS
solutions. The company also uses proprietary software like
Tally for basic accounting and CRM for contact management. P
K Sharma, Proprietor of Comnet Vision says that the company
spent only about Rs 4 lakh in 2007 on their IT
infrastructure and no major deployments are planned this
year.
Final verdict
While MBs have taken off on their IT journey, hurdles remain
as they go about building a robust IT infrastructure. As
company growth is on the charts, MBs need to pull up their
socks if they want to compete with the large enterprises
that are already equipped with state-of-the-art IT
infrastructure.
Interest in IT is clearly seen with not only desktops and
notebooks but also servers becoming a standard in the MBs.
Companies in this segment have expressed interest in
deploying enterprise applications—more specifically ERP. The
value proposition of such expensive software is clearly
understood by most MBs. So, while there is a good
realization of the value proposition of technologies in MB
in India, moving up from the ad-hoc technology deployments
to planned IT investments can help MBs to best leverage
technology.
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