As India's small and midsize business (SMB) segment grow and mature, having invested in systems such as enterprise resource planning (ERP) and customer relationship management (CRM) in past years, they are looking to reap benefits of the data collected by turning to business intelligence (BI) and analytics tools to gain a competitive edge.
Soumendra Mohanty, global lead of information management at Accenture, noted that four to five years back, SMBs in India, defined as companies with less than 1,000 employees, were not data driven but things are beginning to change. Today, he said there are three broad categories for BI use among these companies: consumer-centric SMBs, SMBs that work for large companies, and SMBs that offer unique offerings.
The first category involves businesses offering products or services, and are susceptible to consumer backlash via online mediums or word of mouth if people are not happy with their offerings, he stated. So, companies in this category would need the right BI tools to prevent negative feedback.
The second category includes businesses that are part of the supply chain for large companies, and a BI tool becomes a business need, Mohanty said. The third category comprises mostly startups which use BI tools for offer a unique service, usually highly data-driven, he added.
Anand Sam, director of business intelligence at analytics vendor Activecubes, added that the last decade has seen SMBs adopt applications such as ERP and CRM in a big way, thus setting up the basic infrastructure to support their business processes.
"The next step is for these organizations is to build a BI or analytics system that will enable them to harness the data collected by ERP and other transactions systems to understand the organization's past performance and predict the future," he said.
Sam added that SMBs, specifically those dealing with customer data such as financial services, healthcare, and retail, are showing significant interest in BI tools as they are keen on understanding their customers better in order to provide better products and services and improve and optimize operations.
Sunil Bhave, vice president of Fujitsu Consulting India, also told ZDNet Asia that Indian SMBs are moving away from gathering basic information in "simple Microsoft Excel tables or pivots" and adopting sophisticated BI applications. This is so they can get insight on past performances, as well as help them to strategize and plan for the future, he said.
He noted that "a lot of" BI adoption is happening in manufacturing, financial services, banking, insurance, and retail companies with more than five branches, echoing Sam's observations.
India's US$2 billion BI software opportunity
In terms of size, the SMB market for business analytics is still rather small with about 160,000 companies, noted Praveen Bhadada, director at Zinnov Management Consulting.
However, the adoption rate of such intelligence mining software is picking up within this demographic. According to AMI Partners, 79 percent of FIRE (banking and financial services, insurance and real estate) SMBs in India had invested in BI, data mining and analytics solutions in 2010. This was to improve daily operations, increase in efficiency, and reduce dependence on manual intervention, it stated.
This upsurge in demand has Mohanty predicting that BI software will be a US$2 billion opportunity in India over the next five years.
Ramendra Mandal, country manager at QlikTech India, corroborated his observation, saying that with the widespread adoption of ERP and other transaction processing systems by the SMB demographic, it sees "large growth potential" for BI tools in the next wave of IT adoption.
"The BI software market in India is in high growth phase. It is currently witnessing a year-on-year growth of 15 percent to 20 percent. And this growth is likely to continue over 2012," he stated.
Gaining a competitive edge
Elaborating on why SMBs are turning to BI tools, Sam said SMBs need to constantly improve and innovate in order to sustain and stay ahead of their competition in today's competitive business landscape.
"SMBs have the same reasons as large enterprises for using BI [such as to achieve] growth and profitability, [enhance] business performance, [and meet] regulatory and compliance requirements," he said.
The Activecubes director added that these companies now have large amounts of data coming in from various internal and external sources such as CRM and supplier systems, the Internet, social media and mobile apps. Having immediate access to and analysis of all operational data ultimately determines the success of an organization.
"SMBs have [therefore] started including analytics as a strategic tool to differentiate themselves in the market," Sam said. "They cannot afford delays in accessing information or mistakes in the data. And hence there is definitely a need for more sophisticated BI tools."
They can also use the information to come up with the right product strategy, effectively market their products, better engage with customers, optimize the supply chain to remove inefficiencies and manage their workforce, among other use cases.
Fujitsu's Bhave added that the ability to make quick decisions with process efficiencies can provide key competitive advantages for companies to not only increase the top line but ensure market relevance. "BI is being looked at as a key driver in delivering these insights."
New technologies drive growth, too
Newer technologies such as cloud computing, in-memory computing, Web 2.0 and mobile, which makes BI tools more affordable, easy to use and quicker to implement, have also shifted data analytics from being used mainly by enterprises to smaller-sized companies, too.
Bhadada pointed out that SMBs are "more amenable" to experimenting with the cloud than large enterprises as they do not have any legacy systems. AMI Partners backed up his observation by estimating that these companies have spent US$23 million on software-as-a-service (SaaS)-based BI offerings in the past 12 months.
Bhave added: "SaaS and the new tool sets in the market are specific to SMBs." He went on to say that traditional BI vendors such as SAP have also recognized the market potential and are introducing SMB-specific products that integrate BI with ERP software.
Data quality, lack of skills a challenge
However, there are three key challenges facing SMBs looking to adopt BI and analytics tools, Mohanty noted. Firstly, data quality is a problem because most such companies do not have the right data needed for analysis.
The second challenge is their corporate culture. "For decades, SMBs have had the culture of getting the work done. They do not ask questions," he said. Thirdly, the Accenture executive said there is a shortage of statistically- and analytically-inclined people within SMBs.
"Deployment and optimal usage are common challenges faced by SMBs in leveraging BI," Bhave agreed.
This is why having a clear idea on what the end state of the BI solution should be and how using the solution would benefit the organization is an important starting point for companies looking to implement such tools. It is, thus, imperative that BI is business-driven and the key metrics are understood by stakeholders involved, the Accenture executive urged.
Swati Prasad is a freelance IT writer based in India.