Reaching for the cloud: India's SaaS Journey

Perhaps no other country is in the vortex of so many revolutions as India. The cell phone, arriving here in the beginning of this millennium, has transformed life in India--especially in the vast rural hinterland where connectivity helps farmers access up-to-date information about their produce or weather patterns so they can plan more efficiently. The advent of cheap smartphones promises to disrupt ossified and inefficient industries such as education and healthcare.

_{"Six years ago, to accomplish what we have today [with the SaaS model] would have taken 5 times the duration of time and 10 times the current 100-person strong engineering manpower that we have in place."}

_{- Amitabh Misra, SnapDeal}

For corporate India, one of the chief drivers of change has been the Internet. It is, increasingly, the dominant channel used to either sell products or attract and engage new customers. Consequently, marketing is going through its own revolution as it is forced to shift from engaging with a broader market to a fragmented media landscape. The increasingly global marketplace means there is an imperative for marketers to widen their net, leading to escalating IT costs attributable to the marketing function.

Five years ago, marketing on the Internet in India would have meant designing in-house systems for activities such as customer relationship management (CRM) or enterprise resource planning (ERP). Products and tools from global software vendors were available, but integration and customization often meant heavy up front capex spends. Now, the SaaS (software-as-a-service) wave--a delivery model in which software and related data are centrally hosted on the cloud, and can be accessed through a Web browser--is sweeping across the Indian business landscape as it has in other economies.

"SaaS is extremely real in India and there is a large critical mass in adoption," said Sunil Padmanabhan, research director for Gartner in India. "It is already upending marketing as we know it, ushering in inexpensive, plug-and-play new ways of managing customer relationships, orchestrating cross channel marketing, and implementing digital advertising."

It also provides inexpensive but sophisticated tools to mine and analyze volumes of data arising from these activities to improve decision-making. However, much of the action to date has been in the small and midsize business (SMB) space where the consumption of CRM and ERP tools has been fairly large. 

Padmanabhan noted that while Oracle, SAP, and Microsoft are some of the lead implementers, a few local players such as Ramco have also stormed the market, propelling the SaaS annual growth rate in the region to 28 percent.

Testing out more options with SaaS

Leading India e-commerce site Snapdeal has comprehensively embraced a SaaS solution. With minimal upfront costs, SaaS presents a tremendous advantage for startups like Snapdeal. Such businesses can try as many new tools as possible rather than committing long-term to one customized solution. But that was not the principal reason Snapdeal decided to adopt a SaaS model.

"We treat our website as real estate. Our opportunity cost of it not working well is huge," said Sandeep Komaravelly, the site's chief marketing officer (CMO). He added that SaaS clearly presented itself as the most stable solution available.

Consequently, all of the company's CRM tools are in the cloud as well as 20 percent to 30 percent of its analytics. The rest was built in-house.

Snapdeal uses Google AdWords for tweeting catalogues and listings, contextual advertising, customer loyalty programs and roll out campaigns in addition to using various tools built on top. Figuring out browsing patterns, keeping tabs on new and repeat visitors and monitoring the health of the website is a life and death business for the company.

"We live and breathe analytics," said Amitabh Misra, chief technology officer (CTO) at Snapdeal, adding that the SaaS tool of choice is Adobe's Omniture.

Being free of legacy technology, Snapdeal was among the first companies in India to place its entire tech infrastructure on the cloud from the get-go, including its storage, web accelerator, and firewall components.  

Making faster decisions

Migrating to a SaaS model makes sense for an e-commerce company like Snapdeal, but it's just as relevant for Bajaj Finserv, which deals in the age-old business of auto loans. A principal reason for Bajaj's adoption of SaaS is because, like Snapdeal, Bajaj increasingly needed the ability to make decisions faster.

"Winners and losers today are determined by speed to market," said Devang Mody, president of consumer business, who also oversees marketing. However, the company's in-house customized lending platform--a motley combination of home-grown CRM, Microsoft Access, and a series of Excel spreadsheets--was unable to meet this criteria. It was painful to manage, difficult to scale, lacked accuracy, and was "just not solving the very urgent needs of the company," added Rakesh Bhatt, chief operating officer (COO), who also oversees technology for Bajaj Finserv.

The company chalked out some very clear objectives for sales and marketing apps: it needed a solution with unlimited scalability for end-to-end, new loan underwriting, and one that allowed them to cross-sell multiple products on its existing customer database.

Another problem that needed to be addressed was the company's susceptibility to seasonal skews. During the Diwali festival season, for instance, it would have to process 50,000 loans a day--a mammoth 10 times that of its regular capacity. Additionally, there are tens of thousands of retail points spread across thousands of Indian cities. With the new SaaS system, Bajaj hoped to also build a campaign-management system targeting customers with good credit.

The Indian company decided to adopt Salesforce.com's service cloud offering, which included data analytics, sales process and CRM coupled with Microsoft's Business Productivity Online Suite (BPOS) and 0ffice 365 communication tools.

Bhatt's decision to go with Microsoft's cloud e-mail and mobility tools proved to be a boon for the company's consumer business head, Mody. "I didn't have to write to the tech department, so my team and I could get access to reports on mobile. It was easily available," said Mody.

Additionally Bajaj's portal architecture, which is the main customer-facing interface that deals with 410,000-plus customers (both business-to-business and business-to-consumer) is entirely SaaS-driven.

"Today, 50 percent of our technology infrastructure is on SaaS—from customer acquisition, to our portal backend, digital architecture and messaging. However, core lending will take some time," said Bhatt. The one hole? Analytics. "I would be glad if someone can offer it to me on a cloud," he added, noting that so far core data warehousing is being done on a SQL server.

So how successful has SaaS been for both organizations?

"Adopting the SaaS model [was] very quick and easy and the experience extremely successful," said Snapdeal CTO Misra. "Six years ago, to accomplish what we have today would have taken 5 times the duration of time and 10 times, based on the current 100-person strong engineering manpower that we have in place," explained Misra.

Komaravelly said his time-to-market implementation shrunk from nine months to a few weeks, allowing the company to make quick decisions.

 For Bajaj Finserv, Salesforce.com's offering boosted loan applications from 1,500 per day to a peak of 8,500 in a single day during the festival season. In particular, the facility for sending out SMS directly from Salesforce.com to dealers to communicate loan approval has had a significant impact on loan turnaround times, helping Bajaj to fulfil its ultimate goal in marketing the personal loan as a viable alternative to credit card. Bhatt said overall productivity has sky-rocketed by up to 40 percent.

"Our company is increasingly seeing a handshake between technology and marketing."

~ Rakesh Bhatt, COO for Bajaj Finserv

Empowering non-tech employees

The SaaS revolution in India is also bringing about another important change in organizations. "The CMO today is even more empowered than before," said Gartner's Padmanabhan.

"Previously, there was extensive dependency on IT, but now the technology department is more and more relegated to a support role for integration, data mining, overseeing contractual terms with vendors, and so on. They focus more on keeping the lights on," he added.

Snapdeal's Komaravelly said: "If you think about it logically, why should a CIO think about what makes an effective tech tool to market a product. Our CTO looks at how to increase stability on our site, and I look at how to make every marketing investment more productive. That's the way it should have been all along."

"If anything, SaaS makes the relationship between marketing and tech stronger," said Misra. He added that at the end of the day, marketing tools are not that simple. There is always a level of customization over and above the SaaS tools acquired. Only a proper engagement between the two sides can ensure an efficient outcome, he noted.

Things are structured differently at Bajaj, though, despite its heavy reliance on the SaaS platform.

"At our company, the CTO owns the process. Fortunately he is business-friendly," said Mody. The decision to select one technology over another essentially resides with the CTO, albeit after a thorough process of discussion and debate. "Business and marketing must remain focused, and that's the way we want to manage it for the next 2 or 3 years at least," he added.  

Yet, for all its current dependence on the CTO calling the shots, Bajaj's COO Bhatt said the company was "on a journey where we'd like the CMO to take over the technology aspects of marketing".

Already, its CMO Mody selects and deploys products of his own choice--some of which are unfamiliar even to the CTO--in several other business functions such as the company's loyalty programs. "Our company is increasingly seeing a handshake between technology and marketing," said Bhatt.

So, how is this brave new world of SaaS likely to affect the future of the organizational structures of companies?

In all likelihood, there will be mini IT departments in each business line or unit and marketing people will increasingly be armed with tech backgrounds, according to industry observers. Conversely, tech professionals will be forced to immerse themselves in the business side of things. There may not even be an IT department, they say, because core IT functions may have moved to specialist companies. Meanwhile, the data center would have migrated to the cloud for management and maintenance.

For all of SaaS's impressive gains in India, there are some things to watch out for and issues that need fixing.

Gartner's Padmanabhan noted that while the allure of SaaS is plug-and-play, localization challenges do crop up. Moreover, a balance needs to be struck between customization and standardization.

It is important, said Padmanabhan, to also understand savings over a five-year period so one can incorporate true data migration and grow scalably--otherwise the complications from a haphazard technology plan are guaranteed to eat into savings accrued from SaaS.

Almost all companies that were consulted said global SaaS companies located in India needed more depth in the services provided by industry players. "Sometimes you have to drag vendors to get things done," said Misra.