|Asia-Pacific I 2003
|The New Broadband World for the Small and Medium Businesses
|Chief Operating Officer
|Bharti Broadband Networks Limited
Rajiv Sharma is the Chief Operating Officer of Bharti Broadband Networks. He joined Bharti in late 2000, and has led the group’s data and broadband business initiatives, which under his leadership have made some breakthrough achievements in India’s data COM industry. He brings with him more than 22 years experience in the Office Automation, IT and Telecom Industry in India. He began his career as a front line sales person in the office automation industry in the early eighties; Rajiv quickly proved his mettle with the HCL team and was soon promoted to head Sales & Marketing Operations. After a long stint at HCL Rajiv decided to try his hand in a different industry – Digital Imaging. Joining as President & CEO Rajiv turned the company from a loss-making unit to a hugely profitable and dynamic organisation within a year. Rajiv is known for his people management and networking skills. He is a workaholic, but, in spite of his hectic schedule, Rajiv never misses his exercise. He has been known to jog from an airport to his hotel if he misses his morning exercises.
“India,” it was said, “has an intellectual advantage, but a practical disadvantage.” This helps India’s software industry, but hinders it elsewhere. The government focus on strengthening SMEs can accelerate growth and build India into an economic powerhouse. SMEs need assistance to assimilate new technologies and new productive, administrative and marketing methodologies. Large corporations can afford professional help, but SMEs need education and hands-on assistance to effectively absorb the technologies and processes that will revolutionise the way they do business.
SME Business – An Overview I happened to have read an extract by Prof. Leslie Young of the Chinese University in Hong Kong with a great amount of interest. Prof. Young talked about how a mix of history, geopolitics, spiritual framework, institutional structure, the impact of neighbouring states and overseas (non-resident) Chinese have made China the economic powerhouse that it is today. He also compared China to India using the same parameters and concluded that we have much to do to catch up, notwithstanding the fact that China was 10 years earlier on this road to economic reforms. It can be concluded, then, that a lot of thought seems to have gone into the very practical way the Chinese have built their structures and policies. Indians on the other hand have been focused more on theory. This is what can be seen today. “India has an intellectual advantage, but a practical disadvantage”, he said. This helps us with our software industry, but hinders us elsewhere. I believe that a focus on all the aspects of Small and Medium Business – that is from regulatory, politics and technology perspectives – can help accelerate and create a huge positive impact and help make India into an economic power house like China. Due to the sheer volume of business they generate and their untapped potential, Small and Medium enterprises (SMEs) have now become the new target for both Indian and multinational vendors who provide enabling technology to evangelise the growth of this segment. For example, the industry estimates that an ERP (Enterprise Resource Planning) product for the SME segment, has a potential market of over US$120 million, and, according to some ERP vendors here, this market has a likely compounded annual growth rate (CAGR) of 12 to 15 per cent. With less than 30 per cent of the SMEs in India having installed medium to low-level ERP packages, vendors are seeing big growth in this sector. Further, out of about 1000-plus IT companies currently functioning, more than 750 firms are in the SME segment. Vendor Approach Interestingly, vendors are using different methods to hammer their message home. Since the awareness among the SMEs is comparatively lower than that of big enterprises, vendors are preparing to go one step further to educate and train them about the challenges they face. SME Business Requirements Since the SME segment is such a competitive business, just by the sheer number of companies, it is constantly necessary to enhance operational efficiencies, increase productivity, reduce cost, counter the competition, present a value proposition and interact with sub-contractors and distributors in real time, SMEs have been forced to go in for cheaper, ready made and easy-to-deploy technology solutions. A recent trend has led many SMEs that work closely with large global enterprises to change their own in-house systems to integrate with those of the larger, technically more sophisticated, extended enterprises. This strengthens the relationship and provides a basis for the future growth of their business with the larger firm. The key area where SMEs need assistance is in the appropriate use of technology. Large corporations have the big consulting companies – and large professional staffs – to help them. SMEs have only themselves and their associates. SMEs need help at several levels: Business Processes: SMEs need templates and libraries of business process maps and best practices from which they can select the appropriate references that they can customise as needed Consulting and Training: They need to consult experts with pertinent knowledge and training skills. The combination can help SMEs leverage technology better Connecting with other SMEs: The SME communities are still quite splintered, mostly connected only through trade associations. Online contact through the Web is a great way for them to connect up, complemented by periodic face-to-face gatherings. They can share their ideas and experiences, and suggest solutions to challenges being faced by others. By doing so, by accumulating their collective experience, a shared knowledge base can emerge – where the whole is much greater than the individual parts. This could later be extended into creating an online marketplace, based on bartering products and services Using the Web: SMEs need to use the Web for marketing and promotion more aggressively. The company website should make comprehensive information available about the company, its products and services; it should be updated regularly. The site can become a hub and sounding board for new ideas, and get other individuals and organisations to connect up with the SME. At present, many of the SMEs in India (as well as other emerging markets) use PCs mainly for three tasks: email, accounting and documentation. This is because PCs are on the desks of only a few people, primarily because of their costs. A computer connected to the Web is a window to the outside world. The PC brings with it a sense of freedom and promise, though at times difficult to detect cultural change. Employees become free, through email and the web, to deal with their peers in the industry and with customers throughout the world. Over time, SMEs will discover that people and ideas are their greatest strengths and their passport to growth and business success. Broadband for Small and Medium Enterprises First, let us define broadband. Broadband is a high capacity communication channel which is capable of transmitting data at high speed or even separate voice, image and data streams simultaneously. Cable TV, for example, uses broadband transmission. In contrast, conventional channels, such as telephone lines, tend to be slow and to allow transmission of only one signal at a time. The broadband market, for the purposes of our discussion can be divided into two principal types of infrastructure and services – terrestrial and satellite-based. As far as terrestrial broadband is concerned, there is currently a huge glut of bandwidth in India. According to industry experts, barely one per cent of the total available bandwidth is being utilised. In fact there is excess bandwidth even in mature markets like the US, where only about three per cent of the total capacity is being utilised. This is happening because, although the service/infrastructure providers continue to add capacity, there are not enough applications in common use to employ the currently installed capacity. What needs to be seen is whether there will be a sufficient number of new applications to drive traffic to levels that will use all the bandwidth being added. Take the case of investment in broadband infrastructure. A whopping Rs 30,000 crore (roughly US$6.37 billion) is being invested to lay optical fibre cable within the country, with the largest chunk of it allocated to the creation of an intercity backbone. Today, then, there is a pressing need to create content and applications as wel as appropriate delivery mechanisms for SME businesses (the largest yet unexplored market segment), to create demand for this broadband infrastructure. The SME market is highly price sensitive, as these enterprises need to be extremely competitive in their respective market places. They need to control their costs, in order to keep their own prices low, and they need access to high performance technology, which will help them respond to market dynamics, so as to stay competitive in the market place. Market Trends It is important to understand, that for SMEs the prime driver for broadband, apart from faster downloads, will be the overall increase in productivity and the overall value proposition of being connected which are significant for the SME segment. SME segments such as the lottery business, stock brokerage business, consultancy services, retail networks have huge potential for broadband using technologies like DSL (Digital Subscriber line) VSATs (Very Small Aperture Terminal), cable, GPRS (Global Packet Radio Service), IP radio and the like. For instance the lottery segment, which is a US$2,000 million industry, has benefited greatly from GPRS technology (Global Packet Radio Service) which avoid the barriers of roof space and location rights which often accompany VSAT deployment. This reduces the investment, increases response, and scales up lottery sales. Broadband has been successfully deployed with solutions based on GSM infrastructure, radio and VSATs. The cable modem and DSL (the two leading broadband technologies) subscriber bases have grown by 15-20 per cent over the last year. Infrastructure in general, and access network infrastructure in particular, is the need of the hour; the moment these start building up, the market will explode. Application development for distant clients, distance learning, video on demand, education on demand, home shopping and interactive gaming will all become big businesses and will multiply the sise of the total market. Nasscom (National Association of Software and Service Companies – India) observed that about 55 per cent of the country’s overall exports are contributed by a select bunch of firms. The rest of the exports come from the large number of blossoming small and medium-sised firms. The Internet and broadband will have an especially significant impact on these firms, facilitating their growth and helping them develop cost effective marketing strategies and, generally speaking, lower the cost of their doing business. Nasscom has also petitioned the State Governments to explore the possibility of joining together with IT firms in eGovernance projects as this has the potential to boost eCommerce. By addressing this segment, SMEs will be able to scale up the value chain. Conclusion Small and medium enterprises are among driving forces that can accelerate the growth of our economy. This segment of business has to be nurtured, built, enabled with technology and processes, networked and structured following a robust model so that a market shakeout of any sort will not affect our economy. SMEs should be free from regulatory and government bureaucracy. It is one segment that cannot be neglected anymore.