Innovation through partnerships
Over the last few months many people have written about the need and way of Indian software companies venturing into creating global products, in this article I touch upon partnering with global software vendors as one of the ways to kick-start the journey for companies to become global players in packaged applications / software.
The Indian software industry has evolved over the years and the global software industry no longer refers to India being a cost effective location as the main advantage and reason for growth. We have now been able to position ourselves along with being cost effective to being able to deliver value to customer and the ability to scale on account of abundant availability of talent.
While this will continue to be an advantage and will fuel the growth of the software industry in India the dynamics of the industry are changing and we are witnessing slower growth rate of software services over the last few quarters as evident from the results of major software services companies in India. While there are global uncertainties at play what is certain is the customer expectations have evolved and they expect more value than the ability to just provide services. With this the linear growth possibilities of adding resources and translating this to revenue growth is slowly but surely diminishing. While this is hurting the businesses of some of the software companies this also provides a great opportunity for the Indian companies to accelerate innovation and look at utilizing their immense domain expertise and translating that into value to the customers.
Most companies look at creating value by developing products or packaged services, yet very few Indian companies have been able to make a significant mark in the global software product market. If business model transformation from services to products is a challenge faced by the large successful services companies the smaller ones lack the brand or the global reach to make a visible impact in the global software products market.
This article explores thoughts on one of the ways Indian companies could accelerate the process of delivering value to customers. While most Indian companies have the domain knowledge and capability to build products they lack the global reach and brand which is very important in the software product market. If Indian companies can maneuver through these hurdles they can take off and potentially play a significant role in the global software product market. This is where partnerships with globally successful software vendors becomes more attractive than ever. Most major enterprise application vendors have various modes of partnering and many Indian companies are already quite successful in partnering with them in providing services. Ecosystem and partnerships are a key element of the overall strategy of global market leaders as this enables these companies to scale and also extend the reach both in terms of geographies and local needs of products. Strategically these companies strive to increase the revenue share from partners via different modes of partnerships like channels, VARs, OEM etc.
The focus of this article is to highlight partnerships that focus on enhancing the value to the customers by providing complementary products which integrate seamlessly often addressing a specific need for an industry or local requirements. Most companies have product partnership opportunities at various levels, from a low touch open ecosystem to strategic partnerships. Companies big or small can take benefit of these partnerships by integrating their products to enterprise applications of the global players, such programs not only offer customers the confidence of software ratified by the large vendors they offer partners access to a large global customer base and marketing support creating a global reach. This provides a clear opportunity for growth and value to Independent software vendors and partners. For partners who need support to develop products most companies provide much needed support to ramp up and develop software which enables partners to translate domain expertise into customer value.
While open programs offer a good starting point for ISVs and partners, if it proves beneficial for the partners and customers then there are possibilities to partner with companies at a more strategic level. Even though the global product vendors mostly have diversified offering across LOBs and industries there are always specific needs of industries and localization which provide a tremendous opportunity for partners. These levels of partnerships are not generally open but mostly based on invites or strategic agreements but if a partner is able to create products which can provide a comprehensive value to customer by filling up a niche process gap or localization need then this is an option for partners to explore. Specifically for software companies in India this provides a tremendous opportunity to scale globally backed by an industry leading brands.
If the larger vendors looking for partnerships is not reason enough to trigger interest from the Indian companies the trends in the market make it even more exciting. While opportunities exist across industries, technologies specific areas like mobile are knocking at the doors for emerging economies like India. With over 930 million mobile subscribers in India mobility offers an advantage of catering to a huge local market before expanding into global markets. In addition to the large local market mobile applications also in some way reduce the entry barriers in terms of investments as there are opportunities to start by building small applications for enterprise mobility.
Gartner in their 2012 list of top trends predict “By 2015, mobile application development projects targeting smartphones and tablets will outnumber native PC projects by a ratio of 4-to-1.
” Forrester in their “Seven trends to shape the future of enterprise applications and ERP” also highlight the potential for mobile applications “Mobile technology accelerates business processes – Mobile technology – including devices, software, networks and product distribution channels – is evolving at breakneck pace. The potential of mobile applications to transform business processes hinges not only on the speed and convenience of mobility itself, but also on the unique capabilities of the devices to sense, respond to, deliver and capture information in real time. Enterprise application suppliers, however, will struggle to adapt their product development cycles to the pace of the mobile world.”
In summary I would like to highlight that we are at the crossroads in the software industry in India and as like any other challenge this offers huge opportunities as well. The secret is to adopt a step by step approach and partnering with large global software vendors could provide the much needed platform for Indian companies to make a mark in the global software product market.