Conceptualizing a ‘Digital SMB’…
2
‘Digital’ SMB: An SMB leveraging digital technologies across business processes thus driving top line growth, maximizing output
and deriving cost efficiencies
A modern ‘Digital SMB’ is powered by solutions touching multiple business levers
Operational
Excellence
Risk
Management
Workforce
Enablement
Customer
Acquisition
SMB
2.
4. 3.
1.
Hg
Compared to enterprises, SMBs adopt digital technologies differently
Digital solutions for SMBs need to reflect 5 key characteristics
Op-ex model with immediate payback
Cap-ex heavy solutions 1
Mobile First solutions Requirement of large IT infrastructure
2
Micro-vertical specific solutions Generic enterprise solutions lacking vertical centricity
3
Enable end-to-end workflow Multiple functional solutions addressing specific workloads
4
Prioritization of ease over features Complex, feature rich solutions with high learning curve
5
SMBs face multiple challenges while adopting solutions typically meant for
enterprises
Successful Digital SMB Solutions impact multiple business levers and enable end-to-end workflow
Discovery platform; Appointment Booking; Practice Management
Access to passengers; Automated Payment;
Vehicle Tracking
Connecting with potential tourists; Booking and
schedule management
Source – Zinnov Primary Research and Analysis
Zinnov leveraged insights gathered from 5000+ SMBs over the last year to assess the digital
opportunity
3
Which SMBs to
target?
12 Mn SMBs with high
degree of tech influence
Why talk about
them now?
Nexus of enablers driving SMBs to go
digital
What solutions do
they need?
Solutions addressing strategic business
challenges
How big is the
opportunity?
USD 26 Bn of opportunity across
solutions in 2020
How to tap the
opportunity?
Interventions across product, business
model and outreach
What is the
impact?
By 2020, impact of USD 1 Tr on GDP; 126 mn on employment
A B C D E F
Understanding the Digital SMB Opportunity
Source – Zinnov Analysis
India houses a massive base of tech influenced SMBs across
verticals
4
Which SMBs to
target?
116 Mn
GDP
Contribution Total
Exports
Total
Employment
Collective contribution of India’s SMBs
51 Mn strong SMB base in India
Micro Enterprises (<10 employees)
96.3%
Small Enterprises (10-100 employees)
3.4%
Medium Enterprises (100-1000 employees)
0.3%
Segmentation of Indian SMBs – by Size
Distribution of Tech-
influenced SMBs across
top 8 verticals
18%
Retail
19%
Professional Services
4%
Auto & Auto Ancillaries
8%
Real Estate
9%
Education
10%
Restaurants & Hospitality
14%
Travel & Logistics
14%
Manufacturing
38% 40%
A
Distribution of SMBs by level of tech influence
‘Tech Influenced’ SMBs: 40% 2015
~90% 2020
L4: 5 Mn
L3: 12 Mn
L2: 14 Mn
L1: 20 Mn
L1: Access to digital
infrastructure Devices/connectivity
L2: Use of consumer
centric services Such as messaging, email
etc.
L4: Business workflow
productivity tools Business centric solutions and services
L3: Digital discoverability
of businesses Company Websites, business
listings, etc.
Source –MSME, Press Articles, Zinnov Analysis
Nexus of 3 enablers are increasingly driving SMBs towards
digital enablement
5
Why talk about
them now?
Access to Enabling Infrastructure Availability of Solutions & Services
Push from Customers &
Ecosystem Stakeholders
Exploding smartphone usage
Availability of low
price devices
Smartphones & tablets
available for as low as
$40-80
Easy access to internet
Internet adoption
in SMBs to grow
exponentially
<10 Mn Users
2014
>30 Mn Users
2020
2X increase in average internet
speed in 3 years
>70% price reduction in average 3G mobile
access prices over last 3 years; internet
access expected to become free
Enterprise grade solutions becoming
affordable
Basic versions available for
free access Google Apps
SMBs realizing benefits of Cloud enablement
of solutions
50% reduction in ownership cost and deployment time
70-75% cost saving with advantages like scalability, set-
up time, etc.
Mobile app ecosystem thriving
Mobile app downloads
in India to increase
100 Mn Monthly app downloads
2014
400 Mn Monthly app downloads
2020
Easy Mobile App
development <3 hours Required to build a
functional app
9,000+ Indian Mobile app development
companies
Consumers spending more time on
the internet
140 Mn Hours
2014
1500 Mn Hours
2020
Internet aiding customer
purchases Growing use of digital
medium by SMBs
1,125 Million searches by
consumer in FY 2014
Ecosystem stakeholders and government
initiatives aiding SMBs
50,000+ SMB sellers on-
boarded by top 3 e-commerce
players
Flipkart, Snapdeal offering
easy access to loans for SMBs
through partners
Easy access to loans Enabling SMBs to sell online
Digital India Initiative
<10 Mn Users
2014
Near universal
adoption 2020
High adoption levels
Better &
affordable
services
‘Digital India’ campaign will likely propel
Indian govt. spending on IT to $7.2 Bn by
2015
5,000 business tenders
added everyday
B
Source –Akamai, BCG Report, Ericsson Market Insights, Avendus Mobile Internet Report, Flipkart Market Insights, Digital India Insights, Zinnov Analysis
Pockets of innovations disrupting four key business SMB
business levers
6
What solutions
do they need?
IOT
Mobility
Analytics
Cloud
Digital SMBs Social
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management
Discoverability and Reach
Managing Customer Relationships
Customer Intelligence
Optimizing Sales Motions
New Sales Channels
Ensuring Efficiency in Operations
Optimal Resource Utilization
Customer Experience Enhancement
Optimization of Inventory and Logistics
Partner Identification and Visibility
1
2
3
4
5
Talent Sourcing
Productivity Enhancement
Skilling
1
2
3
Data security
Counterfeit protection
Physical security of assets and resources
Safeguarding against financial risks
1
2
3
4
1
2
3
4
5
CRM on Mobile
SMS-based Website Creation and Management
Missed Call Marketing
Online Kirana shops
Mobile-based Accounting / Book-
keeping Solution
Cloud-based Production
Planning & Control
Cloud-based Project Management
Solutions
Mobile based POS
Cloud-based Collaboration
Solution
Mobile Job Marketplace
Online Training & Learning Solutions
Online Job Portals
Counterfeit Prevention
Solutions
Cloud-based Backup and
Recovery Solutions
Cloud-based Invoicing for SMBs
Low-cost Security Solutions
C
Source – News Articles, Company Websites, Zinnov Analysis
Digital enablement of Indian SMBs presents a multi-billion dollar
opportunity for tech vendors
7
How big is the
opportunity?
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management 306
484
370
467
310
383
431
551
417
462
518
788
421
683
367
658
219
279
199
384
564
783
621
964
Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of solutions providers, MSME, Press Articles, Zinnov Analysis
D
Opportunity across key
verticals (USD Mn) Manufacturing Travel and Logistics Retail Professional Services
Restaurants and Hospitality
Others
Total Opportunity: USD 11.6 Bn (2015)
USD 25.8 Bn (2020)
Addressable opportunity by verticals and business
areas (USD Mn) XX
8
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e-readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – MSME, Planning Commission, State Websites, TRAI, Ministry of Tourism, Census Report, World Bank, Ministry of Road Transport and Highways, Crisil, Zinnov Analysis
Key Cities – Mumbai, Pune, Nagpur, Nasik,
Aurangabad 8.1% Maharashtra
Key Cities – Chennai, Coimbatore, Madurai,
Tirupur Tamil Nadu
Key Cities – Ahmedabad, Vadodara, Surat,
Gandhi Nagar Gujarat
Key Cities – Lucknow, Kanpur, Meerut,
Varanasi, Agra Uttar Pradesh
6.8%
6.5%
6.9%
Share in opportunity
Share in opportunity
Share in opportunity
Share in opportunity
1.
2.
3.
4.
Key Cities – Hyderabad, Vishakhapatnam,
Vijayawada Andhra Pradesh
Also includes: Noida, Gurgaon & Faridabad Delhi NCR
Key Cities – Mysore, Bengaluru, Hubli, Belgaum Karnataka
Key Cities - Thrissur, Kochi, Kozhikode,
Thiruvananthapuram Kerala
6.1%
6.1%
6.1%
5.9%
5.
6.
7.
8.
How big is the
opportunity?
Top 8 states constitute over 50% of the overall opportunity in
digital enablement of SMBs D
Share in opportunity
Share in opportunity
Share in opportunity
Share in opportunity
Strategic initiatives required to be set in motion to tap into the
digital SMB opportunity
How to tap the
opportunity?
Engineering Product for SMB use Optimum pricing to ease SMB adoption High Impact outreach enabling large scale
Successfully targeting SMBs necessitates 3-pronged approach
Vertical specific solutions addressing end to end
needs SMBs are receptive to solutions that digitize entire workflow of their vertical
Mobile first solutions
Given high adoption of smartphones among Indian SMBs, it is imperative for solutions to be fully operable over mobile interface
Low set-up time/ready to use
SMBs have limited resources to invest in implementation of solutions and hence prefer ones that work out of the box
Digitization of entire workflow for a doctor, including,
discoverability CRM & operations
Op-ex model: Reduction in up-front cost Greatest deterrent to adoption of solutions is requirement of high upfront investment. Need to reduce the burden by offering pay-per use pricing
Tiered pricing
- Encourage free trial to ensure high initial uptake - Freemium models of engagement to ensure maximum value realization
Creation of channel with non-traditional reach
Need to almost create FMCG reach of solutions across geographic barriers. Experiment with on-boarding entities such as cyber cafés operators, and ticketing agents, as partners to ensure last mile reach
Mass scale evangelization • Need to enhance visibility of
products through mass evangelization
• Use of viral marketing techniques
Enabling easy payments
Tie-up with telecom service providers to enable SMB payments through telecom bills
1. 2. 3.
E
Source – Company Websites, Press Articles, Zinnov Analysis
Targeting new-age digital SMBs requires strategic realignment of
channel
10
How to tap the
opportunity?
E
I. Chaotic: Partner strategy in complete chaos, sells any IT
products to make ends meet; hasn’t invested in growth and capability
II. Reactive: Only fulfils demand generated by principal
vendor, no investments into customer relationships, minimal ability to value sell, poor sales team
III. Proactive: Has set key accounts and made investments
into solutions, limited capabilities to value sell, has growth aspirations yet struggles with scaling sales, may not have competent leadership
IV. Invested: High investment into driving product sales;
capabilities to build solutions; high growth aspirations supported by strong leadership and ability to scale; have own brand presence
Build 2-3 year growth
plan per partner
Build Individual partner
GTM
Define individual
capability development
plan for each partner
Segment partners by
maturity level
Key Impacts of digital SMB solution characteristics on vendor channel operations
Off the shelf nature of products Op-ex model of pricing Low Switching costs
Focus on product sales instead
of professional services Widen funnel, push free trials Accelerate sales cycle
Handhold customers into
solution usage, high focus on
customer engagement
Ensure customer loyalty, Derive
higher lifetime value (LTV)
1 2 3 4 5
Fulfilment, onboarding and configuration done by customer itself
Software vs. services revenue nearly 1:1
Low upfront income per customer Recurring revenue from customers
Need to ensure high customer engagement and satisfaction to maximize LTV
Sales vs. services revenue
# of SMB Customers
Length of sales cycle
Customer lifetime value
Management Commitment
Partner Capability
Credit and Profit Potential
Revenue contribution
Strategic realignment of channel to target SMBs
Source – Zinnov Analysis
Assessment of partner maturity for SMB sales Framework to classify partners by maturity level Strategic Interventions into partner operations
Digital enablement of SMBs would have a multifold impact on
India’s GDP, exports and employment
11
What is the
impact?
Collectively, digital
enablement of Indian
SMBs will lead to
following additional*
contribution by 2020
Additional jobs are expected to be created to power
incremental output aided by digitization
~168 Mn
Additional GDP
Additional annual contribution to the GDP
due to adoption of digital technologies by SMBs
~$ 1.1 Tr
Increase in Exports
Increment in SMB contribution to Indian
exports ~$ 264 Bn
Notes: 1) Based on revenue enhancement and cost optimization effects of digitization of tech addressable SMBS on projected GDP of India in 2020
*Contribution attributable to digital enablement; over and above the expected contribution due to overall Indian GDP growth
Incremental Employment
Generation
Overall Economic Impact of Digital
Enablement on an SMB –
75% of current
revenue
Impact through Revenue Enhancement
50%
Impact through Cost Optimization
25%
F
Source – DNB, MSME, Press Articles, Zinnov Analysis
Agenda
13
Nexus of Forces Driving Digital Enablement of
SMBs
Digital Enablement Impacts Key Business Levers
Digital Enablement of SMBs Key for India’s Holistic Development
Digital Native Solutions Driving SMB Disruptions
Opportunity Deep Dive – Vertical and Geo View
Increasing device penetration
Enhancement in internet connectivity
Customer IT adoption
Availability of enterprise grade
solutions/services at SMB price points
Initiatives from ecosystem
stakeholders
Thriving app ecosystem
Access to Enabling Infrastructure
Availability of Solutions & Services
Push from Customers &
Ecosystem Stakeholders
1
2
3
Nexus of 3 key drivers pushing SMBs to go Digital
A
B
C
D
E
F
14
Increasing propulsion of Indian SMBs toward digital adoption can be attributed to three key
drivers…
Source – Zinnov Analysis
Adoption of smart devices in conjunction with enhancement in internet availability, enabling easy
digital access
15
Increasing
device
penetration
Considerable use of smartphone by
SMBs
2015
2020
1
Meanwhile, low cost
smartphones & tablets are
readily available
$40
$60-80 “
Enhancement in
internet
connectivity
High device penetration
complemented with Rapid
consumerization of IT
Almost the same price as feature phones
Low cost tablets are available from more
than 10 different brands
Growing use of Online collaboration
services like dropbox, google docs,
skype etc. for both personal and
professional work
Increasing broadband & mobile
internet adoption in SMBs
~7 Mn
>30Mn
2015
2020
Reducing internet access
prices
A
B
~7-8 Mn
Near universal
“
“ “
“ “
2X increase in average
internet speed in 3 years 0.9 Mbps
2.0 Mbps
7.0 Mbps
2011 2014 2017
“ “
>70% reduction in 3G mobile prices over the last 2
years
Expectation of data services access for free
Source – Zinnov Analysis, Akamai, BCG Report, Ericsson Market insights, Avendus Mobile Internet Report
16
2 Various SMB relevant solutions and services are available across desktop and mobile platforms
Enterprise grade
solutions/services
at SMB Price points
Thriving app
eco-system
100 Mn
400 Mn
2014
2020
4X Increase of monthly mobile app
downloads in India by 2020
Top Business
Apps
Over 75+ Million average downloads
per app worldwide
Mobile app development is becoming
increasingly viable for SMBs “ <3 hours Required to build a functional app
9,000+ Indian Mobile app development companies
45% reduction in prices in 2013;
base version available for free
31% reduction in prices in 2014;
base version available for free
Google Apps
Easy affordability of cloud enabled
enterprise grade solutions “
“
Cost effectiveness of
cloud-based solutions
50%
50%
Reduction in cost of ownership
Lower deployment time
Public cloud
infrastructure fit for
SMBs
70-75% Advantages like scalability, low management requirement
and low set up time
C
D
“
“
“ cost savings with adoption of public
cloud
Source – Zinnov Analysis, AMI Partners
17
3 Adoption of IT across customers and push from ecosystem stakeholders, fueling SMBs’ digital
journey
Increasing
customer IT
adoption
Initiatives from
Ecosystem
stakeholders
Consumers spending more
time on the internet Internet aiding
purchases across
consumer segments “
1,125 Million searches by consumer in FY 2014
37 Mn ratings and reviews, signifying high
engagement
Increasing use of
digital medium by
enterprises “ 5,000 business tenders added everyday
5-6 average leads for SMB/day
E-commerce companies helping SMBs
to sell on digital platforms
50,000+ SMB sellers on-boarded by top 3
e-commerce players
Rapid growth of e-commerce market
$13 Bn
$70 Bn
2014 2020
“
“
Easy access to loans
for SMBs through
partners Flipkart, Snapdeal offering easy access to
loans for SMBs through partners
Government initiatives
aligned to help SMBs
digital uptake
‘Digital India’ campaign will likely propel Indian govt. spending on
IT to $7.2 Bn by 2015
Government launched scheme to promote ICT in MSME sector
extending support of basic ICT infrastructure
E
F
140 Mn Hours
2013
2020
1500 Mn Hours
“ “
“
“
Source – Zinnov Analysis, Global WebIndex Wave, Company websites
Agenda
18
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business
Levers
Digital Enablement of SMBs Key for India’s Holistic Development
Digital Native Solutions Driving SMB Disruptions
Opportunity Deep Dive – Vertical and Geo View
Led by digital enablers, SMBs are witnessing disruptions across four key business levers
19
Social
Mobility
Analytics Cloud
IOT
Digital SMBs
Discoverability and reach Managing customer relationships Customer intelligence Optimizing sales motions New sales channels
Customer Targeting and
Engagement
A
Efficiency in operations Customer experience enhancement Optimal resource utilization Partner identification and visibility Optimization of inventory and logistics
Operational Excellence B
Sourcing of relevant talent Tackling attrition Productivity enhancement Skilling
Workforce Enablement C
Counterfeit protection Data security Physical security of assets and resources Safeguarding against financial risk
Risk Management F
Four key business Levers impacted by tech
adoption
Source – Zinnov Analysis
20
Discoverability and Reach
Access to clients in distant geographies and create greater visibility and mindshare among
target segments
Managing Customer Relationships
Ensure efficient management of new and existing customer
relationships; personalization in engagement
Customer Intelligence
Understand customers buying patterns and their requirements to push relevant offerings along with
upselling of complementary products
Optimizing Sales Motions
Gather real time visibility into the existing partner network, measure
their performance and effectiveness of campaigns
executed
New Sales Channels
Engage in various online channels like aggregator websites, online
marketplaces ,etc. to undergo non-linear growth
Illustrative SMB focused Solutions
SMB focused CRM available through cloud across web and mobile interfaces
Used by ~400k SMBs globally
CRM on Mobile
Solution categories to enhance customer targeting and engagement
1 2 3 4 5
A Various solutions are available to address SMB needs related to customer targeting and
engagement
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Quick website creation – in 13 minutes
Website update over SMSs; Auto – SEO
SMS-based Website Creation and Management
Use of missed calls to generate leads, deliver coupons, run contests etc.
High quality leads, positive customer
engagement
Missed Call Marketing
Tie up with local retail SMBs to deliver grocery orders received online
Online Kirana shops
Source – Zinnov Analysis, Company websites, Press Articles
Zinnov estimates an opportunity of USD 3.8 Bn in provision of Customer Targeting and Engagement
solutions to Indian SMBs
21
Total Discoverability andReach
Managing CustomerRelationships
CustomerIntelligence
Optimizing SalesProcesses
New Sales Motions
$ 3,800 Mn
$ 1,250 Mn
$ 550 Mn
$ 550 Mn $ 100 Mn
$ 1,350 Mn
Avenues to enhance discoverability, such as website creation and portal listings, constitute a large market within SMBs
In addition, enabling SMBs to sell over internet can potentially drive annual revenues in access of a billion dollars for the enabling platforms
A
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
FY2015
FY2020 $8.4Bn
$3.8Bn
Addressable Opportunity in Customer Targeting and Engagement across
Tech-influenced SMBs
Opportunity Split – by Sub components (2015)
Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Ensuring Efficiency in Operations
Automation of operations and streamlining of core processes to draw higher execution efficiencies
Optimal Resource Utilization
Reduction in wastage and optimum utilization of resources, such as raw
material, labor, and overheads
Customer Experience Enhancement
Improvement in customer facing operations to ensure higher
customer satisfaction
Optimization of Inventory and
Logistics
Usage of technology to forecast and automate inventory
management. Visibility and control over logistics to minimize losses
Partner Identification and Visibility
Use of portals to identify suitable partners for supply of materials and delivery of finished goods
Illustrative SMB focused Solutions
Solution categories in Operational Excellence and Supply Chain Management
1 2 3 4 5
Operational Excellence and Supply Chain solutions fall under five key areas
22
Solution called ‘Len Den Khata’ automates the accounting / book-keeping
for SMBs with simple, easy-to-use interface
Targets kirana shops, chemists, jewelers,
milk dairies etc.
Mobile-based Accounting / Book-keeping Solution
SMB-focused vertical specific resource planning
Web-based Resource, Sales, Operation, Demand Planning, Master Production
Schedule
Cloud-based Production Planning & Control
Cloud based solution to track multiple projects, assign/track tasks & milestones
Also offers reporting and analytics
Cloud-based Project Management Solutions
POS solution comprising a lightweight card reader, smartphone and an app
Partnered with SBI to deploy 5 lakh POS
devices by 2019
Mobile based POS
Source – Zinnov Analysis, Company websites, Press Articles
Zinnov estimates an opportunity of USD 2.5 Bn in provision of Operational Excellence solutions to
Indian SMBs
23
Total Ensuring efficiencyin processes
Optimal ResourceUtilization
CustomerExperience
Enhancement
Optimization ofinventory and
logistics
Partneridentification and
visibility
$ 2,500 Mn
$ 950 Mn
$ 400 Mn $ 200 Mn
$ 800 Mn
$ 150 Mn
SMBs require solutions that help address issues around inventory management, efficient logistics and overall efficiency of operations
Overall market for operational excellence solutions is expected to grow at a CAGR of 17% to reach $5.5 Bn by 2020
A
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Opportunity Split – by Sub components (2015) Addressable Opportunity in Operational Excellence across Tech-
influenced SMBs
FY2015
FY2020 $5.5Bn
$2.5Bn
Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Talent Sourcing
Usage of technology solutions to address workforce shortfall by
identifying talent and hire as per requirement
Productivity Enhancement
Ensuring collaboration amongst employees and enable monitoring to increase employee productivity
Skilling
Use of web based solutions to provide training to employees
across skill categories
Illustrative SMB focused Solutions
Solution categories in Workforce Enablement
1 2 3
Includes solutions, such as email, calendar, storage, productivity apps
delivered over cloud
Cost effective – INR 1,500 per person per annum
Cloud-based Collaboration Solution
Saral Rozgar Card allows users to connect to job market place from mobiles;
location based mapping, aiding both “job seekers” and “job providers”
2 Million registered users across 800 cities
in just 2 years
Saral Rozgar - Mobile Job Marketplace
200+ Courses of professional certification
Accredited by 20+ global bodies
Over 100,000 professionals trained across 150+ countries
Online Training & Learning Solutions
Users can apply for jobs across 50+ job boards in one submission
Built-in Social Recruiting to take
advantage of integrated social network postings
Online Job Portals
Workforce Enablement solutions solve problems related to talent sourcing, productivity and skill
Source – Zinnov Analysis, Company websites, Press Articles
Zinnov estimates an opportunity of USD 3.1 Bn in provision of workforce enablement solutions to
Indian SMBs
25
Total Talent Sourcing, tacklingattrition, hiring
Productivity Enhancement Skilling
$ 3,100 Mn
$ 2,300 Mn
$ 400 Mn
$ 400 Mn
Workforce hiring and retention are one of the biggest pain points in SMB. Solutions addressing the same across hierarchy levels have a massive opportunity among SMBs
A
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Opportunity Split – by Sub components (2015) Addressable Opportunity in
Workforce Enablement across Tech-influenced SMBs
FY2015
FY2020 $6.8Bn
$3.1Bn
Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
Data security Counterfeit protection
Physical security of assets and resources
Safeguarding against financial risks
1 2 3 4
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Prevention of leakage of critical business data on finances, customers, operations etc.
Adopting mechanisms to help consumers identify a counterfeit
product from a real one
Use of surveillance, asset control and tracking solutions to ensure
physical safety of assets
Illustrative SMB focused Solutions
Advanced physical layer authentication to prevent counterfeiting
Counterfeit Prevention Solutions
Integrated backup for offsite data storage and disaster recovery
Available as a service delivered over cloud
Cloud-based Backup and Recovery Solutions
Provides monitoring and reports / analytics on invoicing and payments on a
freemium model
5 mn users across 120 countries
Cloud-based Invoicing for SMBs
Provides CCTV surveillance, Metal detectors, etc. along with electronic
security-as-a-service
Low-cost Security Solutions
Ensure healthy working capital by safeguarding against financial
defaults on receivables
26
SMBs can mitigate risks by adopting technology across 4 major areas
Risk Management solutions can be categorized in four broad buckets
Source – Zinnov Analysis, Company websites, Press Articles
Zinnov estimates an opportunity of USD 2.2 Bn in provision of Risk Management solutions to Indian
SMBs
27
Total Data Security Counterfeit protection Physical security ofresources
Safeguarding againstfinancial risk
$ 2,250 Mn
$ 610 Mn $ 110 Mn
$ 1,030 Mn
$ 500 Mn
Safeguarding enterprise data and security of physical assets are critical to SMBs and represent the largest opportunity for providers of relevant solutions
A
Customer Targeting & Engagement Operational Excellence and SCM Workforce Enablement Risk Management
Opportunity Split – by Sub components (2015) Addressable Opportunity in Risk
Management across Tech-influenced SMBs
FY2015
FY2020 $5.0Bn
$2.2Bn
Note: Opportunity assessment done on the basis of relevance of sub categories of solutions to 5 largest SMB verticals, average solution prices, and number of tech addressable SMBs. Source – Company Websites of key solutions providers, MSME, Press Articles, Zinnov Analysis
Agenda
28
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business Levers
Digital Enablement of SMBs Key for India’s Holistic Development
Digital Native Solutions Driving SMB Disruptions
Opportunity Deep Dive – Vertical and Geo View
Opportunity Assessment – Manufacturing Vertical
29
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management
Total Opportunity USD 1,627 Mn
Manufacturing Vertical
306
484
370
467
(USD Mn)
Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality
Uttar Pradesh Key Cities – Lucknow, Kanpur, Meerut
Maharashtra Key Cities - Mumbai, Pune, Aurangabad
Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada
Karnataka Key Cities - Bangalore, Mysore, Hubli
Tamil Nadu Key Cities - Chennai, Coimbatore, Tirupur
Rajasthan Key Cities - Kota, Jaipur, Udaipur
4.9%
9.2%
7.1%
6.1%
7.5%
6.4%
6.6%
5.7%
Gujarat Key Cities – Ahmedabad, Vadodara, Surat
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e-readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Planning Commission
Kerala Key Cities - Thrissur, Kochi, Thiruvananthapuram
States with highest contribution to manufacturing opportunity
Opportunity Assessment – Retail Vertical
30
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management
Total Opportunity USD 2,184 Mn
Retail Vertical
(USD Mn)
Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality
417
462
518
788 6.9%
6.5%
7.0%
6.2%
6.2%
7.2%
9.0%
5.8%
Uttar Pradesh Key Cities – Lucknow, Kanpur, Varanasi
West Bengal Key Cities – Kolkata, Siliguri, Asansol
Maharashtra Key Cities - Mumbai, Pune, Nagpur
Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada
Karnataka Key Cities - Mysore, Bangalore, Belgaum
Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai
Delhi NCR Includes Noida, Gurgaon, Faridabad
Gujarat Key Cities – Ahmedabad, Vadodara, Surat
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e-readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Census, World Bank, Crisil
States with highest contribution to retail opportunity
Opportunity Assessment – Travel and Logistics Vertical
31
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management
Total Opportunity USD 1,675 Mn
Travel and Logistics Vertical
(USD Mn)
Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality
310
383
431
551
Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai
Kerala Key Cities - Thrissur, Kochi, Thiruvananthapuram
3.9%
4.7%
5.6%
4.5%
6.5%
5.5%
6.6%
5.7%
7.0%
Uttar Pradesh Key Cities – Lucknow, Kanpur, Varanasi
West Bengal Key Cities – Kolkata, Durgapur, Asansol
Maharashtra Key Cities - Mumbai, Nasik, Pune
Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada
Karnataka Key Cities - Hubli, Bangalore, Mangalore
Rajasthan Key Cities – Kota, Jaipur, Udaipur
Gujarat Key Cities – Ahmedabad, Gandhinagar, Surat
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e-readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Crisil, Ministry of Road Transport and Highways
States with highest contribution to travel and logistics opportunity
Opportunity Assessment – Professional Services Vertical
32
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management
Total Opportunity USD 2,129 Mn
Professional Services Vertical
(USD Mn)
Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality
421
683
367
658 8.3%
6.9%
5.9%
7.0%
8.8%
5.8%
6.6%
Uttar Pradesh Key Cities – Lucknow, Kanpur, Varanasi
Maharashtra Key Cities - Mumbai, Nagpur, Pune
Karnataka Key Cities - Mysore, Bangalore, Belgaum Tamil Nadu
Key Cities - Chennai, Coimbatore, Madurai
Kerala Key Cities - Kozhikode, Kochi, Thiruvananthapuram
Delhi NCR Includes Noida, Gurgaon, Faridabad
Gujarat Key Cities – Ahmedabad, Vadodara, Surat
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e-readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, Census Report, World Bank
5.4%
West Bengal Key Cities – Kolkata, Durgapur, Siliguri
States with highest contribution to professional services opportunity
Opportunity Assessment – Restaurants and Hospitality Vertical
33
Customer Targeting and Engagement
Operational Excellence and SCM
Workforce Enablement
Risk Management
Total Opportunity USD 1081 Mn
Restaurants and Hospitality Vertical
(USD Mn)
Manufacturing Retail Travel and Logistics Professional Services Restaurants and Hospitality
219
279
199
384 5.7%
6.9%
7.2%
6.8%
7.4%
9.6%
6.6%
Uttar Pradesh Key Cities – Agra, Mathura, Varanasi
Maharashtra Key Cities - Mumbai, Aurangabad, Pune
Andhra Pradesh Key Cities - Hyderabad, Visakhapatnam, Vijayawada
Karnataka Key Cities - Mysore, Bangalore, Mangalore
Tamil Nadu Key Cities - Chennai, Coimbatore, Madurai
Delhi NCR Includes Noida, Gurgaon, Faridabad
Gujarat Key Cities – Ahmedabad, Junagarh, Surat
Note: States prioritization is based on two broad parameters, namely a) State Digital Business Index, b) State *Vertical* Index. State Digital Business Index indicated combined assessment of factors including # of tech addressable SMBs, tele-density, PC and internet penetration, e-readiness rating, state GDP, average SMB asset base etc. State *vertical* Index indicates a combined assessment of various vertical specific parameters, such as vertical clusters, urbanization index, literacy rate, tourism etc. Source – Zinnov Analysis, MSME, World Bank, Ministry of Tourism, Census
States with highest contribution to restaurants and hospitality opportunity
Agenda
34
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business Levers
Digital Enablement of SMBs Key for India’s Holistic Development
Digital Native Solutions Driving SMB
Disruptions
Opportunity Deep Dive – Vertical and Geo View
Disrupted traditional procurement methods of individual buying at low scale
Driving cost efficiencies through aggregated demand
Cloud based solution enabling demand aggregation
Collective payment through online channel
Enterprise scale
procurement for SMBs
Digital native solutions driving SMB disruptions (1/2)
35
Operations structured around merely three employees per city which handle thousands of accounts (SMBs)
Made possible due to extensive digitization of operations
Disrupting customer engagement through permission based marketing using missed call (toll free for customers)
Provides actionable leads with serious intent
Easy to use solutions encompassing entire SMB (Doctor) workflow : Enhancing discoverability by customers Managing customer relationships Enabling operational workflow
1
2
3
4
Completely mobile workflow
Ease of operation for both drivers and consumers
Engaging customers through lowest denominator of technological adoption – telephone calls
Digitization of entire workflow on an integrated cloud based platform
SMB reach without feet on street
Enabling end-to-end
vertical specific workflows
Non-intrusive
customer engagement at scale
Source – Zinnov Analysis, Company websites, press articles
Help Individuals derive value out of their “underutilized assets”
Companies have created trusted market places for respective offerings: Air BnB – Accommodation Lyft – Car Ride
Digitally enabled crowd sourcing of user ratings
Ease of execution –fully operational through a mobile app
Powering new breed of SMBs
Digital native solutions driving SMB disruptions (2/2)
36
Organization of blue collar workforce through saral rozgar card
Registered job seeker base of close to 2 million and reached 1 Lac job openings in March 2014
Used as a medium for both internal (employees) and external (clients) communication
Rapidly emerging as an effective mass marketing tool
End-to end solution to create and manage websites
13 minutes for creation of websites; auto SEO
Ability to manage/update websites over SMS
5
6
7
8
Enablement through mobile phones which have a significant penetration in the target workforce
Mobile only solution with high penetration
Low learning curve; near Zero Cost
Extreme ease in web-presence creation and management
Organizing the
unorganized
Consumer apps for business
Web presence
made simple
Source – Zinnov Analysis, Company websites, press articles
Agenda
37
Nexus of Forces Driving Digital Enablement of SMBs
Digital Enablement Impacts Key Business Levers
Digital Enablement of SMBs Key for India’s
Holistic Development
Digital Native Solutions Driving SMB Disruptions
Opportunity Deep Dive – Vertical and Geo View
38
Overall Economic Impact of Tech Adoption on
an SMB – 75% of current revenue
Revenue Enhancement –
50% Cost Optimization–
25%
Notes: 1) Economic impact has been calculated based on 100% adoption of all relevant digital technologies and estimating %age revenue enhancement and cost reduction resulting from tech adoption across each of the 4 business levers
Customer Targeting and Engagement, 38%
Risk Management, 22%
Workforce Enablement, 20%
Operational Excellence, 20%
90%, Operational Excellence
10%, Customer targeting and Engagement
Zinnov estimates 75% overall enhancement in SMB performance due to technology adoption across
6 key business levers
Source – Zinnov Analysis, Company Websites, Press Articles
Digital SMBs would have a multifold impact on India’s GDP, exports and employment
39
Additional* Contribution
of Digitally enabled Indian
SMBs in 2020
Additional jobs are expected to be created to
power incremental output aided by digitization
~168 Mn
Additional GDP Additional annual
contribution to the GDP due to adoption of digital
technologies by SMBs ~$ 1.1 Tr
Increase in Exports Increment in SMB
contribution to Indian exports ~$ 264 Bn
Notes: 1) Based on revenue enhancement and cost optimization effects of digitization of tech addressable SMBS on projected GDP of India in 2020
*Contribution attributable to digital enablement; over and above the expected contribution due to overall Indian GDP growth.
Incremental
Employment Generation
Source – DNB, MSME, Press Articles, Zinnov Analysis
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