Simplify, Integrate and Step Around the Dot-com Puddle

Look beyond the slowdown. The dot-com crash apart, it has been a good year for packaged software—growth was at 37%, Indian companies launched 92 products and upgrades, and MNCs another 152

VOICES across the packaged software industry spell reassurance and quiet confidence in the future. And why not? Despite the slowdown in Q4, the industry has seen a healthy growth of 37%. Between April 2001 and March 2001, Indian companies launched over 92 new software products and upgrades in the domestic market, while MNCs launched another 152.

E-biz solutions emerge winners

Given the slowdown in the economy, even traditional non-IT companies are bound to cut back on IT spending. However, the gloom has not been infectious. Plans to overhaul the entire digital structure or commence selling online may have been axed, but essential upgrades, streamlining internal processes and ramping up customer-facing operations remain top priority. Not surprisingly, e-business applications are expected to grow 15% this year.

According to DATAQUEST estimates, in 2000-01, e-commerce software solutions worth $1.2 billion were exported. This number is expected to increase to $1.8 billion in 2001-02. From a back-end database that cannot talk to the company’s interactive Website to users who swear by the company’s legacy system—"the new SCM is too complex". Technology has often wreaked havoc on unsuspecting clients. Given the high investment in e-business packages, users find it extremely frustrating to deal with complexity and non-compatibility among different platforms. The year 2000-2001 has seen some of these key issues being addressed.

Simplicity: The buzzword

"Oracle is waging a war on complexity," declares Somesh Bhagat, head of marketing, Oracle Software India. "We want to help organizations concentrate on doing business instead of spending 50% of their time and effort in integrating technologies, platforms and versions," Bhagat adds. Oracle’s 11i, mySAP, iBaanERP, QAD’s eQ—all launched this year—are collaborative e-business solutions addressing the issue of complexity with varying degrees of success. These indicate a clear move away from ‘point solutions’ that tackle just one aspect of e-business. The thrust is towards more comprehensive and integrated solutions that are Web-enabled and support hardware from almost every major vendor.

While it is simpler to integrate versions from the same vendor, the challenge lies in cross upgradation. The year 2000-2001 was projected to usher in the application service providers’ boom. Client server applications were to swiftly give way to application servers and thin clients. Typically, ASPs deploy, host, manage and rent access to the software from a centrally managed location. They provide substantial benefits to companies—reducing software maintenance costs, minimizing installation time, providing full product lines to customers… However, the ASP revolution failed to take off due to bandwidth and infrastructure issues.

CRM software

Today, CRM is being defined as ranking customers profitably. Here too, the trend has been in integrating CRM solutions with the Internet as well as the back-end systems of the organizational structure. For instance, using mySAP, Villeroy & Boch sales representatives can access as well as upgrade current customer and product data, orders, customer service records and information on showrooms anytime and anywhere on their laptop computers. Other products from Peoplesoft, Onyx, Oracle, Pivotal and Siebel also support browser-based clients.

One of the most important aspects of CRM strategy lies in answering customer queries promptly and correctly. This is usually done by providing automated responses using keyword matching or else in person—the most effective but expensive option. The California-based YY Software provides answers to text-based queries using what it calls knowledge-based linguistic processing, or KBLB. KBLB combines patented linguistic processing with industry-specific knowledge bases. The solution’s linguistic processing engine deals with language much the way it is processed by humans—it understands sentence structure and phrasing. Instead of charging a traditional software license fee, YY charges by the correct answer at a rate that is below the typical cost-per-answer in a CSR-based service situation.

However, a good CRM strategy lies in integrating voice, fax, Web as well as face-to-face interaction—not just point solutions. For instance, PeopleSoft’s CRM ‘Mobile Sales’ for wireless access protocol is designed to let field sales representatives access customer service databases from a cellular phone.

Voice, fax and hand-held devices

As with PeopleSoft’s CRM 8, a pure Internet solution is now seen as a shortcoming that needs to be upgraded instantly to integrate with mobile connectivity. "Once software is Web-enabled, it is just a question of transformation and does not involve cumbersome technology. A PDA or a mobile is treated like yet another thin client," explains Oracle’s Bhagat. In February 2001, Onset introduced Metamessage, a wireless service that displays Web pages and more than 25 different file types on wireless e-mail devices by converting Web pages, faxes and attachments into textual e-mails.

There are similar offerings by Equinox and Astata, and PDA software applications such as ‘Documents To Go’ from DataViz, which let you view and edit attachments on a Palm. These, however, have shortcomings like garbled text.

Office software

A 51% growth in PC sales has cascaded on to the office software segment. Not surprisingly, the Microsoft office suite continues to occupy over 80% of the market. The obvious reason for this is Microsoft’s business acumen. But for a user, comfortable with any suite, switching to anything else just seems too much of a bother. This is despite the fact that Corel’s WordPerfect, Lotus’ SmartSuite, and Sun’s StarOffice all offer some features that Office lacks. For instance, Corel WordPerfect Office 2002 is a terrific word processor, especially for long and complex documents, but import filters for Microsoft file formats end up removing fancy formatting. As against this, Sun StarOffice 5.2 handles MS Office files well. And even more important, it can be downloaded free.

Effect of piracy

Concerted efforts at checking piracy on the part of Nasscom and other agencies have succeeded in curbing piracy to a certain extent. There has been a 50% growth in sales of branded PCs due to bulk purchases by larger organizations and MNCs. Branded PCs are usually bundled with genuine operating systems. Users have accepted that pirated software is often of inferior quality and are gradually investing in genuine packages. Despite these buffers, it has been found that software piracy has actually increased by 51%.

Bundling software

It is a buyer’s market and software vendors have been bundling diverse products in an attempt to woo customers. The bundling strategy has worked in cases where target users have been identified accurately. The cost of overheads certainly goes up in such an exercise. But if the strategy works, growth in revenue far outweighs the combined expenses of shipping, brand promotion and advertising. For instance, SAP bundled complementary software like security, implementation services and hardware in its CRM solution. Oracle launched a performance bundle with 9iAS and DB. Customers today can purchase out-of-the-box, pre-integrated, pre-installed Compaq systems with Oracle9i real application clusters, resulting in faster-time-to-deployment and less risk.

While SAP and Oracle have exhorted the effects of bundling, Microsoft India Managing Director Rajiv Kaul does not agree. "We do not bundle diverse products from our company. We also do not bundle outsourced complementary products. We often package our software applications together to provide the end consumer with a complete solution. For instance, we launched the BackOffice Server 2000, a suite of server products designed to address the needs of medium to large enterprises. The suite comprises Windows 2000 Server, Exchange 2000 Server, Microsoft SQL Server 2000, Internet Security and Acceleration Server and Host Integration Server 2000. In addition, the product also includes special tools that make it simpler and more cost-effective for businesses to build, deploy and maintain their information technology infrastructure" says Kaul.

Targeting SMEs

Another example of bundling, Microsoft’s Small Business Server 2000 also corroborates the fact that software is increasingly aimed at small and medium-sized businesses. The SBS 2000 includes Windows 2000 server and a suite of Microsoft’s .NET Servers, including the Exchange 2000 Server for e-mail and collaboration. Oracle 9i too was aimed at SMEs. Besides, about 48% of all Linux server-based installations are in small companies. Looking to boost Linux-based productivity among small businesses, IBM too launched its server-based Small Business Suite. This spurt can be explained by plotting the IT lifecycle of an organization (as explained in box).

The future

The growth in software exports is likely to be retarded by over 10% this year. As a result, application development and deployment tools will be severely hit. With dot-coms down and out, the demand for Web tools will be affected. As a RedHat representative explains, "Due to the economic slowdown, the trend observed last year would remain more or less the same throughout the major part of 2001-2002. However, the slowdown has also provided an excellent business opportunity to open source software companies. With more and more commercial software available on Linux, enterprises are taking open source software more seriously."

Microsoft chief executive officer Steve Ballmer had predicted, "Software will no longer be packaged and sold to customers on a CD. Applications will no longer be static programs that sit on a desktop or run off a server. They will be delivered over the Internet as services that allow customers to interact with them dynamically.

Fields like biotechnology and bio-informatics have shot up the demand for robust, high capacity and intelligent databases. The biggest commercial systems available today are 300 terabytes. The size of computing power needed to fully analyze the human genome data will be measured in petabyes (1,000 terabytes). Systems are required to capture and disseminate data and information involved in target identification, assay development, screening and lead optimization, and pre-clinical development.

Globally, computational tools like DoubleTwist, CANTAB, Blast and Neurotouch, among others, have already made inroads into the biotechnology software sector. In April 2001, Oracle entered into a joint venture with Utah-based Myriad Genetics and Hitachi for the creation of a proprietary database by 2004. The project involves the compilation of information on proteins and their interactions within human cells. The software will be licensed to pharmaceutical and biotech companies for use in drug and therapy development. Oracle and Hitachi’s combined contribution for the project includes $85 million in cash and $18 million in products. None of this has seeped into Oracle’s India segment yet. Oracle assures us that it soon will…