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Imagine a dull painting, with shades primarily of gray and white. Then imagine a bright, glaring red splash of color right in the middle of the canvas. Absurd, huh? Surely it is. And this is no modern art. This is exactly what the overall enterprise business applications market looked like after its tryst with turbulence last year.

FY 09 was a momentous year in many ways. For one, it made every business realize the need to have efficient process in place. But more importantly, it made a lot of enterprises see the glaring gaps that existed between the process of deployment and the promise of performance. So the last year served as a reality check for most of the enterprises. And that made it a dull picture for the vendors. Add to it the fact that most applications like ERP and CRM have already matured and, hence, there was little scope for growth.

The bright red splash in the middle of the picture belonged to business intelligencethe only entity that added sheen to the business applications canvas. With a growth of 47%, it compensated for rather dreary growth rates seen by the likes of ERP and RDBMS.

CyberMedia Research   DQ Estimates

The movement challenging ERPs prime position, though happening since a couple of years, is finally translating into numbers. BI takes a sizable 10% of the total share this year and CRM is close in the race with 7%. RDBMS has always been considered a necessity, and has even found its way to the small businesses now. And as the last year demonstrates, its specialized applications like middleware, productivity and developmental suites and other vertical applications, though they have registered a low growth in themselves, that have again taken up more than half the market

However, if one thing comes out rather clearly in all this analysis, it is the fact that low growth doesnt really mean low activity. There was plenty that happened in the business applications space last year. We try to chart it herebut wait! Its only one at a time!

BI: The Saving Grace
If FY 08 was a year of acquisitions in the BI space, FY 09 was the year of consolidation and growth. With all mature applications like ERP and CRM registering slack, BI became the application in shining armor for the vendors. In a year that was by no means a good one, BI clocked the maximum growtha healthy 47%.

CyberMedia Research   DQ Estimates

The brightest thing about this segment, BI is one area whose graphs shriek growth. India continues to be the fastest growing market for BI in the APAC regiongiving the big vendors like SAP and SAS enough reasons to rejoice. Unlike last year, there were no acquisitions this year, but there was a lot that happened for the big and the small vendors alike. The highlights of the year were the governments enthusiasm for BI and its increased demand even during slowdown times

In fact, a good chunk of growth for all vendors came from BI, as it continued to be on the shopping list for most CIOs. It is the only application that has remained a priority in the past year. A part of it can be attributed to the average dip in the deployment time that BI has witnessed over the past one year. The other major factor is that BI is now an integral part of BPM and is thus, getting bundled with SOA.

Another interesting thing to observe during the last year was how did the biggies, who mostly dominate the BI space now went about their strategies and how did the lone independent vendor SAS, hung onto its position. Although many expected FY 09 to see the acquisition of SAS, given the prominent trend, SAS held out well and devised numerous strategies to compete on an equal footing. The results showed: although the top rung remained with SAP, SAS became the close secondwith a gap as narrow as Rs 39 crore between the two. Besides, SAS managed to bag some big deals like the one from the Government of Maharashtra, National Aids Control Organization, Reliance ADAG, Shoppers Stop, and Vodafone Essar. It also set up its re-seller network to get a foothold of SMBs.

CyberMedia Research   DQ Estimates

The growth was dismal, and much of the euphoria around CRM dissolved. However, there were some new deployments. The other prominent happening was that SAP overtook Oracle after a couple of years of its dominance in this area. What worked for SAP was the aggressive SME courting and good traction in the government sector. However, the two remain dangerously close and the dynamics could change any time

Meanwhile, SAP couldnt have acquired Business Objects at a better time. Not only has it made SAP the instant leader in the space but it also came to the rescue of the company during the last two quarters when other applications fell flat. Its BI solutions targeted at SMBs was one of the biggest successes ever in the Indian software applications scenario. While the tussle with Oracle and SAS was intense, SAP managed to win hands down on the BI front. It won back some key clients like MRF (from Oracle) and JK Tyres (from Ramco) and also displayed some fireworks in the telecom sector.

However, BI was a success story for all vendors, being the only application registering a significant growth. Oracle and Microsoft grew in the area. Oracle added several clients like Syndicate Bank and Hero Honda. Microsoft also made some value addition to its BI list through names like Infosys, Department of Posts, Cognizant, and TCS. It also announced Business Intelligence COE with Path InfoTech targeted at Financial Services & Manufacturing segment. Even smaller local vendors like MAIA Intelligence reported some major wins like Bharat Forge and HDFC Standard life.

Like FY 08, the most prominent trend in the BI space was aggressive SME courting, a strategy that no vendor left untouched. And the results spoke for themselves as a lot of mid-sized businesses purchased BI tools and ramped up demand in the market. The percolation of BI beyond the top management to the mid management level was another significant movement in the BI space. Mobile analytics has been the other trend of the year as BI took a leap forward from computer monitor to several smartphone screens.

Though the traditional BI tools are still in demand, a lot of evolution is happening in the space and newer forms like Predictive BI, Operational BI and Real-time BI are gaining momentum.

CRM: Not Euphoric but Realistic
There was some bit of reshuffling in the CRM space in FY 09. While Oracle gained the top slot in FY 08, owing to its focus on niche applications, the last year saw SAP reinforcing its position and climbing to the top again.

CyberMedia Research   DQ Estimates

Like always, SAP reigns over this space. However, overall ERP registered very low growth, partly owing to its maturity curve and partly due to market conditions. But there were plenty of upgrades and some new deployments as wellthanks to the mid and small businesses in tier-2 and -3 cities that are adopting ERP

SAP gained owing mostly to its deployments in the government, FMGC, and banking verticals. A key win in the banking space came with HSBC, there was a good number of deployments in the retail sector but it was the government that added sheen to SAPs performance. Another strategy that worked for SAP was its dedicated focus towards SMEs, and that fueled the demand to some extent. During the last year, SAP did more than hundred live CRM implementations for clients including Times of India, Manipal Press, Essel Group, Mastek, and PNB among others.

Not to be easily outdone, Oracle ramped up its CRM strategies and gave its CRM-on-demand some aggressive marketing push. Result: it gained clients like EBZ online, Artha Money, BirlaSoft, Macmillan India, and TAG Media Networks. Oracle also focused on its newer offering, the Social CRM applications, that harnesses web 2.0 technology and can perform intuitive tasks like developing sales campaigns.

Microsoft, the third top vendor, also focused on CRM and launched its CRM 4.0 in India last year. Through this, Microsoft is targeting businesses that are today more global than ever or even the ones that aspire to go global. CRM 4.0 comes with multi-currency support offerings for flexible multinational deployments. As of now, its main customers include Barclays, Aegon Religare, and Reliance Money.

With the big brothers showing so much activity, the younger siblings like Sage, Ramco, and Salesforce also partook in the enthusiasm. Sage came out with a new solution specifically for the stock exchange, Ramco began its on demand offerings, and Infor and Comverse partnered to develop billing solutions and active customer management for telecom operators.

Keeping all this in the purview makes several things clearthat CRM is still seen as an area by the vendors that has scope for newer deployments, unlike the maturer ERP. Also, vendors are clearly looking at newer and yet unexplored verticals, given the slackened response from the BFSI segment last year, which together with telecom accounted for around 70% of the CRM market in FY 08. Telecom, however, embraced CRM in a big way and FY 09 saw Aircel Cellular, BSNL and BPL Mobile going the CRM way.

The other definitive trend is that CRM is moving beyond sales force automation. It has now reached the stage of market automation and predictive analysis. It is no longer about only generating leads, but has advanced to take into account the advertising spend, inventory movement and time-to-market modules. Also, as the focus of most enterprises in a tough year like the last one was to retain their existing customers, CRM applications that enhanced the overall customer experience in terms of response time and follow-ups were in vogue.

Customization and integration were the other trends that CRM displayed during the year. Niche applications for specific industries drove the demand to a great degree, and though the overall growth rate was as low as 9%, the vendors showed a lot of optimism for the CRM market in India.

An area in which CRM is not replicating ERP is the adoption models. SaaS, especially in the last year, has propelled CRM in a way that ERP never witnessed. No wonder then, that everyone has started offering CRM on hosted model. Bigger vendors like Oracle only furthered the trend, with both on-premise and on-demand offerings, something that vendors like Salesforce and Cincom had been doing for over a couple of years.

ERP: Beyond Tier-1
The top slot in ERP domain has long been occupied by SAP. Last year, the second rung also became almost decisively occupied by Oracle. While Microsoft and Oracle were fighting it out rigorously for the next slot even until FY 08, FY 09 saw Oracle climbing certain steps and becoming the certain second. Now it is in a position to turn back and look comfortably at Microsoft, just like SAP can look back at Oracle.

CyberMedia Research    DQ Estimates

Recession showed in SCMs accounts. As manufacturing and retail suffered, SCM was one application whose demand dipped majorly during the year. The niche applications, however, were in demand and helped the overall scenario look a little better. Also, since filling the gaps and cutting costs was a focus area, applications like lean planning and optimization and spend analysis were in vogue

Oracle claimed 24% of the ERP market in FY 09, exactly half of SAPs 48%. Microsoft, meanwhile, captured 10% of the market share. Like last year, it was the biggies that dominated the ERP scene, while the smaller vendors struggled to make a mark. Another trend that continued from last year was wooing SMEs that all vendors embarked upon.

If Oracle launched its JD Edwards solutions for mid-sized business, Microsoft answered with its Microsoft Dynamics NAV Business Essentials for growing businesses. The solution, priced at Rs 3 lakhs, including licensing and implementation allows growing businesses to access a basic set of ERP functionalities including financials, distribution and sales managementwithout huge capital investments. It can also be deployed in about two to three weeks timeframe.

SAP again bagged the most number of deals from SMEs, thanks to its rigorous mid organizations courting strategy. It now has around 40% market share in mid market ERP. Government was another sector that ramped up demand for ERP solutions. In Q3, which was a bad quarter for the whole industry, SAP cracked close to 200 deals with government entities alone, over forty of them being ERP deployments. Oracle also won significant deals from the government like UP Treasury, and Orissa Modernized Government Initiatives.

Although SMEs provided the much required fodder to ERP, there were some big deployments in large enterprises as well. SAP for instance, signed deals with City Corporation, Medicity, and HMEL. Oracle gained Vodafone, Tikona Digital Network and Madhyanachal Vidyut Vitran Nigam. With its Microsoft Dynamics NAV AX 2009, that is especially designed for large enterprises, Microsoft also added some big names like Life Cell, SREI and Hero ITES to its ERP kitty.

With big names leaving no sector or market untouched, the smaller names faced threat of oblivion in the last year. The likes of 3i Infotechalthough they saw a decent overall growthalmost disappeared from the ERP scene. Except some deals with the government, the ERP market was flat for most of the smaller players. It was the same story with the local vendor, ESS. Although some business came from Africa and Mauritius, the overall growth was almost flat. India sales virtually stopped, even though some dairy business continued to come by virtue of the long standing Amul association. The result of this business fizzle out resulted in the company diversifying into government managerial projects.

CyberMedia Research    DQ Estimates * Others include core banking and other related solutions, HCM and other niche applications.

Productivity suites like the Microsoft Office took a hit, thanks to the licensing blow earlier this year. Middleware and engineering tools did nominally well, but it were the niche applications like core banking solutions, HCM, telecom billing, etc, that stole the show. Another area that sprung to attention was the vertical applications, which registered a good growth, primarily owing to some innovative analysis tools. For instance, Crane Software created data presentation and analysis tools for the general elections of 2009, that were taken up by almost all news channels

Being a mature market, ERP saw minimal growth in tier-1 cities. If at all, it was mostly owing to small businesses and the government. It were the tier-2 and tier-3 cities that contributed a major chunk of ERP growth. Close to 65% of the revenue came from relatively new and unexplored markets. Thus, last year saw mid-sized businesses located elsewhere than tier-1 cities embracing ERP in a big way. Although the adoption was for very basic functions like finance and pay-rolls, it made a big contribution to the modest 8% growth that ERP recorded. Some of the SME names last year included Khadim Jwellers, Paranjpe Auto, Fenner India, Scan Steels (from SAP), and Systems Plus, Accel Frontline and Ledger Solutions (from Oracle).

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