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