IT-as-a-Service for Small and Medium Businesses

Transcription

1 White Paper IT-as-a-Service for Small ad Medium Busiesses The demad for IT from the SMB segmet is growig. The SMB segmet is characteristically differet from large eterprises i that it is a attractive market for iche solutios i hardware ad software. Yet, the busiess eeds of the SMBs require a holistic partership. With too may optios ad very little i house kowledge, the eeds of SMBs are far from beig met. This calls for a differet service model, a model that makes IT available as a remotely maaged ad hosted service. TCS, with more tha 42 years of IT solutios experiece ad expertise i various verticals, is eablig this feature by brigig IT-as-a- Service that caters to the eeds of SMBs.

2 About the Author Veguswamy Ramaswamy Veguswamy Ramaswamy (Swamy) is the Global Head of ion, TCS strategic uit for Small ad Medium Busiess. ion provides ed-to-ed busiess solutios to the SMB segmet. I his previous role, Swamy was the Director of TCS' Global Cosultig Practice (GCP) ad was istrumetal i the structural formatio, developmet, ad positioig of TCS cosultig offerigs. He was listed amogst the top 25 cosultats i Cosultig Magazie i Durig his 18 year teure at TCS, Swamy has held several strategic positios that have icluded maagig key customer relatioships, buildig ad headig the Process Cosultig Group, maagig the Corporate Resource Maagemet fuctio, leadig umerous Ceters of Excellece, as well as lauchig TCS' first steps i geographies such as Hugary ad Chia. Swamy is a firm believer i the power of IT to create busiess value ad is kow for his iterest i Iovatio & Quality ad expertise i Six Sigma. He is also recogized as a champio of may digitizatio drives withi TCS, icludig deployig digital platforms for Six Sigma, creativity, ad talet acquisitio. 2

3 Table of Cotets 1. Itroductio 4 2. Characteristics of a SMB 4 3. Buildig Blocks for a New Service Model 6 4. IT-as-Service 8 5. TCS Iovatig a New Service Model for SMBs i Idia Coclusio 10 3

4 Itroductio SMB is a burgeoig ecoomic segmet that is capable of drivig ecoomic growth i its ow right. I Germay, 46% of the GDP is cotributed by SMBs. Germa SMB customers such as Siemes, BMW, ad SAP are settig stadards to drive the ecoomy. I Idia, while the cotributio of SMBs to exports is 46%, the sophisticatio of IT i Idia SMBs is poor. The geeral otio is that it is easy for large IT vedors, give their experiece i servicig global eterprises, to service the growig SMB market. O the cotrary, products ad services that have traditioally served large eterprises well, caot be applied to a SMB. Products eed to be rebuilt, ad traditioal service models eed to be uleared to address the characteristic eeds of this segmet. I order to expad ad compete, SMBs eed a regular ifusio of capital i their core busiess. They also eed workig capital for operatios. Capital ivestmet i IT is hece uplaed ad teds to be deferred. Coupled with the fact that a IT project could take several moths to go-live ad could fail too, upfrot IT ivestmet is rightly see as risky. Probably, the most importat IT issue plaguig SMBs is a talet cruch. With a huge demad for IT professioals i Idia s boomig IT idustry, SMBs fid that IT talet is expesive ad volatile. I the midst of this, SMBs are cofused by too may vedors espousig ew techologies ad stadaloe products. Very few vedors have the capability to propose a itegrated solutio ad a roadmap to meet the log-term busiess ambitio of the orgaizatio. Ower/ promoters of a SMB are forced to fid time to deal with multiple IT vedors, ad struggle to keep IT systems relevat ad techologically up-to-date. SMBs may ot have stadardized processes ad may ot be aware of best practices i their idustry. A ERP ofte meas movig to more rigorous but efficiet processes that make iformatio trasparet, ad employees more accoutable. These characteristics make the IT eeds of a SMB very differet, ad demad of high sophisticatio. No sigle vedor today is experieced i solvig all challeges that lie with IT adoptio i this segmet. The discussios i this paper lead to solutios that address the IT adoptio challeges ad guide towards a altogether ew model to service this importat segmet. Characteristics of a SMB A. Costraied workig capital ad low risk preferece Small busiess fiacig falls broadly ito three categories: Workig capital is fiaced through overdraft accouts. Credits to customers are through bill discoutig. Capital ivestmets are fuded by hypothecatig the ivested asset to the bak; with repaymets plaed as equated istallmets. Software liceses ad customized software geerally caot be hypothecated, ad therefore, there is the eed for collaterals, such as lad or shares. IT projects, hece, eed upfrot ivestmet usig capital borrowed agaist collaterals. 4

5 Today, a liberal ad professioal bakig sector is ethusiastic about fudig the IT adoptio projects. However, with iterest rates beig high ad the eed to provide collaterals, SMBs fid such fudig expesive. Istaces of cost overru or failures i ERP implemetatio are rife i large eterprises; a similar experiece i a SMB ca be costly. The capacity to take risks i large IT projects, for example a ERP implemetatio, is hece less i SMBs. A SMB would rather pilot simple solutios ad scale up as they reap beefits. This however, leads to a busiess compromise, where SMBs must implemet lesser solutios that do ot scale up to meet their future eeds. The IT solutio ad services offered to a SMB the have to mitigate the risk of adoptig feature-rich solutios that demad upfrot ivestmet. B. IT talet too expesive ad volatile for SMBs SMBs eed a small iteral IT orgaizatio that maitais ad admiisters the solutios that are ruig. With more sophisticated ad itegrated IT solutios, there is more depedecy o the talet that maages them. SMBs specially eed a fuctioal expert who uderstads its busiess processes ad helps the orgaizatio i usig software applicatios. I order to retai orgaizatioal kowledge, such experts eed to be retaied with the orgaizatio for a reasoably log period of time. With the IT outsourcig boom i may coutries, IT talet is hugely attracted to large eterprises ad to IT service orgaizatios. A depletig talet resource is leadig to risig salaries ad higher attritio. SMBs thus fid it difficult to attract ad retai IT talet. While adoptig IT for efficiecy ad iovatio is a imperative, the fear of scarce ad volatile IT talet is o less a deterret. The cost of hirig IT talet, depedecy o such talet, ad the fear of losig such talet i the midst of a IT project makes SMBs postpoe IT adoptio. IT services for a SMB should be desiged to elimiate depedecy o local IT experts. C. Islads of data poit to a absece of IT roadmap SMBs ivest i IT, a applicatio at a time, ofte from differet vedors. They may start with a popular desktop accoutig package with ew locatios ivestig i additioal desktop copies ad eterig trasactios locally. services may be provided by the Iteret provider. Payroll may have bee outsourced. The sales uit may start usig a CRM i a SaaS model, while applicatios o the shop floor may have bee acquired as part of techology trasfer from a foreig collaborator. All the stadaloe systems are coected by tasks that are performed maually. As a result, data becomes duplicated; time is spet i trasferrig ad recocilig data. Creatig a MIS report becomes a complex task of correlatig iformatio from multiple data sources. I such a diverse techology ladscape, promoters fid it difficult to receive accurate ad timely aswers to questios such as: How much ready ad work-i-progress ivetory do I have for this urget sales iquiry? How would the shop-floor system sed a otificatio triggered because of fallig raw material ivetory? A reimbursemet claim filed by a sales executive will take weeks for fiacial approval ad subsequet credit ito the executive s payroll. Data backup of multiple systems will be ureliable. SMBs the eed a trusted adviser who uderstads their log-term busiess goals, ad helps create a IT roadmap that eables their busiess. Such a roadmap would cotai a family of applicatios that 5

6 idividually scale-up ad seamlessly itegrate to provide o-demad iformatio for better decisio-makig. D. Multiple IT vedors ad immiet techology obsolescece Whe faced with a IT issue, multiple providers of differet applicatios ad services idulge i idictmet ad allegatios o each other. SMBs eed a parter who ca assume ed-to-ed IT accoutability. I this era of aggressive media promotios, SMBs eed someoe to tur to whe faced with a plethora of techologies ad buzzwords. The parter must be accoutable for keepig all solutios relevat to the chagig eeds of the growig orgaizatio, while isurig the SMB agaist techology obsolescece. E. Traditioal practices ad resistace to chage SMBs are ofte family owed ad follow traditioal practices. For istace, i accoutig, it is ot ucommo to fid book-keepig practices that follow a archaic system of goverace, ad thereby are impedimets to better itegrated processes. I maufacturig, the work-i-progress stock is heuristically estimated ad it takes radical ratioalizatio to trasitio to better practices. A medium-scale fabric maufacturer i Idia selected a ERP package but woud up makig extesive modificatios. The package could ot hadle the sceario where the compay could price the same bolt of cloth i two differet ways. Ufortuately, i that ERP, there was o way to assig two prices to the same uit of the item, while keepig ivetory couts accurate. Oe uit, two prices, said the maufacturer. Two prices, two uits, said the ERP Vedor. Such istaces are ot rare ad, i fact, characterize the SMB segmet. Yet, SMBs have made little attempt to stadardize processes from a ed-to-ed perspective. SMBs rarely make ivestmets i busiess process reegieerig. This does ot mea that such itervetios are a overkill. Rather, process re-egieerig is more pertiet to SMBs who strive to be participats i global supply chais. They are forced to adopt stadard iterfaces ad bechmarks that their eterprise customers demad. SMBs hece eed a helpig had to cross this bridge ad maage chage i their jourey to become a competitive busiess. Buildig Blocks for a New Service Model A. Software-as-a-Service (SaaS) A iterestig evolutio has happeed i the software idustry i the past decade. Istead of istallig a software applicatio o the desktop, or o the local server, the idea was to access the applicatio, hosted by a exteral agecy, over a etwork, usually the Iteret. The agecy was a Applicatios Service Provider (ASP) ad the model was iitially christeed as ASP. ASP, however, did ot fid wide acceptace. The problems were may. Iteret was still evolvig, though very rapidly. Badwidth explosio that we see today was the a pipedream. Faced with a low immediate realizatio, software vedors deferred their plas to provide software i a Iteret-hosted model. I fact, may software vedors cosidered the ASP model to be a threat to their well-etreched ad profitable software licesig model. The idustry became more cautious ad realistic after the dotcom bubble burst. While Iteret became popular for , collaboratio ad portals, busiess applicatios remaied i the domai of local etworks; hosted withi the orgaizatio. I 1999, Mark Beioff of Oracle saw a opportuity to offer a Customer Relatioship Maagemet (CRM) solutio over the et. CRM was a buzzword ad the idustry was skeptical of its utility. CRM practices varied from eterprise to eterprise. Beioff decided to make CRM adoptio capital friedly by offerig it as a service accessed over the 6

7 iteret. Salesforce.com was bor. May orgaizatios, large ad small, had strikig customer gais from usig Salesforce. It was a eye-opeer for the etire IT idustry. Oe of the isights was that, more tha the large eterprises the model was better suited for SMBs who could experimet with ew software with little ivestmet. The paradigm got re-christeed as SaaS Software-as-a-Service. SaaS is ow a paradigm shift; SaaS products are mushroomig. Fortuately, Iteret badwidth is icreasig three times, year o year. Google, with office suites o the et, ad ERP vedors with re-egieered SaaS solutios, have jumped o the badwago. SaaS is here to stay. Some of the pereial problems that lie i the way of IT adoptio i SMBs are solved by the SaaS model. Capital ivestmets are low. Software ad ifrastructure are remotely maaged, with lesser depedecy o i-house talet. New features i the periodically upgraded software address the chagig eeds of a growig busiess. While all this souds to be a wiig model, is SaaS a paacea for all IT challeges faced by SMBs? Impersoal services such as a stadard CRM ca be successfully offered as a SaaS applicatio. However, for ERP systems, the software eeds to be flexible ad itegrated with other applicatios. A busiess process that best meets a orgaizatio s requiremet still eeds to be cofigured. The ecessity for i-house fuctioal experts remais. Moreover, a good part of the ifrastructure, such as etwork routers ad cliet PCs, remais i-house. How would the SaaS provider provide system itegratio services for a orgaizatio? B. Cloud Computig For 2010 as well as 2011, Garter Research has idetified Cloud Computig as the topmost techology [1], [2] i its aual list of top 10 strategic techology areas. Garter defies Cloud Computig as a style of computig where scalable ad elastic IT-related capabilities are provided as a service to exteral customers usig Iteret techologies. To clarify, here IT is offered as a defied service to cosumers ad cosumed over the Iteret, with service resources beig either added or removed, as eeded, from a pool of shared resources for ecoomies of [3] scale, ad with cosumers payig for these services as per their idividually metered usage. There is ow a cosesus that Cloud Computig services be categorized ito three broad types. A service that primarily offers computig resources such as CPU, RAM, ad data storage is termed Ifrastructure-as-a-Service (IaaS). Amazo is the pioeer ad the idustry leader i offerig iexpesive computig resources i a iovative pay-as much- as-you-use model. A service that targets software developers ad offers them platform ad tools to build ad host their applicatios falls uder the category of Platform-as-a-Service (PaaS). Google, Microsoft, Force.com are some of the players i this yet-emergig category. Ad lastly, Cloud Computig ecompasses the well-uderstood category of ready-for-use SaaS applicatios that are web-based ad offered i a subscriptio model. So is Cloud Computig, with software applicatios as well as computig resources available o the Iteret, the aswer for a SMB s IT challeges? The aswer is a qualified o. Not all IT systems ca work o the Iteret. For istace, a poit-of-sale system (typically the billig software used i retail outlets) eeds to be locally istalled so that it ca iterface with local devices such as the bar code scaer, the bill priter, the credit card reader, ad the cash till. Moreover, retail [1] Garter Idetifies the Top 10 Strategic Techologies for 2010 Garter Press Release dated 20-Oct [2] Garter Idetifies the Top 10 Strategic Techologies for 2011 Garter Press Release dated 19-Oct [3] Garter Highlights Five Attributes of Cloud Computig Garter Press Release dated 23-Jue

8 systems caot stop workig due to etwork uavailability; the retailer risks losig busiess from a irate shopper waitig i a growig check-out lie. For the ext few years, affordable broadbad coectivity will remai ureliable i parts of urba Idia. I the iteriors of Idia, there are tows where coectivity is ot readily available. A local telecommuicatio compay eeds to lay the proverbial last mile, a process that takes several weeks. Power outages too affect etwork equipmet that have limited battery backup. A holistic IT solutios model for the SMB would the iclude a few applicatios residig withi the orgaizatio. There would be offlie modules that eable a busiess to cotiue to perform critical trasactios eve whe the etwork is uavailable. Legacy applicatios too would be local. While Cloud Computig is a appropriate way of deliverig IT to SMBs, it eeds to be supported by offlie, legacy, ad local services. C. SaaS ad Cloud Computig - buildig blocks for a ew service SaaS ad Cloud Computig though critical, are but oe part of a larger service model i the makig a ew model that mitigates the hassles i last mile itegratio, provides much-eeded advisory services, ad brigs multiple solutios to the basket. How ca a ecosystem of a software service provider, a hardware vedor, a etwork service provider ad professioal process cosultats be brought together? Tappig the promisig SMB market eeds a service provider, who will drive such a ecosystem. IT-as-a-Service If we coect the dots, the eed of the hour is Maaged Services: a vedor who provides all IT compoets, ad relieves the busiess by takig the owership for IT maagemet. The vedor must drive a ecosystem of hardware vedors, etwork service providers, support parters, iche software vedors, ad fiacers. These, i tur, would complemet its software solutios ad cosultig capabilities. We call this IT-as-a-Service. Figure 1 depicts the elemets of IT-as-a-Service. There are six layers of IT Services i this model, with each layer becomig specialized ad sophisticated as it asceds. I additio, there is the L5P layer betwee L5 ad L6, which covers platforms such as Assessmets, Professioal Virtual Commuity (PVC) ad Reward & Recogitio. Access devices such as cliet PCs, laptops ad Poit-of-Sales systems require efficiet vedor maagemet to get the best value for moey. Effective vedor maagemet would also iclude cosideratios such as logistical coveiece, support availability, ad maagemet of support cotracts. Fiacig the ivestmet would eed parterships with fiacig istitutios. A similar set of services would be eeded for etwork solutios. Network solutio would also iclude system itegratio services ad security setup i the last mile. To start with, a SMB eeds office applicatios, (messagig), ad a website (olie presece). A iteral system to collaborate ad a system to maage importat documets are eeded as the orgaizatio grows. May of these applicatios are web-based. To dramatically reduce costs, ope source is a attractive optio. I case of busiess solutios, trasitio to a web-based service depeds o a few factors. Uderstadig the busiess requiremet ad developig the IT roadmap is importat. The service model requires stadardizig the fuctioalities of these solutios. Fuctioal support is eeded to help the busiess fid opportuities to ratioalize their process to stadard ad best practices. At the same time, these applicatios must be atively desiged to provide specific flexibilities. The IT service provider would eed to support the busiess to cofigure these applicatios ad to make them work as per the orgaizatio s requiremet. 8

9 A SMB would have cocers about the security of their data that resides i remote dataceters owed by the service provider. The service provider the must comply with ad implemet a comprehesive ad foolproof security policy that maitais data privacy ad preserves data itegrity. Techology has, ideed, evolved to provide high data security i maaged services models. Sophisticated itrusio prevetio ad detectio systems alert the service provider whe web-attacks are attempted. Formal certificatio of compliace to security process stadards idicates a service provider s maturity i protectig customer data. Whe data is located remotely, oe would also be cocered about busiess cotiuity whe faced with a uforesee evet such as a atural disaster. Techology is available to replicate data i real time ad cotiue operatios from a alterate data ceter. Hostig applicatios i robust, secure ad certified data ceters that adopt such techologies is importat. Figure 1 Layers ad Offerigs i IT-as-a-Service 9

10 TCS Iovatig a New Service Model for SMBs i Idia TCS provides IT solutios i each area (Figure 1), i a cocerted way. TCS offers oe shop IT solutios that are redered o demad. The demad may be either i terms of scalability with busiess growth, or i terms of ew solutios as the busiess adopts ew operatig models to evolve ad compete. TCS maaged services relieve SMBs from the complexities of IT. SMBs receive maximum beefit from solutios they adopt, with TCS iovatig o it ad maagig them o their behalf. By cetralizig ad stadardizig solutios for multiple SMBs, TCS is able to achieve ecoomies of scale ad pass o the cost beefits to SMBs. TCS coverts IT ivestmet ito a operatioal expese. Scarce capital ca ow be ivested to grow the core busiess. Quarterly IT expeses are offset by beefits that the SMB immediately gets from automatio. TCS has bee servig large eterprises for over 40 years ow. Rich expertise, diverse talet pool, ad techology capabilities have brought TCS to a threshold where it ca redefie the way SMBs leverage IT. Coclusio SMBs are tech-savvy ad are ofte quick to leverage ew techologies for a competitive advatage. However, of all the idustry segmets, SMBs lag behid i IT adoptio ad sophisticatio. A multitude of IT vedors, with eterprise service capability, have jumped the badwago to tap the ow-very-attractive SMB market. While the IT market for SMBs has come of age, the vedors are yet to iovate! Their covetioal service models do ot work for this segmet at all. The questio that the eeds to be aswered is, What should be the elemets of a ew service model for SMBs? Clearly, we caot have oly oe breed of vedors to cater to this uique market. Rather, we eed a ecosystem. TCS is strogly iclied to the visio that a service player, who drives a ecosystem of service providers ad provides a basket of services, will see better acceptace i this segmet. 10

11 Why ion ion provides comprehesive solutios that address varied IT requiremets. From etwork to ERP, ion is offered as a sigle service, i a pay-per-use model, allowig you to leverage the solutio s true potetial. ion esures itegratio of all processes alog with ease of use. ion promises: High performace i ormal broadbad; Striget security ad data privacy ; Guarateed availability (99 per cet uptime); Disaster recovery; Reduced eed for IT staff. ion, therefore, maages your processes while you use the software. You gai from: Itegrated solutios We esure that all your solutios are coected. For example, if you are usig a CRM alog with a ERP, ad have a documet maagemet system to orgaize your files, we esure that these solutios are coected ad work as oe. So for you, it is simply IT ad ot applicatios. Icreased agility We brig i the agility to keep pace with chagig processes or a ew lie of busiess. We help you cofigure the processes to work differetly or simply choose ew practices recommeded by the software. Our activatio system flags o best practices while the system is ruig. As you pick ad choose, we give you more optios to choose from. A pay-as-you-use model This model elimiates capital ivestmet as we provide the IT ifrastructure ad software o ret. You pay as you use ad oly for the umber of users who actually use the software. The ret is charged mothly. Typically, the cumulative retal for three years is equal to the capital cost of acquirig similar or lesser software with oe-time paymet. Usually, the ROI exceeds retal withi three moths, whe best practices are well followed. The retal icludes maiteace ad traiig, with o hidde costs. Persoalized solutios Although this is a cloud service, the software is cofigurable to each busiess. You will always get the flavor of your ow busiess by pickig ad choosig what processes you would eed. Automatic upgrades We cotiuously ivest i our solutios to esure best practices. We erich the software based o user feedback ad busiess ad statutory chages. We esure the upgrade without disruptig the user. 11

12 About ion ion is Tata Cosultacy Services strategic uit for Small ad Medium Busiess. ion provides ed - to - ed busiess solutios to the SMB segmet, the growth egie of the ecoomy. ion caters to the eeds of multiple idustry segmets with best practices gaied through TCS global experiece, domestic market reach, skills, kow-how ad delivery capabilities. For more iformatio, visit us at Cotact To kow more about ion Toll Free Number [email protected] Subscribe to TCS White Papers TCS.com RSS: Feedburer: About Tata Cosultacy Services (TCS) Tata Cosultacy Services is a IT services, cosultig ad busiess solutios orgaizatio that delivers real results to global busiess, esurig a level of certaity o other firm ca match. TCS offers a cosultig-led, itegrated portfolio of IT ad IT-eabled ifrastructure, egieerig TM ad assurace services. This is delivered through its uique Global Network Delivery Model, recogized as the bechmark of excellece i software developmet. A part of the Tata Group, Idia s largest idustrial coglomerate, TCS has a global footprit ad is listed o the Natioal Stock Exchage ad Bombay Stock Exchage i Idia. For more iformatio, visit us at IT Services Busiess Solutios Outsourcig All cotet / iformatio preset here is the exclusive property of Tata Cosultacy Services Limited (TCS). The cotet / iformatio cotaied here is correct at the time of publishig. No material from here may be copied, modified, reproduced, republished, uploaded, trasmitted, posted or distributed i ay form without prior writte permissio from TCS. Uauthorized use of the cotet / iformatio appearig here may violate copyright, trademark ad other applicable laws, ad could result i crimial or civil pealties. Copyright 2011 Tata Cosultacy Services Limited TCS Desig Services I M I 10 I 11