Catalyzing Entrepreneurship
Entrepreneurship has been identified as the primary growth engine of any Economy. In the early 1990s when India opened up its markets to Globalization, we saw the spirit of entrepreneurship receiving a tremendous impetus cited with several instances of Startups or Small and medium sized businesses growing leaps and bounds benefiting the nation’s economy. Infosys has been an excellent example of how entrepreneurship has contributed to India’s growth and that too both in tangible and intangible value terms bringing global recognition of India’s Knowledge driven economy. However Entrepreneurs face several challenges which impediments to their growth. A few of the challenged being
· Limited exposure to capital for running their businesses
· Limited access to experienced IT resources
· Lacking processes and systems which can help grow their businesses
· Inability to Innovate
IT has been the catalyst which helps businesses to foster growth, which Entrepreneurs have not truly been able to leverage very effectively. This primarily being due to the high entry barriers, primarily owing to the high capital which needs to be invested upfront in terms of hardware and software, associated in building applications and systems even before the Enterprise would have started earning any revenue. Due to this the traditional IT delivery model has not been conducive for Entrepreneurs to innovate as the risk associated with failure is very high.
With the latest computing paradigm aka “Cloud Computing”, the IT barriers have dropped and entrepreneurs can now look at leveraging IT as a tool for innovation which can script more growth stories.
Wikipedia states,” An entrepreneur is a person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome.”
An entrepreneur could be a startup or even the small and medium size businesses (SMBs). Entrepreneurs usually tend to work in niche market segments addressing needs which the larger enterprises are not able to meet. They have a higher risk appetite but usually with an acute shortage of capital generally just enough to meet their business goals. Their businesses are primarily driven by operational revenues and each Penny is worth a Pound. They are nimble, primarily owing to their size, and able to respond to changing market dynamics speedily. Globally, they have been recognized as the primary economic growth engines for a nation.
Role of ITEntrepreneurs look at IT being the back-bone to help them drive their businesses and to fuel growth. This is further substantiated by the fact that, their IT spending growth (8%) particularly in the SMB segment is faster than the IT spending growth (6%) of an enterprise. Additionally in the emerging markets the spending growth is around 14% whereas in the developing economies it is 7%.
Key Challenges faced by Entrepreneurs today:However they face several challenges in terms of using IT, a few of them being:
1. Insufficient working capital to invest in IT which can handle growth
2. Businesses are less IT Savvy, primarily since they do not have a dedicated IT department.
3. Also prefer to buy from local or regional vendors with more personalized support
Business case for Cloud Computing:Being at the bottom of the business pyramid these businesses primarily focus on local regional markets. They are also known as the long tail, characterized by nominal IT spending individually but as a group they form a big market segment to reckon with. The SMB market offers a large market opportunity: Global SMB IT spending was around $ 513 Bn in 2007, projected to reach to about $ 750 Bn by 2012.
Even in these times of Recession they are a promising segment to tap into. As per the recent AMI-Partners survey to understand the impact of current economic downturn on SMB:
· SMBs continue to remain optimistic, even though they are cautious with growth expectations
· Investments may shift to solutions focused on driving efficiency and revenue
· There is a marked increase in SMBs planning to invest in SaaS - 23% now v/s 14% earlier
This segment offers a large opportunity, untapped by GDM based IT majors presenting a case before us to pursue this market aggressively. With Cloud Computing, – “a model for enabling convenient, demand shared pool network access to a set of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” – NIST Cloud Computing project, the characteristics of which closely map and provide a solution to address the challenges which the SMB’s are grappling with today. Indicating this market segment could be the early adopters on the cloud providing some of the following potential benefits
· Cloud as new business enabler enabling new apps and new business models to explore
· Low user friction to adopt cloud
· Internet standard abstractions enabling access anytime, anyplace and anywhere
· Potential cost savings
Role of a Service IntegratorService Integrators existing service offerings and delivery models would have to be revisited and positioned accordingly to meet the needs of the entrepreneurs. At the same time new business models will have to be explored to tap this segment effectively.
If you have an opinion, it would be great to hear back from you.
