Infotech Lead India: IBM is stepping up its presence among Indian small and medium enterprises.
IBM’s core growth strategies revolve around geographic expansion in India. The growth strategy in the country is in line with the global strategy. IBM taps SMEs in China, Africa, South America, among other markets.
IBM is expanding into untapped markets around the world where there is a significant opportunity for growth. Geographic expansion markets are typically outside of more established growth centers – such as regions and urban centers beyond capital cities and countries beyond the BRICs.
IBM is investing and focusing on smaller cities across sectors, bringing in new products and strengthening the channel network through expansion. The plan is to increase coverage by having sales offices in Tier II & III cities with specific templates and offerings across the spectrum for SMBs.
“Our priority is to establish presence in new small cities while deepening relationships in select large, high growth cities with new branches,” said Jyothi Satyanathan, vice president, mid market & inside sales, India/SA, IBM.
The technology major is working with a number of organizations in segments such as co-operative banks, education, retail (food processing), manufacturing (leather, jewellery), etc. In fact, SME business for IBM India is growing faster than large enterprises’ business.
Indian SMEs spend around 0.7 percent of their turnover on IT. But IT spend is growing. Indian SMEs, according to Satyanathan, is spending on IT because it helps them for improving the decision making process and enhancing efficiency.
CEOs and CFOs are driving IT investment decisions at Indian SMEs. Probably, IT heads are not the key decision makers at Indian SMEs as they are young administrators.
IBM India’s Jyothi Satyanathan hopes Indian SMEs will increase their IT spend to up to 2 percent in coming years. There is a huge potential for manufacturing sector to increase IT investment and reap benefits.
Demand for cloud is also picking up among Indian SMEs.
According to the recent mid market survey 54% of Indian firms look to improve efficiency and be smarter about their customers through analytics and predictive technologies and 70% of Indian firms aim to enable virtualization and eliminate redundancy with cloud solutions.
SMBs are moving their core business application to the cloud. Businesses with 999-100 employees can benefit from the cost savings of accessing applications such as collaboration and email via the cloud. In fact, IBM’s cloud services are also becoming popular in the banking, automotive, and other sectors – a sign that SMEs are comfortable in the cloud.
IBM is committed to the success of the small and medium enterprises (SME) and has a clear strategy to help them transform and drive both growth and innovation in today’s economy — with Business Partners leading the way. These firms are vital to the strength of local business and industry around the world. Those leading the way are the ones adopting innovative technologies in pursuit of growth. IBM recognizes the needs of the SME market and understands the need to provide them with cost-effective, yet advanced technologies to help them compete.
In 2011 IBM has opened six new branch offices in India as it expanded its reach to smaller, rapidly developing Indian cities. The Ludhiana branch which IBM announced in March 2012 is IBM’s seventh new office to be opened in India in the past 12 months after those in Coimbatore, Indore, Guwahati, Dehradun, Raipur and Visakhapatnam in 2011.
Financials and credit worthiness of SMEs are a big challenge for technology majors.
In 2011, IBM also committed $1 billion in financing through IBM Global Financing for credit qualified SMBs (through IBM Business Partners). Since the launch of this program, IGF has increased its financing to Mid Market clients by 32 percent.
A key part of IBM’s Geographic Expansion strategy is capacity building where IBM works with local universities, local businesses and government leaders to develop skills and advance new ways of doing things in order to establish a pipeline for future growth. IBM’s citizenship initiatives such as Corporate Service Corps and Executive Service Corps are key to this capacity building work.
Why SMEs? SMB’s drive more than one-half of the total GDP and represent 99 percent of global businesses, according to the Organization for Economic Cooperation. They are major contributors to the strength of economies around the world.
The midmarket is one of the fastest growing segments in IBM’s Growth Markets Unit (GMU). For IBM midmarket customers are typically businesses with 100-999 employees. IBM working along with its partners has developed a set of solutions to help in growing the scope of firms located in Mid towns primarily Tier I and II Cities. IBM plans to work hand-in-hand with local ISVs to provide new and existing clients with additional value-added solutions that are specifically tailored to the local market.
IBM’s Indian SMEs strategies are driven by Jyothi who also leads the Mid-Market segment for overall IBM General business His team is responsible for all IBM businesses in Small and Medium Organizations across India. The Organization helps articulate IBM’s value propositions to its customers and helps customers with solutions that increase their business efficiencies through optimal usage of IT solutions and infrastructure.