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Can Indian SSIs Flourish In A SAAS World
There is clearly scope for SSI startups to have a separate identity and get encouragement from the government and industry
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Gartner predicts that by the end of 2023, the SaaS market will reach USD $208 billion in revenue. Add to that, other services like Application Infrastructure as a Service (PaaS), System Infrastructure as a Service (IaaS) and Cloud Management and Security Services, the number goes up close to a staggering USD 600 billion.”
Source: Gartner, April 2022.
Covid was a wake-up call to those who were slower in their decisions around adopting digital tools and techniques. It was probably even a better catalyst than most of the engaged boards and CIOs / CDOs. Yet there have been issues from the past where the question of viability and utility of Software System Integration (SSI) is still being debated. Globally, and in India, businesses have started adopting Software as a Service (SaaS) in a big way. It has reshaped the way IT teams were designed into the organisation structure. This is where the debate of the importance of Software System Integration comes in.
There is no doubt that the exponential growth in SaaS adoption will be at the expense of System Integration / Professional Services companies because the shift from monolithic application systems to ready-to-use SaaS products/platforms is irreversible. It not only offers cash flow flexibility but also allows for the businesses to focus on their core competence and not be constrained to build an IT organisation that they can barely manage or afford.
That said, deploying an enterprise SaaS product is not as easy as it seems. It is not configure and plug and play, even if it may be sold as such. There are legacy systems to be integrated, data to be accessed or migrated and security to be managed. Especially these days, with data privacy being an imperative, customers are worried about critical business information not being in their control. Hence, a transparent policy on IP ownership versus data ownership is needed. Another issue is the location of the data, especially the fallback centres, more so in the Indian context.
If the client is in the financial services business, the complexity increases to another level. To give an example, a bank has sensitive data of its customer with a loan, whether it is an individual or an institution. The question that then arises is: what does the bank do with this information? How long is the data retained after repayment? Is it used to push other products or worse, shared with outsiders? This is just one example of how complex it can become. In addition to that, there are specific requirements of the customer that need to be built on top through available add-ons or customisation.
Unless it is a very simple process, most SaaS products require partners who must understand the customer’s requirements, design the architecture and then implement it. In such cases, there also might be a need for complex workflows to be understood and managed. While it may be possible for a company to do all this on its own, hiring a professional services provider will definitely give them an edge in being faster to market.
With evolving technology and the advent of the digital age, the imperative is to address the real-time resolution requests across the value chain. Velocity and volume of incoming and outgoing events coupled with intense business competition have acted as a strong lever for businesses to start considering vertical automation within organisations with a business outcome and business function combination driving automation. The expectation from a SaaS product is not only quick implementation and cost-effectiveness but also ease of use. Its cloud-native design makes it easy to scale without the hassles of high-cost infrastructure and maintenance needs.
For example, SAP, one of the best-known on-premises global ERP companies, had a huge ecosystem of implementation partners. Now that it has an offering on the cloud, SAP S/4 HANA, it still depends on partners. Companies like Salesforce, UIPath, and Automation Anywhere, have a huge partner ecosystem. While established SaaS players rely on business partners to provide services to their customers, early-stage startup SaaS companies that depend on funding for their growth have a dilemma because potential investors do not like to see service revenue on the balance sheet.
*Charging for Time vs Outcomes
Professional services constitute a large portion of the revenue mix of Indian technology biggies like TCS, Infosys and Wipro. Even Accenture, Cap Gemini and IBM have a sizeable chunk of revenue coming from services. But the traditional service model is undergoing rapid changes. Fees will be linked, not to time but to business outcomes. Software System Integrations will have to adapt quickly and grab this opportunity to provide value-added services to their customers. Pre-determined outcomes for automation linked to business metrics can provide a real-time view of the benefits brought about by automation from Day 1 itself; in effect, what gets delivered can be called Business KPIs as a Service.
However, this will entail a major mindset change for these behemoths and the shift will have to be from gathering requirements and developing, to approaching the customer with ready-to-use add-on solutions. From an individual’s perspective, the role of an SSI professional has progressed from a pure-play technology focus to that of someone who understands business requirements, shifting client-industry trends and hence the need for future design, business and regulatory processes and has the ability to interact with multiple cross-functional teams. The focus is simply not on implementation but also to help achieve the desired outcomes for the clients.
It allows service providers to focus on client-centricity, and to offer specific point solutions, vertical as well as horizontal, that integrate disparate data silos, design unified views and automate complex workflows and make a mark for themselves. There is also scope for platform players to offer multiple use cases rolled into one. Both have their advantages; while a point solution has the depth to solve a single use case, a platform is more horizontal in nature and can be customised with ease, using pre-existing templates.
The ever-growing cloud and API economy makes distribution and scaling of such solutions relatively much faster for businesses, allowing them to serve specific areas of interest, while most of these startups are categorised under IT Services, Finance Technology, etc.
There is clearly scope for SSI startups to have a separate identity and get encouragement from the government and industry. The 70K plus registered startups have created 7.5 lakh jobs in our country to-date, and with much greater equity raise. With continued policy encouragement, this number could grow exponentially in the next four to five years. Software System Integrations with their own IP and an asset-light approach have an advantage that they can cash-in on. While SaaS, in its multiple forms, is here to stay, SSIs will remain partners in the digital transformation process of their customers. Can India encourage rise of its SSIs to serve the global SAAS market?