NASSCOM EMERGE Community Catalyst for Growth of Emerging & Start-Up companies

Let me share my thoughts on this first.

The reason a CIO will settle (I have used the word settle with deliberation) for a Made-in-India software product will be:

1.  Great fit to the problem he has

2.  Non-availability of a solution by any of the software biggies for the problem. Price does not matter if the solution is indeed available.

3.  Not just good, but great price point (Typically, must cost at least 5 times less than what a similar global product would cost)

4. The absence of any global buying guidelines for the given category of the product (This is true only for CIOs of MNCs who typically have a Global Buying Strategy which is decided out of New York or Luxemborg, or Zurich, or wherever). This can typically happen only for innovative stuff - the kinds that have not been budgeted for, yet.

5. Great demos, proven pilots on his site, with his companys data

6. Proven implementations within competetion

7. Proximity to the CIO's office

And even with this, the CIO is likely to decide in favour of the indian software product with a great deal of trepidation and fear.

Comments, Ayes, Nays welcome...

I will try and summarize after we collect a few thoughts, so that we can focus on the CIOs who are indeed open to buying, rather than butting our heads against folks who simply wont.

Hi Sangeetha

Perhaps an ROI chart that would differentiate onself from the "we do everything" services companies and substantiate your pricing.

Duleep

Most Indian Companies don't have CIO's - they have glorified Systems Administrators .... In India you need to sell to the Promoters / MD / CEO not to CIO ...

Further, no one's ever lost his job for placing an order on IBM - that's a professional mindset which is very hard to beat ....

Indian CIO's neither have discretionary budget allocations, nor specified deliverables on which they're goaled .... they're spanner & screw driver operators in maintainence mode ....

If you wanna sell to CIO's sell to International CIO's and ensure they're not of Indian descent ....

All the best ....

http://OutSourcedCFO.GooglePages.Com

you may add...

Flexibility of the product in terms of compatibility with other applications
Upgrades, AMC and Support
Product Customization possibilities
Realistic ROI

How about deep domain expertise? How about knowing the problem really really well? That enough of a differentiator?

@Duleep, thanks for your response. Is it not really a make-or-buy decision for the CIO, when being considered from the services competition perspective?

@Sreekumar, I think you are right. Compatibility to existing solutions within the enterprise would be a very big plus.

@Jayant, I think you may be being too harsh on the CIO community. Maybe your CFO pedigree makes you feel that way. (In most organizations, CIOs report to CFOs - and thats a real pity in my view. But thats another story :) I do think that there are several good CIOs in Indian companies, and many of them do gun for innovative and cost effective solution. It is just that their tribe is too small.

As Product companies, what can we do to change the "No one get fired for IBM" mind set?

-Sangeeta

1. If you have existing global customers

2. If you have blue-chip Indian customers

3. If you have been rated by the consulting folks

Arvind

I would agree with Jayant that only the large companies have CIOs and mostly they lean towards the big players - IBM, MS, SAP, Oracle.

My addition to the list would be - honesty or a clear communication of what aspects of his requirements are not fully met or are being met through a work around. Its very critical to stress that the IT application implementation is not going to be a cure for all evils and will need discipline, rigor and constant senior management support to be successful.

Our experience in India has been the following:

• Most of the deals we've won don't involve CIOs. They involve VPs of Sales and Marketing, even in companies where there have been CIOs. And in those cases, the CIOs have considered us in as fair-minded manner as the other VPs.
• In our won cases where the prospect does not have a CIO, the "glorified systems admins" in charge have overwhelmingly supported us.
• Where we've tried to enter an organization via the CIO, we've lost the deal in every case, sometimes because the CIO does not like SaaS but as much because his/her choices don't necessarily sit well with Sales or Marketing people.

My personal opinion, after selling to CIOs in the US and working with CIOs in India, is that I'd rather sell to the Indian CIOs than not, both here and in the US. And that's not because of a bhai-bhai connection. I just think they're less into turf and more into domain.

I agree with you, Kishore. I think the Indian CIOs like technology and their doman too much to obsess with protecting their turf.  I also agree that by and large solution sales are made to the LOB in-charge people. However, a CIO can be an excellent ally in the sales process, and a formidable infuencer for any technology buying process.

I also do not agree that CIOs are "glorified system administrators", except maybe for the small scale sector - where not just IT, but every buying buying decision is made by the owner. CIOs, even Indian CIO's are fine professionals, who are trying to keep the show running for the large organizations, despite the ever changing business scenarios and continously moving technology curves.

In my view, the biggest hurdle that stops CIOs to be our co-partners in implementing new technology solutions are:

1. The inability of the local Indian CIOs to try out anything other than the biggies - SAP, Oracle etc - in face of global guidelines as laid out by the global IT stategists.

2. The 'Nobody gets fired for buying IBM" mindset.

3. The inability of ours to reach out to them and convince them of our stability, our USP and the advantage of geographic closeness to them.

We, the software product vendors, cannot alienate this important pillar of the user constituency we serve, IMHO, and must attempt to understand them better, so that we can influence them better.

-Sangeeta

I have been marketing/selling to the Indian CIO/ IT head since 1986 and seen the transition.

Late 80s early 90's . Buy hardware. Software given free unless its a very large application or a tender - very rare to buy software seperately

middle 90s. Ready to buy custom applications outsourced and some products like Ramco did do well

end 90s till now - buy SAP/ Oracle and dont get fired. Unfortunately the same trend is happening now in SME market

Since end 90's for large and small cases, Small vendors from India have to face huge hurdles

Price should be 1/5th

Brochures and demo should be world class

Unlimited service

Agree to take payment late

Visit 10 times before the deal is closed because you are not a major brand

So to answer the original question - should we delight the CIO with a huge check list - my answer is rather qualify the CIO/ IT head well. If he/ she is the 'dont get fired and oriented to the big product' dont waste time. If they have valid reasons why they dont favor the 'biggie' product then fight like hell on all fronts.

So those of us who have sold despite this are really world class already. We just need a critical base before we can sell internationally.

The recession should help as CIO's/ IT heads are now being asked as to why they are spending so much for product implementations, license, maintenance etc. SME's just cannot afford to pay so much. So the Indian product vendor should have a place in the scheme of things soon.

@Sangeeta, very nice points, out of your list, I will tick

instant demo (DIY),

proven implementation &

Non-availability of a solution in that category from global players

@aravind's : Global customers

Also I think : Excellent technology solution with low TCO

Well said, George. Agree on all fronts!Qualify the CIO, and then fight like hell!!

And this sounded really good - as some of us who have indeed climbed this rather difficult mountain - "So those of us who have sold despite this are really world class already. We just need a critical base before we can sell internationally."

On another note, there is a session with th CIO's in the coming Product Conclave. This may be a good place to place some of our thoughts there, and hear from them collectively.

-sangeeta

Priorities in my opinion (for standard solutions such as ERP):

1. 4 & 5

2. 3 & 9

3. 6 & 7

Given a chace, most people would like to buy SAP & IBM to add to their resume. User group is only interested in ease of use and how well it is related to their day to day business.

For emerging solutions, the decision making process & priorities will be different from the above.

My general comments:

1. Head of the operation (user group) makes the final decision after getting the opinion from the CTO or IT people on the technical analysis.

2. CTOs look at scalability, security, technology used & ease of system management. User group look at the expertise in problem domain and how exactly it heals their pain points.

3. For safe decisions both of them look at Pilot, proof-of-concept, client base, success stories and brand value.

4. When the start up cannot provide the basic safety net (as listed in "point 3"), then it is necessary to cut down price, differentiate on the functionalities & domain expertise etc.,

5. Awards and recognitions facilitate the decision to some extent. If it is affordable, most decision makers will go for international brands.

Ashim Bose has very good expertise and wisdom in this area. I suggest you contact him to get more input.

Ashim: When time permits, please participate in this thread.

To borrow a phrase from Paul Krugman, the 'aura of inevitability' would soon start playing a big role in such procurement decisions (if it is not doing so already), in favour of the smaller, and perhaps the more innovative and passionate vendors. With increasing evidence of the success of the indigenous (read non-biggie) solutions, and the delivery sophistication and committment shown by the new-age vendors, customer CXOs will find it extremely hard to ignore the very attractive price-value equations on offer.  

While domain expertise and brand building are essential attributes of success that vendors will acquire over a period of time, through intense focus, the other attributes that Sangeeta highlighted, are almost table-stakes, that vendors will ignore at their peril. With information being so easily available and verifiable, resume-padding will be less of a driver for decision-making for the vigilant customer, than the ability to make a significant positive impact.

The aura of inevitability is upon us, and vendors that persist will make the breakthrough. An example is the SAAS model, where customers find it very difficult to ignore the vendors who put their skin in the game, and offer to share the downside of a failed implementation, as against the biggies that claim hefty upfront fees, and large ongoing support fees  and continue to wash their hands off unsuccessful implementations.

You may also fine the following discussions from Gartner relevant:

http://www.youtube.com/watch?v-3s2oIGnEASc

http://www.youtube.com/watch?v=5E69WhGwOA0&feature=related

A counterpoint to my earlier comment - on what makes customers prefer established solutions as against innovative ones from new entrepreneurs - they just don't need the innovation, yet! Here's Ashish Gupta explaining the concept to Smarana Mitra----

"A retail company today has enough risk and opportunity around plain old growth. Such as company is not dependent on the efficiency of its solutions just yet for it to be worried about the rewards of market cap and so on. Technology innovation will come in once the retail company has reached a point at which technology innovation indeed delivers to the company its next marginal value proposition from a market cap perspective. Right now, these companies are squarely in a growth stage. People would rather buy a solution from Oracle and deploy that as opposed to encouraging entrepreneurs."

Lakshman, Ashim, very interesting observations!

I think that we, Product vendors have no other option but work very hard to break the current buying precedence. And that can only be done by offering something that the buyer can ignore only at his peril. Either competition, or cost pressure, or a complete fit  - the CIO buyer has to be coerced out of his/her comfort zone to look at us.

I like the idea that Ashim mentioned - Offer the CIOs/Buyers something that they cannot afford to ignore, or something that the Biggies would never never do, such as maybe performance guarantees, or some other way that the vendor shares the risk that the CIO is taking with them. However, at the price points new vendors are driven to, this becomes a very difficult thing to do.

-Sangeeta

On Ashim's point about technology not being needed at a particular stage of a company, I agree, that it is possible that at one stage, the solutions being sought are the ones that keep the company stable, and efficiencies increasing. (read lower costs)

But what if the new companies need technology to stand out, use technology to drive their effectiveness (read newer customers, newer channels etc), would'nt a cost effective technology provider, with more skin in the game, be more effective? 

Intuitively it makes sense, though I have not seen many examples of it. It may be fun and inspiring to hear stories on how a product vendor has done that - ie enabled their customers to reach out to new customers and new markets. 

-Sangeeta