Microsoft Helps SMEs Lower TCO, Capex

by Sonal Desai    Jul 21, 2009

Microsoft’s recent announcement to offer its services online can help a lot of small and medium businesses (SMBs) and small and medium enterprises (SMEs) switch from a capex model to an opex model.

The software vendor is also inviting partnerships from mobility and telecom companies, besides other managed service providers (MSPs) offering SMB/Es an opportunity to test technologies requiring high investment - something they would otherwise never have looked at.

Mohammad Saif, deputy director (consulting), ICT Practice, Frost & Sullivan, South Asia & Middle East, in a statement yesterday, said, Lower TCO and capital expenditure, rapid deployment cycle, and a wide variety of offerings by various global vendors have constituted the driving force for on-demand software in India. Increasing awareness about the delivery model and flexibility of trial version has helped in allaying the apprehension of customers, and is expected to play a major role in the growth of the on-demand software market. This market is expected to grow from the current level of $40 million to $800 million by 2015, with SMEs fuelling the growth.

In an interaction with CXOtoday this morning, Saif elaborated that while Microsoft takes care of the software, it is putting all its services online and is offering different vendors scope to handle managed services. It is thus offering customers options and more choice.

Such relationships (between the service providers and software vendors) also enable the latter to penetrate deeper into unified communications market - in fact bring the technology closer to the SMB and the SME segments. The vendor has to provide the package through a medium, and so this is just a matter of purchase facilitation. Service providers already have inroads to SME accounts. So software vendors can focus on customers who were earlier not in their arsenal.

There are also pain points, essentially from the end-user perspective. "Users will need some time to get educated on these services. We re not talking about an immediate market here. Any business has to be long term. One area that the vendor or the MSP will have to look at will be to educate the customer, handhold and train them," said Saif.

These needs stem from issues such as need for customisation, essentially where SMEs are concerned. "They cannot afford large capex. They want to deploy unique or specific solutions and work on tight budgets. The MSP can play a vital role here. He needs to sit with the customer, understand his requirement, and convince the customer about the need for a solution."