Dramatic Growth; All Videshi?

align="right" width="350" height="199">The packaged

software market grew by a dra-matic 95 percent in the survey fiscal. The performance was

all the more impressive in the face of the poor growth rates recorded in domestic hardware

sector. But on the flip side, the dream of homegrown Indian packages dominating the Indian

marketplace remains but a dream.

NT sold in more numbers than it did the previous year.

Microsoft launched another marketing blitzkrieg for its office suite, and that too

continued to hog marketshare in the office suites segment. Novell NetWare lost marketshare

but still did well enough to keep the Novell flag flying. ERP was the other 'big' word and

SAP was the company that hogged much of the marketing mindshare. Baan too did not do

badly, notching up as one company executive said, "its first serious year of ERP

marketing." Oracle did well enough for the company to rank India as the most

happening market, in the next financial year, in the Asian/South Asian region. Elsewhere,

it was Notes in groupware and McAfee in anti-virus. Packages all making good in a year

that isn't the one that the industry would remember with too many fond memories.

The Number Cruncher



Number-wise, this is the one segment that really stole the show. Growth rates for software
packages hovered over the 95 percent as the domestic industry lapped up software packages

despite the political uncertainty and, more importantly, the falling rupee. What is

interesting is that this growth happened in a year when there were no significant product

releases or even version updates from the vendors. This must be good news for the vendors

as they have all lined up a slew of releases for the current year. Starting with Windows

98, major upgrades for NT and SQL Server are expected from the Microsoft stable, while

Oracle too is looking to come out with an upgrade on its products. Overall, systems

software did business worth Rs 705.63 crore during the fiscal 1997-98. This is 105 percent

more than the Rs 342.81 crore worth of business done in the previous year. Application

software too recorded an impressive growth of around 90 percent, growing to Rs 1,250 crore

for the fiscal under debate from Rs 657.95 crore in the previous year.

The MNCs again dominated the packaged software showcase

with previous year's market leader Microsoft recording a 60 percent increase in business

to end the year with Rs 320 crore worth of business. The big news for Microsoft was

undoubtedly the increased acceptance of NT in the enterprise segment. Its brightest day

came when Mumbai-based Mahindra & Mahindra opted for a SAP/NT installation which

according to the implementation partners is the largest SAP on NT installation in the

world.

The story of the year must, however, be ERP. The

three-letter word was the most heard in corporate computing circle for much of the year.

SAP picked up the major mindshare, with Baan and Oracle following closely behind. With

corporate India waking up to the performance edge provided by ERP solutions, financial

1997-98 was the year when the potential of the market translated to reality. The ERP

segment also witnessed some activity from Indian software companies with Ramco Marshal

faring well against the MNC onslaught. But the most interesting product in this category

was an entry-level ERP package developed by Delhi-based ESS Pvt. Ltd. Costing around Rs 6

lakh, it is being positioned as an ERP solution for the small and medium enterprises

segment. Though the company has sold only 11 of the packages, what is interesting is the

positioning and the marketing strategy that could see ERP actually become a product that

is used across all industry segments.

In fact, the SME segment was the target for other software

companies too, with both Microsoft and Novell/Oracle offering special bundle offers for

this segment. The tie-up between Oracle and Novell to bundle five seats of Oracle

alongwith NetWare for small businesses was clearly aimed at ensuring that NT does not run

away with this segment. ERP apart, the other story of the year was groupware. Lotus Notes

continued to dominate this segment as corporate India discovered the benefits of messaging

and collaborative computing. MS Exchange and Novell GroupWise also sold, but in small

quantities. The preference for Notes comes from the product's security features which

users say is not matched by competing products. This fact seemed to be vindicated when the

Central Bureau of Investigation (CBI) too chose Notes for implementation across the

country. The CBI order was Lotus all the way, with even SmartSuite piggybacking on Notes.

Modi Xerox bought Exchange, due to the worldwide standardization of Xerox on the platform.

GroupWise did some business, with Larsen & Toubro being the largest order of the year.

In office suites, however, Microsoft returned the favor to

arch rival Lotus. Its product MS Office is estimated to have a phenomenal 85 percent of

the Indian market compared to Lotus SmartSuite which has around 12 percent share. The rest

is with PerfectOffice.

Domestic Gloom



For domestic software package developers, the year gone by was a repeat of the previous
years. No new package of any significance and only one major product update-that of EX

(renamed Tata EX NexGen). The rest of the story is as dismal as before. Despite the huge

growth in demand for packaged software, Indian companies seem completely unable to break

the trend of being bit-part players in this market. What is unfortunate is that Indian

software companies have not been able to take advantage of the boom in the packaged

software market that is quite clearly happening now. The only product categories where

Indian companies still seem to have a presence are in traditional strongholds like

financial accounting and anti-virus software. Some companies did make an effort in the ERP

segment, but with prices of the majors coming down, survival rate of Indian ERP packages

is down drastically. The one area that did witness a lot of activity for domestic

companies was language computing. With the Government seriously pushing ahead with its PC

penetration plans this segment can only get hotter. Last year the hot news was the

development of the Susha font-set by Konkan Railway employee Harsh Kumar. By giving it

free, Kumar paved the way for product development at reasonable costs. Pune-based C-DAC

too cut down the prices of its Gist-based language packages and saw business picking up.

It plans to introduce a number of language packages this year. And also open up the source

code for the products to independent developers.

Hope In Exports



Another ray of hope for Indian software companies came in the form of multimedia titles
export. Though this segment is still too small to be treated as anything serious,

companies like NIIT and Pentafour have shown that it is possible to make this a lucrative

business. CBTs are hot in the international marketplace and multimedia companies

struggling to find a domestic market for their products will do well to tap into this

segment. NIIT did business worth Rs 70.90 crore from this segment alone. And similarly, a

major chunk of Pentafour's exports came from the export of CBTs and multimedia titles.

Growth in this segment will be further fuelled by the Internet explosion. Both NIIT and

Aptech expect a major chunk of their CBT orders to be sourced through the Internet.

This is the one area where software companies wanting to

make a mark with packages can concentrate on. As far as the domestic market is concerned,

the heady growth of the current year will continue into the next year. With corporates

going for the high-value products like ERP, the going should be good for packages in the

domestic market.