Home-Grown Software Brands: Made in India

Here’s a quiz: Name any three international soft ware products– branded,
shrink-wrapped and pervasive. Chances are your answers will include Microsoft
Windows, Adobe, Oracle, Corel Draw, OpenView, Tivoli, WebSphere… Chances also
are that your answer will not include any Indian product.

But here’s a surprise–there are many Indian products sold
and accepted in both our domestic and international markets. The numbers may not
match up to the Windows of the world, but in their own specific domain, they are
doing reasonably well, and growing. And here’s a few names for you to chomp on–Flexcube,
Finacle, Finness, Signbank, CustomerView, Ubitel, BanksAway, PayAway, TaxMantra,
eRamco, Contago. Sure, the list doesn’t go on forever, but its there, and its
long enough, and it is growing.

Why is it then that many of us are not aware of the Indian
software industry’s foray into products? There are a few reasons. First, of
course, is the fact that though some of these products have been around for
almost a decade in some form or another, the bottomline numbers don’t yet
amount to a great deal. Second, if you’ve read the names of the Indian
software alternatives carefully, you’ve probably realized by now that most of
these products have to do with the banking and finance sectors.

While in themselves, these sectors may be a pervasive part of
everyday life, it is in business terms a niche area. Products sold to banks aren’t
exactly advertised on hoardings; and finally, deriving in a sense from the
previous reason, the success stories of Indian software products have been
limited by their limited visibility and what some would call “non-core
areas”. The typical cry against the Indian software industry, for instance,
is “There is no world-class Indian operating system or database”. Why?
Well, that’s another story altogether. But many Indian companies do have a
substantial presence in specific verticals–most notably banking and finance,
with telecom being the upcoming domain to watch out for.

And that’s what this story is all about–a story of Indian
software products, of how they grew, where they are today, the challenges they
face and where this segment is headed in the coming years.

Story #1: Flexcube

Flexcube, the core banking solution from iFlex Solutions, for
instance, is a product that has gathered quite a name for itself in the
international market. Both the company and the product have an interesting
history. The company began as a division of the Citibank group in India and till
last year, was known as CitiGroup Infotech. The product itself–Flexcube–is a
rejuvenated and upgraded version of an earlier smaller product called

Says Senthil Kumar, head of corporate marketing at iFlex:
“We launched the company as a product company and the product we created
and built upon was Microbanker.” Launched in1992, Microbanker was an
integrated banking solution for small- and medium-sized banks and within three
years of its launch, it became one of the largest banking back office solutions
in the world, with a presence in nearly 30 countries. Some of the success had to
do with its lineage–coming as it did from the Citibank Group. A larger amount
had to with how the product was designed. “We never sold Microbanker as a
branch automation product. For us, it was always an integrated piece,” adds
Senthil. Yet, Microbanker was a small product, targeted at small-sized banks in
developing economies very similar to India.

Moving to advanced markets with more sophisticated systems in
place, more complex requirements was a completely different ball game. “We
wanted to build a core banking product for large banks and one that addressed
retail, corporate and investment banking,” says Senthil.

One of the first things the company did was to take
Microbanker to Europe and the United States for evaluation. At the same time, it
initiated an extensive market research study in these geographies. Apart from a
whole list of new functionalities and local legal issues that emerged from this,
there were three key elements that came up–scalability, parameterization and
the need for an open platform. “There was a huge time and effort required
in a banking back office solutions in the eighties and nineties. If you needed
to launch a new instrument, you had to write the code. Banks didn’t want that.
Also, we realized that international banking markets wanted an open

So when work on the new product began, the company chose to
go with a Unix and Oracle platform and one of the design goals for the new
product was clear–” No code change”.

Flexcube was finally launched in 1997 and today boasts 1.3
million customers, 100-plus branches and is sold in 36 countries. iFlex has a
subsidiary in Holland which manages Europe, Asia and Japan are managed from
Singapore, while India and West Asia are handled out of India. One of its
strongest bases, however, is Africa, where it has a substantial presence in
countries like Ghana, Nigeria, Kenya and South Africa.

Story #2: Finacle

When the management at Infosys Technologies sat down to
explore the possibility of creating a product, they walked a slightly different
route. Says Merwin Fernandes, head of global sales and marketing at Infosys’
banking business unit: “We examined enterprise-spending data. And we found
that the financial services segment was one of the largest spenders on IT.”
That suited Infosys fine. Like in most Indian IT companies, financial services
had been a key focus area for Infosys and deciding to take up a product in this
domain was an easy choice to make.

Infosys started slow and small. In 1989, the company came up
with a small product for cooperative banks. Two years later, it began to make
serious efforts in the commercial banking sector. And in 1993, the first version
of their earlier flagship product Bancs2000 was launched in the domestic market.
It wasn’t till two years after this, in 1995, that Infosys launched Banc2000
in the international market. Says Merwin, “It was a getting-our-feet-wet
kind of thing. We wanted to test the market and our product. And we wanted to
make sure that when we got aggressive, we had all the features and
functionalities in place.”

For two years after this, the company made Banc2000 sales in
countries in and around India. In 1997, the company felt the need to revamp the
product significantly. The reason was simple–a lot of things had happened in
the interim. Technology had improved, banks themselves were getting more
sophisticated, infrastructure had improved and the Web had emerged as a new and
important medium. Most importantly, the company felt it was time to move from
the more elemental financial markets to the more sophisticated markets of Europe
and the US.

So when Infosys began looking at a new product, they began to
look at expanded functionalities and scalability. At that time, Banc2000 was a
purely character-based system developed in Unix. The management had a choice to
make–should they go the client-server way or the Web-based way for the new
product? Says Merwin, “It was a call we took–going the Web-based way. And
we’ve never regretted it.” But by that time Banc2000 already had 35-40
customers and an additional consideration was building a seamless migration path
to the new product. That mandated a slower migration to the new product.

For the next three years, from 1997 to 2000, Infosys gave out
intermediate releases of the as-yet-unnamed product, adding new features every
time–Web enablement, multi-currency processing, integration of work flow
management and the like. During that time, it also re-architectured and
re-engineered their existing customer installations.

Finally, in July 2000, they decided they had their new
product ready and it was time to give it a name. They called it Finacle.
“Because of the migration we had already been doing,” says Merwin,
“on the day of the launch of Finacle in July last year, we already had five
existing customers.” This included one of the biggest catches of the time–Unit
Trust of India. IN the meantime, Infosys has also launched some other banking
products, including BankAway and PayAway.

Today, the company’s banking business unit caters to 45
banks across 15 countries, though a substantial amount of its revenues comes
from domestic sales. By the end of last financial year, banking products had
contributed close to $10 million to Infosys’ bottomline, a figure it expects
to exceed by the end of the ongoing financial year. Is this a sum that takes
your breath away? No, especially when given the sheer size of Infosys. But
Finacle has been doing well, more so domestically, with over 60% of the
marketshare in centralized banking and almost 80% of new domestic orders in the
last 15 months. Last year, Finacle, along with Flexcube from iFlex, was among
the to top three retail banking systems in the IBS list, while BankAway got CSI’s
‘Best Packaged Application’ award.

Some other stories…

Other banking product success stories include Tata Infotech
and Delhi-based Nucleus Software Exports–a 15-year-old company that moved from
consultancy and services to solutions and now has a stable of software products
in the banking and financial services segment.

Nucleus’ flagship product is Finness, which is essentially
an integrated suite that provides solutions for both the asset and liability
side of the business, core financial accounting and customer service.
Interestingly, as a Rs 55-crore company, it gets 23% of its revenues from
products, of which 21% comes from Finness alone. Introducing four new products
last month, the company also announced that it would be investing close to Rs 10
crore over the next two years in product development.

But are banking products the only sector Indian companies
venture into?

Walking some other roads

Obviously not. Though banking and financial services dominate
the Indian software product story–as they do the entire Indian software story
for that matter–there are other companies looking at other application areas
and business verticals.

Chennai-based Ramco Systems, for instance, first launched its
flagship product Marshal in 1994. By the time Marshal 3.0 was released by Bill
Gates in Mumbai in 1997, it was a full ERP suite consisting of over 30
applications, including discrete manufacturing, treasury and quality
applications. Two years later, Marshal 3.1 was re-branded as Ramco e. Around
that time, the generic mass market for ERP was breaking up into clusters of
vertical industries and the Internet had emerged as a significant business
medium. Therefore, Ramco e was built keeping in mind the new verticalization and
featured Web products designed for the various stakeholders in an enterprise.
The next version–Marshal 4.0–is planned for a 2002 launch and the company
says it will build in strains that will support what it calls c-commerce
(collaborative commerce).

Ramco has a diverse customer base. For instance, Ramco’s
process manufacturing solution is among the top such product for chemicals, food
and beverages, metals and textiles industries in the US market, while its
enterprise asset management solution has reasonable acceptance in the aviation,
utility and facilities management market. Recently, Ramco and Boeing also
announced a partnership to provide solutions to the global aviation maintenance

The company forayed into enterprise product vending at a time
when the ERP market was dominated by the likes of SAP and Baan. From small
beginnings, its operations are today spread across 1,000 customers in 11

Another company that ventured into the ERP space was Eastern
Software Systems, with its Web-enabled ERP system called Ebizframe. When Anil
Bakht and Sanjay Agarwal set up the company in 1990, they started with hospital
management software. In 1998, they announced an ERP package specifically
targeted at the SME segment and, a year later, were among the first to offer ASP
services through their ERP-on-the-net offering. Recently, the company has
launched a WAP-enabled enterprise solution called Cellbiz. Though largely
oriented towards the domestic market at the moment, the company gets 20% of its
revenues from West Asia and hopes to venture farther afield shortly.

This is by no means a comprehensive list. There are a host of
other products and companies and not all of them can be reasonably covered here.
But this begs a question–if there are in fact Indian software products of
international standards, and if they have been around for a reasonable length of
time, why aren’t they as big as one would have a right to expect?

The challenges

In two words–marketing muscle. There are various expert
estimates on what it takes to market a software product internationally. But all
of them agree on one thing–it takes more to market a product than to produce
it. And more of almost everything–money, international presence, branding and
plain marketing savvy. It also requires a different mindset–the ability to
pour money down a project on which no returns are foreseeable.

None of these are typical characteristics of a nascent
industry. This is the major reason why the profile of Indian product offerings
looks the way it does: heavy on banking, telecom and enterprise. No operating
systems or databases… though one wonders what happened to Wipro’s Unix
offering Winix.

Being in niche verticals like banking saves companies the
cost of saturation advertising. They are able, instead, to look at more focussed
branding exercises for their target audience.

Infosys, for instance, has a very clear three-stage marketing
strategy for entry into international markets for its banking products. In what
it calls its ‘Entry Focus’, not only does it carry out market research and
gap analysis, it also does preliminary brand-building and market-sensitization.
This is largely through select advertisements, participation in seminars and
some press interviews that build up visibility. They also enter into services
and sales partnerships locally and leverage that for local presence till they
get their first breakthrough.

In Stage II, or what it calls its ‘Growth Focus’, Infosys
begins to get aggressive, targeting 20-25% of all new deals. Says Merwin,
“Bankers are known to be conservative. They have to be, for they deal with
others’ money. Therefore, a breakthrough is not very easy. But the same
conservatism that works against us in the beginning begins to work for us after
we make our first sale. And increases with every sale. Being a tried and tested
product is a big plus after that.” By the time the company comes to its
final consolidation stage, Infosys begins to look at 40% of all new deals.

Forging partnerships

Whatever their particular marketing strategies may be, local
participation is crucial for all companies in the international market. Product
sales require knowledge of local markets, local lingo and extensive local
presence. iFlex deals with this through local hiring. Says Senthil: “As
much as possible, we are using local people for marketing and sales. The
customer-facing team almost anywhere is likely to be local–the Netherlands, UK
or America.” Infosys, on the other hand, deals with this through local
partnerships. “Our sales partners in every market handle the front end,
including making day-to-day calls and providing the first level of
support,” says Merwin. Their service partners provide higher levels of
support, including, often, implementation as well.

Finally, however, both companies have found that partnering
with infrastructure vendors like HP, Compaq, IBM and Digital works well. For
instance, the iFlex-IBM relationship happened, says Senthil, “when we
started succeeding in a space we weren’t present before. They were in the
AS400 and S390 space when the Unix solution started winning. So we signed up a
technology partnership in 1999. Subsequently, they came to us and told us how
the MQ series could be used to integrate Flexcube”.

Finally, however, no one thing is sufficient. Says Girish A
Menon, vice-president (global marketing and planning) at Ramco Systems,
“The strategy has to be multi-pronged. Marketing a product, particularly an
enterprise solution, depends a lot on the maturity level of the market

Ramco’s marketing strategy is also focussed around
partnerships in the international market. Says Menon, “To this end, we’ve
put in place a global partnership program–Ramco Value Net.” The most
significant partnership the company has forged in recent times is with aviation
major Boeing, under which the latter will market Ramco’s aviation solutions,
together with its own modules under the brand-name Enterprise One.

But do these sound like stories of intermittent successes? Of
exceptions rather than the rule?

The days ahead…

Perhaps. A lot is changing, however. Indian software giants
today have more cash available for investment in R&D, their brand value is
high and growing, technology issues are no longer an impediment as they once
used to be and most of the big companies today are very brand-savvy. They also
have a huge advantage–coming from a services and solutions background, these
companies have built up considerable domain expertise in verticals like telecom,
retail, logistics and VLSI and chip design. It may be a slower route to
productization, but it is also a very sure route.

Quite clearly, the Indian software products story has not
ended. It is just beginning. Watch this space.

By Sarita Rani in
Bangalore  Inputs from Shrikanth G in Chennai, Meghna Sharma in Delhi and
Easwardas N in Mumbai

Cash Cow…

do you think about the Indian software industry’s efforts to develop and
market software products?

In the early years, Indian companies chose to focus on software services due to
better risk-reward metrics in the services segment. As the industry matures and
large world-class Indian players emerge–in the next two years, India will have
five $1-billion-plus software companies–their appetite for risk and hence
product development will increase. As they gain domain expertise, say in the
financial services or telecom, product development will increase even further.

Is productization important?
During these years, we have built up strong domain knowledge, achieved
global exposure as well as a global brand equity in the software services
sector. All this provides a good stepping stone for Indian IT companies to start
looking at developing software products. Products would help enhance the Indian
IT brand further.

What verticals should Indian companies target?
Some of the verticals that Indian IT companies can look at for building products
include, banking, telecom, retail, hotel, aviation and insurance. Indian
companies broadly have opportunities in three arenas–enterprise software,
consumer and desktop software and mobile computing and embedded software. In the
enterprise software and consumer and desktop software space, Indian companies
can develop horizontal applications that deliver specific functionality and
features and complement a broad set of existing applications. In addition,
within the enterprise space, there is a significant demand for integration
between existing and emerging applications (such as e-commerce integrating with
financial applications residing on mainframes). Indian companies already
providing integration services on a customized basis have the opportunity to ‘productize’
their offerings and reuse their expertise across multiple client solutions.

Also, we have seen that e-commerce is creating new software product
categories for enterprise computing and Indian companies can provide significant
components of this technology and also productize e-commerce implementation

Deregulatory steps the government needs to take…
The government can help companies mobilize resources and create a suitable
climate for more VC funding in this area. Government funded laboratories,
R&D centers and academic institutions such as IITs should be encouraged to
invest in and carry out research in this area. The government can also provide
support via tax holidays and exemption in duties for IT companies that develop

Nasscom and the software products segment…
Nasscom on an ongoing basis is working with the industry in providing relevant
industry information that is required by companies who want to venture into this
area. Nasscom provides forums for best practice sharing where successful Indian
and global companies share their experience on developing products. We also
bring out research studies which help companies identify relevant opportunities
and sharing real life examples of companies who have successfully developed

Some significant Indian software products…
Some Indian companies who have developed products which are marketed in global
markets include iFlex Technologies’ banking product called ‘Flexcube’;
Infosys Technologies’ banking automation product called Bancs 2000 (it is now
called Finacle); Talisma has a CRM product; Ramco Systems has an ERP solution
called ‘Marshal’; TCS recently developed MasterCraft, which helps software
design and development teams in requirement analysis, modeling and automatic
code generation. Even a startup like Adamya Technologies has developed embedded
software which is the world’s smallest Bluetooth stack.

Meghna Sharma

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