Dataquest (Edition: March 31, 2008)
The term emerging has been derived from the Latin word, Emergere, where e stands for out, forth and merger means to dip. Literally, it would translate to coming out from dip/slide. The Oxford English Dictionary defines the verb emerge as: 1) become gradually visible or apparent. 2) Recover or survive a difficult period. 3) (Of an insect) break out from an egg, cocoon or pupal case. And from the verb emerge, we get the adjective, emerging. But all this is mere etymology (how the word originated) and one would wonder what the real significance of such deliberation is?
Indeed there is; the three aspects, as described above by the dictionary, are hallmarks of what we refer to as an emerging enterprise. The firm or the company is slowly getting credence in the marketplace and gaining recognition, it is surviving the onslaught of competition, and is trying to create an identity, which is not solely defined by its parent company.
What distinguishes an emerging enterprise is basically what we call fire in the belly it is trying to do different things or simply doing things differently. Stagnation is an anathema for an emerging enterprise, and growth is the only mantra. In this article, we talk about a few such companies, how they are deploying IT, what challenges they face, and what the key findings are.
Emerging or SMB?
Browsing through a magazine or a newspaper on any given day, one is very likely to come across some mention of the SMB segment either it will be a big company targeting this market (XYZ banks on SMB) or some report that talks about them (SMBs to spend XYZ crore). As the Indian economy continues its upward ascent and growth percolates to smaller towns and cities, a vibrant community of entrepreneurs is coming to the fore. These entrepreneurs had set up shop most likely in the License Quota Raj times and managed to survive the babudom days. But the challenges brought about by liberalization were just too much.
As the floodgates opened and foreign companies started selling their goods and services, the Indian customer too developed a taste and liking for professional services. For instance, if one wants to purchase a motorbike, the customer does not want to wait long, he wants everything, including the delivery of the motorbike, to be done in a day. Gone are the days when you booked a scooter and waited years to hear from the Hamara company. In this world of instant gratification, instant discontent is equally pervasive.
It is in such a scenario that emerging companies have to not only survive but also thrive. While it is a common practice to label such companies as SMBs, Dataquest thinks otherwise.
The term SMB lays a lot of emphasis on the size of the company, not exactly highlighting the nature of business. For instance, an SMB in the aviation industry, for instance, IndiGo or SpiceJet, would always be many times larger than a Tonic Media working in the digital advertising space. Whereas, when we talk of an emerging enterprise, it refers to a company that is not a leader in its space but is moving upward and would emerge as a challenger in some time. Thus, while emerging and SMB might refer to the same company, very often, they do not necessarily mean the same.
Also, SMBs in most sectors want to survive somehow. In
Strategic or Not-so-Strategic
Last year, the survey conducted on emerging enterprises by IDC, in conjunction with Dataquest, touched upon a very pertinent question. Is IT strategic? Sadly, the answer was in the negative, with over three-fourth of the respondents not considering IT as strategic. It was a big letdown considering the overwhelming numbers that were stacked against the notion.
The good news is that the trend seems to be changing, with almost all CIOs with whom Dataquest interacted, giving their thumbs up for IT. While many spoke about their troubles with higher management and the entrepreneurial boss, they confided that IT, nevertheless, was being regarded not only as integral but also important to the success of the organization.
Does growth propel IT, or does IT enable growth? In the present-day scenario, IT has become the backbone for every business. Nowadays, every company is using IT in some form or the other, feels Ketan Shah, associate director, IT, Angel Broking.
A clear indicator of the change is the fact that many CIOs agreed that convincing and getting commitment from top management, though still an issue, has become less challenging. The chief factor is growth. Unlike foreign economies, the Indian economy is growing at a rapid pace, and so are different sectors. This growth is facilitating much of the IT investments. As emerging companies go up the ladder of profitability, they increasingly realize the need to be more productive. And IT and productivity go hand in hand.
While IT adoption is a matter of a company’s business model; for instance, a brick and mortar company would not really consider IT as strategic; in newer segments, the role played by IT is almost critical. Nonetheless, one can safely say that these days business strategy is driving the IT strategy, Pradeep Pendse, dean, IT, LN Welingkar Institute of Management Development and Research.
IT plays a supporting role in the manufacturing segment, where the focus is more on heavy manufacturing machines than nimble computers. It is easier for top management to be convinced for the purchase of manufacturing equipment that have a direct impact on the topline than to invest in systems that add to the bottomline, says HS Sai, CIO, Thomson Press.
IT is still a service function in most manufacturing companies. Its basic role is to cut costs. Though not yet strategic, the shift toward it is happening, feels KP Parab, AVP, IT, Ion Exchange.
Getting the nod
Most emerging companies have roots in the entrepreneurial talent of a single person, someone who stepped out of the line and decided to pursue a path created by self. Usually, the single owner, while being aware of IT, does not realize the dominant role played by it. In such a scenario, it is harder for a CIO to convince the boss to invest in a firewall, whereas the owner is contemplating wall-to-wall air-conditioning. Indeed, quite many CIOs complain about this disconnect; more so as the ball firmly lies in the owners court.
The best thing about entrepreneurs is that they are a great bunch of business minds and visionaries who can often look into the future. If they are convinced about a business need, they would not mind spending any amount of money on it, says Ramesh Wahi, CIO, House of Pearl.
The big idea is to show tangible benefits to the CEO rather than talking in terms of obscure technical terms. It makes more sense to talk the business language in terms of RoI, profit, benefits rather than open source, SOA and WAN optimisation. To be able to convince the CEO, the CIO needs to understand the business needs of the organization and present his solution as a business case. One needs to talk in the language that is easily understood by them, says KS Bhattacharjee, CIO, XPS World.
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