Business To Business Project- Software as A Service

Application On

Demand

December 28

2009

Business tools for the low IT penetration SME sector in Asia, with

special emphasis on the Indian market

Submitted To:-

Dr.Saji Nair

Final

Project

submission

: Business

to

Business

Marketing

Submitted By :-

Amita Singh u108064

Aditya Tripathy u108004

Rupaj Dash u108099

Satyajeet Mohanty u108103

Shakti Nath u108104

Sujit Sahoo u108111

Swarup Kar u108112

Udaya Satapathy u108116

Contents

1 Abstract.........................................................................................................................................5

2 Application on Demand.................................................................................................................6

3 Introduction...................................................................................................................................6

4 Software-as-a-Service (“SaaS”): The Platform for our Offering....................................................6

4.1 Our Solution..........................................................................................................................7

4.2 Customer Relationship Management.....................................................................................8

4.3 Hosted Messaging and Collaboration Services......................................................................8

4.4 Supply Chain Management....................................................................................................9

5 Tata Consultancy Services: Launch pad for the Service................................................................9

5.1 Opportunities.......................................................................................................................10

5.1.1 Revenue Growth..........................................................................................................10

6 Marketing Objectives...................................................................................................................10

Target Group -..........................................................................................................................10

6.1 Market Analysis...................................................................................................................11

6.1.1 Estimated Market Size.................................................................................................12

Approach to Marketing....................................................................................................................12

Customer Analysis...........................................................................................................................13

6.1.2 Price.............................................................................................................................13

6.1.3 Competitive Edge........................................................................................................13

6.1.4 Time to market.............................................................................................................13

6.1.5 Efficiency and flexibility.............................................................................................14

6.1.6 Perceived Risks............................................................................................................14

6.2 External Environment Analysis............................................................................................14

6.2.1 Political........................................................................................................................14

6.2.2 Economic.....................................................................................................................15

6.2.3 Social............................................................................................................................15

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6.2.4 Technological...............................................................................................................15

6.2.5 Environmental..............................................................................................................15

6.2.6 Legal.............................................................................................................................15

6.3 Competitor Analysis.............................................................................................................16

6.3.1 Supplier Power.............................................................................................................16

6.3.2 Buyer Power:...............................................................................................................16

6.3.3 Competitive Rivalry.....................................................................................................16

6.3.4 Threat of Substitution..................................................................................................16

6.3.5 Threat of New Entry....................................................................................................17

7 Technology acquisition................................................................................................................17

7.1 Parameters for Deciding the Method of Technology Acquisition........................................17

7.2 Choosing among Technology transfer, In-house development and Outsourcing................18

7.3 Options selected..................................................................................................................19

7.4 Email package: Why Transfer of technology?.....................................................................20

7.4.1 AtMail Email Package...................................................................................................20

7.5 SCM and CRM Packages – In-house R&D.............................................................................22

7.5.1 Research......................................................................................................................22

7.5.2 Development...............................................................................................................23

8 Segmentation, Differentiation and Targeting Strategies..............................................................23

8.1 Segmentation.......................................................................................................................23

8.2 Target Segments..................................................................................................................24

8.3 Differentiation.....................................................................................................................25

8.4 Positioning...........................................................................................................................26

9 Brand name..................................................................................................................................27

10 Integrated Marketing Communication.....................................................................................27

10.1 Media planning and budgeting............................................................................................29

11 Projected financials..................................................................................................................29

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12 References...............................................................................................................................30

13 Annexures................................................................................................................................30

13.1 Annexure 1..........................................................................................................................30

13.2 Annexure 2..........................................................................................................................31

13.3 Annexure 3..........................................................................................................................31

13.4 Annexure 4..........................................................................................................................31

13.5 Annexure 5..........................................................................................................................32

13.6 Annexure 6..........................................................................................................................32

13.7 Annexure 7..........................................................................................................................32

13.8 Annexure 8..........................................................................................................................32

13.9 Annexure 9..........................................................................................................................33

13.9.1 Market Research..........................................................................................................33

13.9.2 Semi structured Questionnaire....................................................................................33

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1 Abstract

Our product is basically “Application on Demand (AoD)” for SMEs, educational institutions and

research firms of India wherein the delivery mechanism will be either the internet or Direct to Site

satellite connectivity. This product will focus on industry verticals encompassing not only software

applications but also products like databases on research articles, documentaries and videos of their

concern. This product will enable the customers to use software products on demand as per their

requirements and they would be charged on a time-shared basis or a pay-per-use basis. This product

can be visualised as an aggregate wherein the offerings from different vendors will be bundled and

offered as part of a unified application platform. The applications are expected to take advantage of

the benefits of centralization through a single- instance, multi-tenant architecture, and to provide a

feature-rich experience competitive with comparable on-premise applications. The application

software is delivered remotely through a subscription-based fee rather than being sold for perpetual

use. The users do not buy the license of the software, but only a right to use it for a specific period.

These services can be accessed entirely online, paid for on a low monthly basis, and shall require no

maintenance or support on the part of the customers. The Project report encompasses the three

sections as mentioned below

A) Business analysis: In this section the detailed business analysis of our service offering has

been presented along with the 3C ( Customer Company Competitor ) analysis and pestel

analysis. This section has presented the broader picture of the industry, its relevance to the

industrial project chosen. Marketing obejectives have also been touched upon in this section

B) Technology Acquisition Strategy and Generic Marketing Strategies: In this section

we have explained our technology acquisition strategies. A decision matrix has been drawn to

arrive upon the correct strategy of technology acquisition for the product offerings that we

are offeiring. A generic marketing plan has also been included in this section comprising of

the segmentation, targeting, differentiation and positioning strategies for our product offerings

C) The Marketing Mix Design: This section comprises of the Brand Name which has been

kept as “ TCS Samadhan”. This section presents the integrated marketing plan for our

product along with the IPR issues for our product.

D) The Financial Statements: We have provided the Balance sheet and the profit loss

statements. The financials also details the various the costs associated with our product

offerings ranging from NPD costs to support systems etc

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2 Application on Demand

Business tools for the ITES starved SMB sector in Asia, with special emphasis on the Indian and

Chinese market.

3 Introduction

Information Technology in business has come a long way from being simply a means to improve the

bottom-line to being a source of competitive advantage for the firm. It has come to a stage when no

organization can refrain from adopting IT enablement of its businesses. But till now indulging in IT

enablement of businesses has been a very costly affair, where the company has to first go for

consulting, then development of customized software meeting its requirements, post which it needs to

invest in hardware to host the software, costly training requirements to enable the employees to start

using the software and then comes the cost of year on year support services.   Thus, the total cost of

ownership would come to such astronomical figures that only Fortune 500 organizations could afford

the same. This high cost was mainly because no ways had been tried to achieve economies of scale in

either of the above phases.

Now with large scale adoption of IT across all businesses, there has been a realization across all

segments that without IT enablement they would perish. A large section of the business in the form of

SMBs has remained under serviced by the IT service providers, for the simple fact that the current

model of operation of the IT service providers is not affordable by this segment. But considering the

tremendous size of this segment (elaborated in the marketing Objective section, there is a need to re-

think on the way we deliver services. Bringing in economies of scale is the only way out.

4 Software-as-a-Service (“SaaS”): The Platform for our Offering

We will use the SaaS framework to offer our service. SaaS has created a revolution in the way we

look at delivering ITES. It enables businesses to subscribe to a wide variety of application services

that are delivered over the Internet on an as-needed basis with little or no implementation services

required and without the need to install and manage third-party software in-house. In contrast with the

traditional model, it does not require each customer to install, configure, manage and maintain the

hardware, software and network services to implement a software application in-house. Moreover,

there is no need for traditional enterprise software vendors to maintain support for numerous legacy

versions of their software and compatibility with a wide array of hardware devices and operating

environments. Thus this becomes an attractive proposition for the SMEs because of the following

reasons:

1) Converting IT expenses from Capital expenditure to Operational expenditure

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2) Incremental Scalability Option

3) Lower Implementation Risk due to Plug and Play feature

4) Lower Total Cost of Ownership (TCO) due to economies of scale in development, hardware

infrastructure and support services

This technology enables us to use a common infrastructure and software code base across all

customers who benefit from access to the most current release of the application, automated upgrades,

more rapid innovation and the economies of scale of a shared infrastructure. Businesses are able to

realize many of the benefits offered by traditional enterprise software vendors, such as a

comprehensive set of features and functionality and the ability to customize and integrate with other

applications, while at the same time reducing the risks and lowering the total costs of owning

enterprise software. 

4.1  Our Solution

We initially intend to offer the following ITES Applications-On-Demand to our customers:

Hosted Messaging and Collaboration Services - instant messaging, presence and teamware

services

Customer Relationship Management

Supply Chain Management

The services have been selected so as to boost the businesses of our customers using a three pronged

approach:

Top line improvement through re-engineering the Customer Engagement Process

Rigorous focus on the bottom line through improved Financial Control, Sales force efficiency

and productive process efficiency

Access to world class design software for the manufacturing sector to level the playing

ground

There will be a focus on continuous enhancements and deployment of yet newer software services.

The target customer base is the SMEs in the Asia Pacific region, with specific focus on the Indian and

Chinese markets. Regional language compatibility will be a major differentiating factor in the service

so as to reduce the skill set level of the end user.

4.2 Customer Relationship Management

We intend to provide a comprehensive array of CRM services, developed in house, which will enable

customers to systematically - 

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Record

Store

Analyze

Share

Act upon business data

It will also help businesses to:

Manage customer accounts,

Track sales leads,

Evaluate marketing campaigns, and

Provide post-sales service

We will also enable companies to:

Generate reports and summaries of this data

Share these reports with authorized individuals across functional areas

Enable most features to be accessible through a variety of devices, including laptop

computers and mobile devices

The service will be highly configurable in a short amount of time, enabling our customers to tailor its

appearance, policy settings, language, workflow, reports, and other characteristics without the use of

significant IT resources or consultants. Our services mainly focus on the following functional areas

within CRM:

Sales force automation

Partner relationship management

Customer service and support automation

Marketing automation

4.3 Hosted Messaging and Collaboration ServicesWe intend to provide hosted messaging and collaboration services based on Microsoft Exchange

Server and Microsoft Sharepoint Server. The proposed offering will use Server Virtualization

technology to enable economies of scale in hardware usage, thus lowering costs. The serveices

proposed to be offered are:  

Hosted email service

Cloud based Email archiving

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Data loss prevention solutions

Email security

Instant Messaging

4.4 Supply Chain Management

We intend to provide a comprehensive array of Supply Chain Management services, developed in

house, to bring about efficiencies in the value chain, thus reducing costs. The services to be offered

are: 

Inventory Management

Purchase Orders Management

Sales Orders Management

Supply Chain Management

Foreign Currency Management (for businesses dealing in export / import)

5 Tata Consultancy Services: Launch pad for the Service

In the market we find no commitment from service providers to SMEs. This adversely impacts a

SME’s ability to provide any meaningful service level expectations for their customers. There has

been an evolution in the software requirement scenario of SMEs and this has made it difficult for

SMEs to scale up the IT with business growth. Assembled non standard hardware and software

solutions tend to become obsolete which impedes the growth and the ability of SMEs to use IT.  Tata

Consultancy Services being a large firm will be able to provide a large gamut of services to the

disparate needs of the SME clients. Tata Consultancy Services, due to its large size, will be able to

provide the following benefits:

It can utilise economies of scale to  provide software having very low demand

It can leverage its presence in the target geography to induce more customers and provide

superior service

It has the expertise to suggest changes in business processes to the clients through its pool of

highly experienced domain experts across all industry verticals

It will be able to profitably invest in a large number of technologies and deal in different types

of firms dealing with similar technologies

It can also deliver integrated end-to-end managed solutions in IT solutions if needed

It can scale up the subscription-driven “build-as-you-grow”, “pay-as-you-use” model to an

independent software implementation when the firm grows

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 It has global delivery capabilities and mature processes and hence it has the capability of

highly efficient technology solutions delivery and management which greatly enhances

productivity and ensures discipline, reliability and risk reduction.

Also, the reason TCS has been chosen over the other ITES organizations is that:

It has been focusing on the Indian market for quite some time, and hence it has a better

understanding of the same

The Tata group of companies can serve as a test market for such an offering before the service

goes live.

5.1 Opportunities

5.1.1 Revenue Growth

Through the more sophisticated pricing model, as well as the increase in customer volume brought

about by competitive differentiation, TCS can maximize revenues.

Reduced Costs

By reducing hardware footprint and streamlining IT management via intelligent, SLA-focused

automation, TCS can save big on both CAPEX and OPEX.

Improved Customer Satisfaction and Retention

Because SaaS services will enable TCS to offer better performance guarantees (and live up to them),

customers will be happier and more likely to stay with that service.

6 Marketing Objectives

Target Group - Small and Medium Enterprises

The SME segment is the growth engine of India economy. IT is a key strategic tool, which can help

India SMEs get a competitive advantage in the global market place.

Government classifies SMEs on the basis of limit of historical value of investment in plant &

machinery. Manufacturing units with investment up to Rs. 25 Lakh in plant & machinery are

considered as Micro Enterprises; those with investment up to Rs. 5 Crore are considered as Small

Enterprises and up to Rs. 10 Crore are considered as Medium Enterprises. In case of Service sector,

the Micro enterprises are those with investment ceiling of 10 Lakh, the smaller enterprises are valued

up to Rs. 2 Crore and Rs. 5 Crore for Medium Enterprises.

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6.1 Market Analysis

1 IT Spend Growth Rates by Country

As can be seen from the table above Indian SME firms are fastest growing spenders on IT. The Key

motivators for IT adoption in Indian SMEs are the need to scale operations to manage rapidly growing

business volumes and to increase efficiency of business operations. SMEs want to implement IT

systems owing to influence of large business buyers and international customers and to keep up with

latest technology. Some other factors are

Regulatory compliance

Increased marketing & awareness building efforts by IT vendors and Channel partners

According to a report by Microsoft efforts by Private & Public Sector Telecom companies leading to

increased affordability of the Internet have led to an increase in Internet penetration. 60% of Small

Enterprises are connected to the Internet while Internet deployment has reached near saturation at

96% for the Medium Enterprise segment. Most medium businesses assign high-importance to

implementation of business application software like ERP and other process management systems.

Consolidation of server and storage solutions for achieving an integrated system is seen as an

important strategic solution. Utilization of business analytics for exercises like demand forecasting is

catching on among medium sized businesses

But usage of hosted applications is still at an embryonic stage within Indian SMEs; around 4% of SEs

and 15% of MEs are using them. However it is likely to take off at a faster rate as SMEs become

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gradually aware about the multiple benefits of hosted applications – lower cost, hassle-free operations,

available expertise of service providers, etc.

6.1.1 Estimated Market Size

The Market for Application on demand is estimated to be around Rs 2,000 crore in India alone the

next two to four years according to a 2008 study by Microsoft and AMI-Partners. The total market

size of SaaS based CRM alone in Asia Pacific Including china is expected to be worth Rs 12,250 Crore

by 2010. Hence TCS will be expecting revenue of Rs 480 Crore by 2014 from this sector.

Approach to Marketing

Initially, we will target aggressive top line growth through new customer addition as our strategic

capability is based on economies of scale. The market for such a service is not established, and hence

we will need to reach a critical mass in a very short span of time. The top management’s decision to

continue with the initiative will depend on proving to them the existence of a huge untapped market

for this service and this will be possible only through accelerated customer adoption of this service

and their retention. Pricing of the service is also as important as the volumes, as the organization has a

hurdle rate of around 20% and we need to justify the investments and inflows expected. Hence we

cannot price it too low. On the other hand, pricing it too high might not prove to be economical for

our target audience, and adoption might suffer. Hence our marketing objective will be Sales Turnover

based. We expect to touch revenues worth USD 100 million in 4 years time. The project will have a

gestation period of one year.

Our approach is to target industry clusters. As firms in such clusters tend to follow what the other

members are doing. Our focus for the first year is to have a good set of anchor customers and then

scale it up. Places like Nashik and Coimbatore which contain multiple clusters of specific industries

will be targeted. Initially we will focus on verticals like textiles, components, education, retail and

healthcare. The company will target universities in education sector. Our competencies will be

leveraged to assist SMEs with access to technology for improved product design and establish

processes which allow them to handle greater workloads and operate with greater efficiency. This

collaboration will enable SMEs to gain access to global markets, cutting-edge technology and tools as

well as world-class process excellence.

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Customer Analysis

2 Perceived Benefits of IT implementation in Indian SMEs

Apart from benefits from adopting IT systems, customers of the on demand service will have the

following major benefits in mind while subscribing to the system.

6.1.2 Price

This is by far the top driver for end users exploring SaaS. With SaaS, companies can pay only for the

computing capacity they actually use – avoiding the need to invest in hardware to meet peak demand

periods. In short, companies can still meet their computing intensive application needs without buying

more hardware.

6.1.3 Competitive Edge

Tapping into SaaS services gives end users a drives competitive advantage by increasing IT resource

efficiency and capacity that can be added in a matter of minutes.

6.1.4 Time to market

To remain competitive, companies need to find ways to bring products to market faster – even short

delays in a product release can dramatically reduce profitability. This means removing complexity

and ensuring computing needs are met as quickly as possible. SaaS enables this by abstracting the

infrastructure away from the end user and ensuring that resources are available transparently and on

demand.

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6.1.5 Efficiency and flexibility

Companies with static compute resources have to consistently grapple with the tradeoffs related to

under and over provisioning of in-house compute capacity. Having access to a SaaS service offering

lets companies be more flexible about how they meet their internal computing needs – with the ability

to fl ex out to a SaaS service; companies enjoy faster deployment times and move closer to achieving

a truly dynamic data centre.

Other standard customer expectations from a on demand application service are:

Ease of use : Multiple Language and Easy Interface

Integration with current processes

Scalability

Immediate observable top line increase and bottom line discipline

Advanced Analytics

Rapid deployment

No hidden costs owing to Hardware, Support and Maintenance and IT Department overheads

Manpower Reduction

6.1.6 Perceived Risks

In spite of all the potential benefits that Application on demand can offer, there are some risks

involved. Here are some areas that require vigilance:

SLA management and major outage impact

Security concerns and privacy

Control of IT

Compliance

Viability

Integration

Skills

6.2 External Environment Analysis

6.2.1 PoliticalAs SaaS computing and SaaS gain acceptance, policy makers will be more proactive in addressing

technological changes. We will have to still negotiate multiple policies on outsourced IT applications

in the next few years.

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6.2.2 EconomicDue to the prevailing economic downturn and slow recovery companies are facing increasing cost

side constraints, IT being no exception. Application on Demand is a low cost alternative to expensive

on site implemented systems and will be a key driver for IT projects. It also has the advantage of fast

time to market and flexibility, which is a key source of competitive advantage.

6.2.3 SocialThe number of internet users has increased exponentially. The present generation of internet users is

engaged in various activities on the internet on a daily basis. Companies will bank on this trend to

leverage the internet and improve their internal processes and also to connect with their customers.

6.2.4 TechnologicalIT infrastructure and service sharing has become a key source of growth. Virtualisation, SOA and

SaaS Computing have been a sequence of disruptive innovations in IT. The trends enable more

efficient use of resources and make IT available to the world at a reduced costs and massive scale. As

increasing standardized and industrialised IT services are delivered via the internet they become

repeatable and usable by a wide range of customers. The simplification and consolidation of IT

infrastructure and virtualisation techniques have made present IT systems highly scalable and flexible.

6.2.5 EnvironmentalElectric use of servers and millions of tonnes of electronic waste have made regulators in developed

countries adopt prohibitive measures. This is soon happen in the emerging economies. SaaS based

SaaS computing is a way to reduce the environmental drawbacks and gain from IT infrastructure.

From the users POV SaaS trends will eventually lead to desktops becoming useless as PCs will access

data and applications exclusively online.

6.2.6 LegalThere is an absence of a legal framework even in the US. Vendors have to face regulations depending

on their geography of operation. The legislations remain insufficient in areas like data security,

ownership and location of data confidentiality and intellectual property. But this will not a big

constraint if all parties involved adhere to a common legal framework.

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6.3 Competitor AnalysisMichael Porter’s Five Forces framework has been used to analyze competition to Application on

demand service. This analysis assumes that there are five important forces that determine competitive

power in a situation. These are:

6.3.1 Supplier Power

Supplier will be minor in our service. The only service which needs licenses software is the email and

service. We would be providing archiving and mining facility with licensed products from companies

like Microsoft, Google etc. These companies provide their products on a standard license to a number

of corporate clients. Hence the supplier power will be low in this case. All the other software offerings

will be developed in-house and the hardware will be procured from a highly competitive market.

Hence overall the supplier power will be low.

6.3.2 Buyer Power: 

The cost of switching to some other player in the market will be high for the clients as we will have

the first mover’s advantage in this domain. It will take some time for other large players to offer this

service. Since our market will be Asia with a strong India focus TCS will be able to leverage its

existing client relationships in India to market and sustain this offering. In most cases we will be the

vendor of choice of the clients and this will ensure our continued services for the clients.

6.3.3 Competitive Rivalry 

Competition is bound to get stronger in a few years time as more and more IT services organisations

will start offering this solution to their existing and new clients. TCS being the largest IT services

organisation in India will be able to face this competition better. Since both the messaging and

hardware markets are highly mature and competitive, the impact on supplier’s power will also be

minimal. But the real threat will be pricing competition from other similar players in the future. This

has to be tackled by continuously differentiating our service ahead of the competition.

6.3.4 Threat of Substitution 

This would be the biggest threat for our service. The technology in offsite applications is developing

at a rapid pace. Some other model may be eventually able to substitute the SaaS framework and offer

more value to the consumer. But this will take a considerable time and most changes will be

incremental. Even if a new paradigm is introduced TCS will be able to introduce in the target market

ahead of or with the competition.

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6.3.5 Threat of New Entry

The ability the other players to enter the SME market will be limited. The existing players in the IT

services market will be the best suited to offer this service. This service requires considerable

investment and a large gestation period. Only the large IT companies with the required manpower and

resources will be able to exploit the available opportunities. There will definitely be small players

catering to niche players catering to individual players. But this will be in specific sectors and

geographies and the impact will be limited.

7 Technology acquisitionThere are two ways to go for technology acquisition:

1. Technology transfer

2. Research and development

a. In-house

b. Outsource

7.1 Parameters for Deciding the Method of Technology Acquisition

1. Development / Acquisition Cost: In house software development costs are generally

higher when going for a new domain or new technology. As the company’s expertise

grows, in house R&D costs decrease. TCS is currently not present in Application-on-

demand in enterprise solutions. So, In house software development costs would be

higher. Following are the definitions of the costs mentioned:

a. Acquisition Cost: The cost of licensing the product from a software vendor

b. Development cost: The cost of employing in-house R&D to develop the

product

2. Maintenance and upgradation costs: Maintenance and upgradation costs are lower,

once the product is developed in house. But, the economies of scale achieved by

vendors by selling the same upgrades to multiple customers, makes them offer

competitive prices.

3. Level of technological learning: Level of technological learning will be higher for

enterprise solutions packages like CRM and SCM. This learning can be applied to

develop better and new packages in future also. Email packages are readily available

in the market. The level of technological learning in developing them would be low

and sometimes futile.

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4. Level of organizational commitment: TCS, being an aggressive software solutions

provider, is committed to projects which help it get into new domains and verticals.

The level of organizational commitment is towards projects having high learning

potential.

5. Allows focus on or aids core competence: Similar to the above point, the core

competence of TCS lies in getting into new business and not in areas where most of

the activity has already happened e.g. in email packages.

6. Ability to leverage future potential: Enterprise solutions business is growing in

terms of coverage of industries, number of offerings and medium of offerings (e.g.

on-site, remote or cloud based). The future potential is bright for enterprise solutions.

In contrast, Email packages are in the maturity stage of product life cycle.

7. Expertise level of manpower needed: Expert developers are needed for in house

development. In contrast, only trained configurers are needed in case of technology

transfer.

8. Degree of prior experience needed: Similar to the above point, prior experience

always helps when going for in-house development as it cuts down upon research

costs. But experienced people cost higher.

9. Possibilities of spinoffs providing new business: Possibilities of profitable spinoffs

while working on enterprise solutions is very high as different enterprise processes are

linked with each other.

10. Risk from obsolescence: In house developers always face the risk of obsolescence of

the product or service they are offering. In that case, their prior investment in R&D

comes to a loss (saving the knowledge part). Buyers of readymade solutions are free

from such risk and they can move on to new solutions at their own discretion.

11. Freedom of customization: Freedom of customization is very important when the

end-user is diverse and the product is open to be sold to any customer. The scope of

customization is naturally higher in the case of in-house development and

outsourcing.

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7.2 Choosing among Technology transfer, In-house development and Outsourcing

Following is the methodology for choosing the best option among technology transfer, in-

house development and outsourcing for enterprise solution packages like CRM/SCM and for

email package:

1. Assignment of weightages to the different parameters for decision making based on

the goals and capabilities of TCS

2. Assigning scores – High, low or medium to each of the parameters for options

technology transfer, in-house development and outsourcing.

3. Assigning values to the above scores using the following rules:

a. Score 5 if the option is best for TCS on the parameter.

b. Score 10 if the option is neither best not worst for TCS on the parameter.

c. Score 15 if the option is only moderate good or bad for TCS on the parameter.

4. The option which scores the least in the weighted sum of all scores is chosen as the

right option for TCS.

The following table shows the selection methodology of the best option for technology

acquisition: Decision Matrix

Parameter Wtg.Technology

transferDevelop In-house Outsource

Technology transfer

Develop In-

house Outsource CRM / SCM Package Email Package

Development / Acquisition Cost 15.0% Med (10) High (15) Med (10) Low (5)

High (15) High (15)

Maintenance and upgradation costs 12.0% Med (10) Low (5) High (15) Low (5)

Med (10) Med (10)

Level of technological learning 15.0% Low (15) High (5) Med (10) Low (15)

Low (15) Low (15)

Fit with organizational commitment 7.00% Low (15) High (5) High (5) High (5)

Low (15) Low (15)

Allows focus on or aids core competence 10.0% Low (15) High (5) High (5) High (5)

Low (15) High (5)

Ability to leverage future potential 10.0% Low (15) High (5) Med (10) Low (15)

Low (15) Low (15)

Expertise level of manpower needed 5.00% Low (5) High (15) Low (5) Low (5)

High (15) Med (10)

Degree of prior experience needed 4.00% Low (5) High (15) Med (10) Low (5)

Med (10) Low (5)

Possibilities of spinoffs providing new business 8.00% Low (15) High (5) Low (15) Low (15)

Low (15) Low (15)

Risk from obsolescence 4.00% Low (5) High (15) Med (10) Low (5)High (15) Med (10)

Freedom of customization 10.0% Low (15) High (5) Med (10) Low (15)Med (10) Med (10)

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Total 100% 12.35 7.8 9.9 9.3 13.7 12.05

7.3 Options selected

In house development for CRM and SCM packages Technology transfer through licensing for email package

7.4 Email package: Why Transfer of technology?A few of the reasons for transfer of technology for the email package are

1) There is very little requirement for Research and Development by TCS for the email

package. The acquisition cost is the lowest option in terms of cost options as against

the other options of developing the email package in-house or outsourcing it to

another software vendor.

2) By technology transfer, the email package technology will be available to us in quick

time and can be out on offer as part of our services immediately. Of course the email

packages will be customized to the particular needs of the client but the base package

will be made available almost immediately after the technology transfer.

3) Another reason for technology transfer is that the financial and technical risks

associated with the transfer of technology for the email package are very low.

The Technological Contents of Technology Transfer

20

7.4.1 AtMail Email Package

We have decided to acquire the technology through licensing mechanism of technology

transfer from the transferor AtMail. AtMail sells messaging platforms to enterprises by

licensing them the software. Its messaging platform “ISP server” provides AtMail as a

complete messaging platform for ISP users and Webhosting customers. It provides an email

server with Multi-server License & Clustering and a webmail client. A user license for

unlimited users costs $12,000.

The flow chart for the most significant Issues in Technology Transfer

21

Transferor and Transferee Relationship Grid

7.5 SCM and CRM Packages – In-house R&DEnterprise solutions packages for Supply Chain Management and Customer Relationship

Management need in depth research of the best practices followed in different industries and

sectors. Research also needs to be done for the processes followed in similar packages sold

by competitors like SAP, Oracle, and BAAN.

R&D Effort Portfolio Grid

TCS will provide selective emphasis for the R&D because the core competence of TCS lies

in providing IT services. In IT services companies, the primary emphasis is on providing

software solutions to clients. Dedicated product development (like ISVs) through intensive

22

Low Moderate High

Low

Mod

erat

eH

igh

Prob

abili

ty o

f tec

hnic

al s

ucce

ss

Market opportunity

R&D is pursued only when the capability of the company is very high and so is the market

potential of the product. In the case of TCS, Application-on-demand is an untried territory

and the actual market for the same is still in the early growth phase. Therefore, R&D for

Application-on-demand will receive selective emphasis at TCS.

7.5.1 Research

Applied research in the field of Supply Chain Management and Customer Relationship

Management would need an effort of about 3 months and will involve a team of domain

consultants and project managers who are employees of TCS. The team will be conducting

primary and secondary research and have meetings with potential customers and users of

competitors’ packages.

7.5.2 Development

The development phase will begin with generation of requirement analysis document,

keeping in mind which, the design document for the systems is prepared. Software

development and testing (both alpha and beta) will be done afterwards.

The project team will consist of consultants, project managers, module leads, programmers

and testers, who will work for a period of about 9 months. When the product is ready, the

team size will be reduced to provide only product support and minor enhancements.

The project will need the following resources for development activity:

Software resources: Development platform, database, configuration management

and project management tools

Hardware resources: Desktops, servers and communication infrastructure

Other resources: LAN, internet etc.

8 Segmentation, Differentiation and Targeting Strategies

8.1 Segmentation

Variables 23

Demographic

Size of the Company Micro Enterprises ( Investment upto 25 lakhs )

Small Enterprises (5 crores Medium Enterprises (Investment upto 10 crores)

Type of Industries

(Sample Set Only)

Rice MillsDal MillsSteel Furniture

Power loomSteel Re-rollingRice MillsEngineering & FabricationLeather ProductsRubber ProductsFMCG

Electronic GoodsChemicalsMachine ToolsPharmaceuticals- Bulk DrugsBicycle PartsElectric FansEngineering EquipmentDiesel EnginesFMCG

Geographic

States Andhra Pradesh Tamil Nadu Maharashtra Punjab Uttar Pradesh

Districts AnantpurChittoorEast GodavariGunturWarangal

ChennaiCoimbatoreErodeKarurMadurai

AkolaChandrapurDhuleGadchiroliKolhapurNagpurNashikMumbai

AmritsarGurdaspurJalandharKapurthalaLudhianaPatialaSangrur

AligarhFirozabadNoidaKanpurMoradabadMuzaffarnagar

The Segmentation of the heterogonous market (India being the initial market) has been done into homogenous markets based on demographic variables of industry size, industry Type and geography.

The states and the corresponding districts are chosen depending on the type of industries that we have decided to target during our initial years of launch. The profile of each market segment has been summarized below

24

8.2 Target SegmentsAs suggested in the preceding sections our Product Offerings are

Since micro enterprises in India are constraint by budget allocation for IT and software

systems, we are not targeting them in the initial phase of our product. However it is a

segment which can be looked upon in the near future and India is developing very fast and

technology is transcending boundaries and reaching the hinterlands of the nation. The Latent

demand of this market segment is quite significant to be excluded from our segmentation

considerations. However for the initial years of our operation (3-5 years) we have chosen to

target Market 2 and Market 3 as summarized by the table below. The Target Market selection

strategy used is “Selective specialization”

  M1 M2 M3P1 P2 P3

 25

8.3 DifferentiationDifferentiation Matrix has been presented and summarized below. We have chosen product and service dimensions to operationalize our Differentiation Strategy.

DifferentiationProduct Dimensions Services Dimensions

Features First Movers Advantage Delivery Downloadable from the server and hence delivery is easy and

quick Unique Product

OfferingInstallation Installation automatic and

convenient, suiting the client needs and requirement

Pay per use per user and on the duration of

use

Customer Training

Learning modules and Tutorials Available per software and

downloadable from the company server

Reliability Extremely Good as the products have been

developed by our experienced team

Consulting Service

Superior and Efficient as the service is being provided by one of the best IT companies in India

Design Attractive Software Designs by our expert

engineers

Maintenance and Repair

To be provided by the Company in the paid period. As such not much maintenance and repair

required

8.4 Positioning This product is meant for those who want economic usage of software applications and hence purchase only those applications that they need and at the right time that they want. The client purchases what they want and when they want.

It eliminates compliance issues pertaining to licensing wherein the company now can have unrestricted access to the software.

Convenience in using the applications from anywhere and at anytime makes this a much sought after product which only requires an internet connection and good bandwidth for its functioning.

Companies can leverage on the easy accessibility of latest software for bidding for projects. Companies can get latest updates sent from the company.

26

PERCEPTUAL MAP

Our service offering is a cost effective but high value product

Pricing Policy: The pricing policy to be used for our product offerings is Perceived value based pricing. The pricing would be initially high since we have a first movers advantage for this market and then gradually reduced depending on market competition ( High- Low Pricng

) strategy. The pricing would be based on the value that the client perceives to derive from the product. We would try to maintain a consistent pricing policy for our products depending on the various costs ( NPD cost, marketing and sales cost, etc )

9 Brand name

TCS has followed the policy of naming its services starting with the parent company name.

Thus we suggest a similar method for our product. TCS has very strong brand equity and thus

one can understandably leverage from the parent brand to the maximum extent to create a

positive association for the new brand in the minds of customers. The basic branding rules

kept in mind are:

The name should be simple and easy to pronounce.

It should be suggestive of product category and unambiguous.

27

Low Use-value

High Use-value

High PriceLow Price

It should spell the way it is read to avoid any confusion

Legality should be checked for and also care should be taken to check the translation

(to suit the sensibilities of other nations)

Based on these rules and feedback from our peers who have worked in this industry, we

chose the name ‘TCS Samadhan (ITES Applications-On-Demand)’

10 Integrated Marketing Communication

IMC is the communications mix adopted by a company to derive synergies from the various

types of marketing communications available. Communication is one of the most important

and vital aspect of an organization's strategy. An organization can have the best or most

innovative of products or services, but if they can’t communicate about it to its customers, the

community is bound to be doomed. For a B2B product like ours it is essential to

Communicate in a manner so as to motivate and make eminent sense for hard core technical

people to adopt usage of the product for their applications. A rational approach highlighting

the benefit of the service or the product is essential. When planning for Integrated Marketing

Communication strategy it is essential to gauge the potential customer’s expectations by

inviting their views and having informal discussions. It is also essential to ensure direction,

clarity, consistency, timing and appearance of messages, conveyed to the targeted audience in

all the communication channels

There are five basic tools of integrated marketing communication and given below is the way

we would employ them:

1. Advertising: Advertising convey the company’s messages to large audiences efficiently

through such avenues as TV, radio, Trade Magazines, Newspapers (ROP), Internet,

Billboards and other mobile technological communication devices. For our product we

would be using print media in form of Industrial/ Trade Magazines like Network World,

Business world, Data- Quest etc so that we efficiently reach our target customers. The

deciding factors of these are: reach to target customers, facilities of online and print

publication and circulation and putting white papers and articles along with ads, ad rates,

etc.

28

We will also use Business Newspapers in the launch period. We would also use e- mailers

and blogs featuring technology products. Testimonials of satisfied customers would be

displayed on the site. The advertisements would be informative where following

information would be covered:

Application of the product

Technical literature to support claim

Cost and economy

Availability

Offer of more information or demonstration

Installation service/commercial use trial

After sales service assurance

Company name and address

This tool will ensure that the basic awareness is built amongst the buyers or influencers.

Leading Analysts (from the domain) will be called to deliver talks and give credible

testimonials/opinions about our service, after demonstrating its features. The same will be

shared with Independent Research Bodies like IDC, Forrester, etc. Apart from magazines, the

White papers would be published in relevant trade and information journals like The

International Journal of Computer Science and Software Technology, etc. Webinars and

Webcasts can be hosted and supported through TCS’s site and online banner ads can be used

for publicity. For more Details on Advertising and Communication mediums please refer to

annexure.

2. Sales Promotion: Coupons, contests, samples, premiums, demonstrations, displays and

incentives are deployed to induce trial in this kind of tool. It is used to accelerate short-

term sales. For our product we may have trial versions to promote trial.

3. Public Relations: This integrated marketing communications tool is initiated through

public appearances, news/press releases or event sponsorships, to build trust and goodwill

by presenting the product, company or person in a positive light. We would use it for our

product during the launch wherein the company spokesperson would talk about the

product to the media. Corporate blogs would be used to get open feedbacks and for

sharing valuable insights about the product.

4. Direct Marketing: This tool will utilize email, mail, catalogs etc. to reach targeted

audiences and existing customers.

29

5. Personal Selling: Personal selling would be one of our main strategies to market the

product. This strategy involves setting sales appointments and meetings, making

presentations, giving demos and having one-to-one interaction with consumers. For a

product like ours it is essential to tell the prospective customers about tangible benefits

flowing out of the product. A financial analysis and comparison of the various options the

client has and our product would be made to the client. These comparisons and financials

would be backed with reliable sources. Exact technicalities and after sales service would be

emphasized upon.

Relationship building which is TCS’s specialty is best served through this medium.

Setting up of sales force: Considering that recruiting and training Direct sales force is a

costly affair, we would be using the existing sales force by adequately training them

about the new offering.

Both Demand Generation and Lead Generation would be equally emphasized upon by the

sales force. Leads would need to be carefully followed by the sales force.

10.1 Media planning and budgetingPlease refer to Annexure 1 -7 for complete details of media budgeting and planning.

11 Projected financialsProjected profit / loss statement:

P\L (All figures in Rupees) 30% 30% 30%Revenues 2,184,797,451.07 2,840,236,686.39 3,692,307,692.31 4,800,000,000.00 less cost of revenue 300,000,000.00 300,000,000.00 300,000,000.00 300,000,000.00 gross profit 1,884,797,451.07 2,540,236,686.39 3,392,307,692.31 4,500,000,000.00 operating expenses sales and distribution 20% 436,959,490.21 568,047,337.28 738,461,538.46 960,000,000.00 marketing 5% 109,239,872.55 142,011,834.32 184,615,384.62 240,000,000.00 administrative ohds 15% 45,000,000.00 45,000,000.00 45,000,000.00 45,000,000.00 EBIDTA 1,293,598,088.30 1,785,177,514.79 2,424,230,769.23 3,255,000,000.00 depreciation 20% 40,000,000.00 40,000,000.00 40,000,000.00 40,000,000.00 amortisation 13,471,490.00 13,471,490.00 13,471,490.00 13,471,490.00 EBIT 1,240,126,598.30 1,731,706,024.79 2,370,759,279.23 3,201,528,510.00 net interest 10% 16,041,447.00 16,041,447.00 16,041,447.00 16,041,447.00 EBT 1,224,085,151.30 1,715,664,577.79 2,354,717,832.23 3,185,487,063.00 Tax 30% 367,225,545.39 514,699,373.34 706,415,349.67 955,646,118.90 Earnings 856,859,605.91 1,200,965,204.46 1,648,302,482.56 2,229,840,944.10 dividend % 5% 42,842,980.30 60,048,260.22 82,415,124.13 111,492,047.21 retained earnings 814,016,625.62 1,140,916,944.23 1,565,887,358.43 2,118,348,896.90

Please refer to Annexure 8 for complete details of projected financials.

30

12 References http://www.siliconindia.com/shownews/TCS_focuses_SME_sector_to_offer_ITaaS-nid-

49365.html

SME Study 2008 By Microsoft and AMI-Partners

http://www.gartner.com/it/page.jsp?id=625809

http://www.mindtools.com/pages/article/newTMC_08.htm

http://reseller.co.nz/reseller.nsf/news/8C3D1121E942B8E2CC2573AC006C238D

http://www.bizxchange.in/u47/S-16P-16A-2009102220091022161114937f305ac1eT-16N-/IT-

Zone-Feature-Article.html

13 Annexures

13.1 Annexure 1

Magazine Magazine's online link Targeting Audience

CRN www.channelweb.com Mainly Europe-Asia but online the most accessible

EE Times www.EETimes.com Senior industry executives, project managers, and other business decision makers at various technical related companies

Network-world www.networkworld.com IndiaData Quest http://dqindia.ciol.com/ IndiaBusiness World

http://www.businessworld.in/ India

13.2 Annexure 2Advertising Rate Card ( as given in Business world)

Type Tariff (in US$)   Regular Positions  Double Page Spread US$ 2,900Full Page US$ 1,500Half Page US$ 10,001/3rd Page Vertical Outer US$ 7751/3rd Page Product Flash US$ 650   Cover Positions  Inside Front Cover US$ 2,000Inside Back Cover US$ 2,000Outside Back Cover US$ 2100   Special Positions  1. Corporate Showcase  a. 8-Pages, with flash on front cover US$ 7,450b. 4-Pages US$ 4,850

31

   2. Gatefold  a. Cover: 2-Pages US$ 3,850b. Inner: 2-Pages US$ 4,200   Other Positions  Page facing 'Contents' US$ 14,00   

13.3 Annexure 3

JournalsURLS

IEEE Publishing http://www.atilim.edu.tr/~smisra/IJCSST/index.html

The International Journal of Computer Science and Software Technology (IJCSST) http://www.ieee.org/web/publications/home/index.html

13.4 Annexure 4

Analysts Details

Mr. Scott Lundstrom

IDC, Vice President Research, Regular speaker on future of IT and Software integration in business

Mrs. Judy Hanover

IDC, Research manager for Industry Insights' , Software services provider practice

Mrs. Laura Ramos

Forrester, Vice President, Principal Analyst, serves Technology Product Management & Marketing professionals and primarily conducts research for Forrester's clients who are business-to-business (B2B) marketers.

13.5 Annexure 5

Independent Research BodiesIDCDATAMONITORFrost and Sullivan Cutting Edge InformationForresterGartner

Few Observations

DataMonitor has maximum number of reports, surveys etc. on Software sharing and implementation topics

TCS has partnership with Frost and Sullivan and this partnership can be leveraged

32

13.6 Annexure 6

13.7 Annexure 7

Media Planning and budgeting excel.

13.8 Annexure 8

Projected financials for the project:

13.9 Annexure 9

13.9.1 Market Research

A small market research was undertaken for the purpose of the project. The relevant details of the research have been presented below.

Methodology Used: Qualitative Survey with the help of a semi structured questionnaire

Sampling Plan

Sampling Unit: Respondents comprised of software engineers from TCS, Infosys, Wipro and Mahindra Satyam (formerly Satyam)

Sample size: 30 respondents33

4

S.No Event/ Seminar/ Trade show Date Location

1

2

3

7th Annual Software Services Invitational by IT Executive and Meetings & Conventions magazines

16th International Process Software Integration Seminar

Jan 4, 2010 - Jan 10, 2010 Bangalore

Hyderabad

New DelhiRole of Integrattion of Software-Systems: A Panel Discussion

April 11 - 12, 2010The New advents of Software development and sharing: Trade Show Bangalore, Palace Grounds

February 22- 24, 2010

Jan 14-17, 2010

Sampling Technique: The respondents who have worked and who are currently employed

in IT companies were administered a semi structured questionnaire to derive the key

variables and gain insights into our service offering. The respondents were initially exposed

to our service offering concept and then interviewed in an semi structure type interview.

13.9.2 Semi structured Questionnaire

Name:

Age:

Sex:

QUESTIONS:

1. How do you perceive the value of online cloud computing software, online

applications usage vis-a-vis onsite usage of applications?

2. What are the problems associated with onsite computing infrastructure?

3. What features would you look for in on-demand enterprise solutions?

4. What are the types of applications which you would recommend us as suitable

product offerings?

5. What type of industries do you thing this product can be targeted at?

6. Which industries do you think would have a latent demand for the product offerings

that you mentioned?

7. Why do you think these types of industries would have or would demand for the

mentioned service offerings?

8. What are your recommendations about the technology to be used for your mentioned

service offerings?

9. Which are the possible sources of such technology and suggest some cost effective

ways to acquire it?

10. Any particular inputs about the marketing and promotional strategies to be used for

our service offerings

11. What are your current reading habits? Entertainment options?

12. Please share your inputs on ideal media class (magazines or television etc) and the

media vehicles (which type of magazines/television programs) to be used to advertise

and promote our service offerings?

34