Referrals have worked in the favour of Microsoft, Kaushal added. For instance, Consolidated Carpet Industries Ltd, with revenues of Rs40 crore, deployed Microsoft’s ERP suite in April last year after it saw several of its clients using the Microsoft product, branded Dynamix. “We did look at other vendors but were comfortable with Microsoft’s ERP, which has helped us reduce workload and increase productivity,” said Sanjay Aggarwal, chief financial officer at the New Delhi firm that plans to roll out a Microsoft customer relationship management or CRM software by May.
While both SAP and Oracle have been in the ERP business since the mid-1990s, Microsoft entered the market only a couple of years ago with the launch of the Microsoft Dynamix suite. A version of it for SME customers contributes 70% of the company’s ERP business. By the end of the year, the company expects demand for its software to be less skewed in a 60:40 ratio.
“We feel we entered at the opportune time when the small and mid market was just opening up and they needed software that was flexible and could easily adapt to their own systems. The segment was untapped and had huge potential,” said Sushant Dwivedy, director for business solutions at Microsoft India.“We have good adoption of ERP in the manufacturing, auto and textile sectors.”
Microsoft’s increasing focus on offering software as a service (where customers pay for the services they use as against buying expensive licences), will also help the company grow its share of the market, analysts say. “Around 5% to 10% of our customers currently prefer the hosted mode of buying software. In three years, we see a 50:50 ratio between hosted and licence customers,” Dwivedy said. The hosted service offers “an economical, value-for-money” option and will be increasingly adopted by SME customers in the months ahead, IDC’s Sengar said.
Overtaking Oracle and coming at par with SAP, however, might not be an easy task for Microsoft which has a share equal to that of the German software firm among SME clients. “The big challenge for Microsoft is the strong SAP brand that has much wider coverage and is also very aggressive with its pricing,” Sengar added.
SAP has more than 30,000 small and midsize customers globally, representing more than 70% of its total customer base. “We have in many ways created the ERP category in India and are globally targeting to reach 100,000 customers by 2010, riding on the SME segment,” said Nagaraj Bhargava, vice-president marketing at SAP India, which plans to launch an hosted offering —SAP Business ByDesign—for SMEs in India in the next three-four months.
Oracle’s focus on the SME started last year with the launch of its ‘Accelerate’ program for partners servicing mid-sized companies. At the end its fiscal year ended May 2007, the California, US-headed firm had more than 700 application software customers in India. The firm said its applications allow customers to scale up easily when they grow fast. “SMEs with high growth plans see this as a differentiator. Competing applications do not offer that,” said Nitin Paranjape, director Oracle applications at Oracle India.