CRM Market in India – A silver lining for CLOUD?

Executive Summary

Zinnov
December, 2010

Zinnov Confidential. No part of this report can be circulated, quoted, or reproduced for distribution without prior
written approval from Zinnov.
 On-Demand CRM is gaining ground in India

Company Business Models in India

Hosted On-
Premise
• Most of the companies are exploring the
Hosted On- best marketing medium including new media
Premise
marketing channels such as online seminars,
online demos, blog to drive the volume of
On-
Hosted
Premise inquiries and leads

Hosted
• Though Tier-I cities has a significant share,
Tier-II cities are now emerging as the
destinations for CRM providers to sell CRM
Hosted solution

• The demand for CRM solutions in India is

On-
Hosted likely to be driven by both the large
Premise
organizations and SMEs
Hosted

Hosted

2/16/2011 11
 On-Demand CRM is gaining ground in India

Company Business Models in India

The On Demand CRM market in India is extremely nascent
with a total market size of USD 16-18 million. With the market
Hosted On- being so nascent, there are a couple of early movers who have
Premise
cornered a large share of the market.

Hosted On-
Premise
Salesforce.com
, 45%
On-
Hosted Others, 31%
Premise

Hosted

Hosted

On-
Hosted
Premise

SageCRM, 4%
Hosted

Rightnow, 11%
Hosted Netsuite, 9%

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 Zinnov ran a survey to understand the market potential for cloud based CRM
solutions among Indian SMBs

Current Survey Our

Pain Points findings

Poor IT adoption Current Scenario

IT adoption remains to be Target Audience • Methods in practice
dismal in Indian SMB 403 Indian SMBs • Challenges
landscape • Technology adoption
Verticals addressed
• Manufacturing
• Hospitality
• Media
• Real Estate
Perception around CRM • Finance Future potential
Indian SMBs place CRM • Logistics • Changing value perception
solutions on really low priority • Cloud awareness
Size (employees)
• 1-100
• 100-500
• 500-1000
• 1000-1500

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 Survey was focused on gaining insights around CRM adoption in India;
majority of the respondents were SMBs

Vertical Distribution of survey Distribution by number of Employees

sample

SMBs – firms
Logistics 6%
with less than
Finance 7%
1000
Real Estate 7%
employees
Media & 8%
Entertainment
53%
Hospitality 19%

26%

Manufacturing 52% 13%

5% 3%

1 to 100 employees 100 to 500 500 to 1000 1000 to 1500 1500 and above
employees employees employees employees

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 For most Indian SMB’s , IT adoption means Basic Solutions;
Finance/Accounting is adopted by less than a third

Basic Solutions

98% 98%
75%
CRM Users
CRM Non-Users 29%

25%

Communication Collabration Finance/Accounting

CRM tool is still a new concept among small and medium sized businesses in India

• As high as 63% of Indian mid sized businesses (100 to 1000 employees) have not adopted CRM solutions
• The non-adopters percentage further goes up with small sized businesses (Less than 100 employees)
• Communication (e-mail, chat, conferencing ) and collaboration (Documentation, Spreadsheet, etc.) are
the only solutions adopted by Indian companies.
• Majority of non-users believe that they don’t need CRM solutions since they are self sufficient in
managing their relationships on E-mails/ mail clients, Spreadsheets, etc.

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Other solutions are still in the early stages of adoption

IT solutions adoption CRM adoption across verticals

Communication 98%
60% 57%
Collaboration 98% 46%

Finance & Accounting 29%

13% 13%
Order Processing and 6%
7%
Customer Management

Procurement(SCM) 7%

Centralized System(ERP) 4%

Pressure from competitors has very little role to play in CRM adoption in companies

• Key reason cited for adoption of CRM tool is that it helps in streamlining and managing the processes in a
better manner
• Strengthening customer relationship and push from the customer were other important reasons cited for
adoption of CRM
• Verticals such as logistics and finance have understood the importance of CRM technology as customer
retention is of prime importance hence adoption is significantly higher as compared to other verticals

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 CRM is an essential part of the core business process and most SMB’s with
salesforce>10 people prefer to adopt CRM solutions

Sales and Marketing teams create a

47% strong case for adoption of CRM
CRM Users

• Companies find maximum beneficial

22%
19% impact of CRM in marketing and lead
12% management, customer service and
maintaining customer accounts

1 to 2 3 to 5 6 to 12 more than 12 • Half of the CRM users cited that

demand from sales and marketing
0%
team led them to adopt CRM
solutions

21% • All CRM users believed that CRM

25%
helps them increase the overall
effectiveness of the team

45% Non-users

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Existing CRM users see value around reliable (high brand value) and highly
usable solutions which provide easy access to information

Value perception of CRM Only a third of users perceive CRM

to be a complete/integrated
solution
Affordability
•Affordability of the product
surprisingly does not play a major role
Scalability High Usability
according to both the users as well as
non- users of CRM technology
Medium
•Almost all of CRM users cited
Low reliability as a decision criterion for
Totality Reliability finalizing the CRM solution

•Ease of use and access to information

were cited a criteria for finalizing the
solution by 56% and 69% of CRM
users respectively
Flexibility Accessibility
• Non-adopters associate very little or
no value of CRM tool in terms of
Credibility
credibility which is a total mismatch
with respect to the expectations of
Value for CRM User
users on this aspect
Value for Non-User

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 On- premise CRM solutions have high brand recall among both users and non-
users

Brand preference for software solutions CRM Brand Awareness

96% 96% 96%
73%

27%

4% 7%
1% 3%
Prefer to use known/tested Ready to try new brands
brands SalesForc
SAP Microsoft Oracle Ramco NetSuit Others
e.com

3% 2% 1% 1%

38%
62% 67%
82%
92%

Non-Users of CRM do not have any brand preference

• On-premise solution providers like SAP and Microsoft are better positioned to adopt and even sell cloud
offerings better when compared to online customers due to already existing brand recall in the market
• Non-users of CRM do no have any preference for known and tested brands for CRM solutions and ready
to try new brands as long as they can provide value
• SAP pips Microsoft for a higher brand recall among the non-users of CRM solutions

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Most of the vendors have localized their messaging for India market

Microsoft Impel Oracle Zoho SageCRM Salesforce. NetSuite K-Serve

com

Localised Messaging      

Blogs/ Discussion Forums      

Website based Awareness

Pricing Currency on Website USD INR USD USD INR USD USD INR
Online Free Trials       

Welcome/Introduction Mail      

Follow-up call post registration    

Microsoft/Oracle are trying to create a value proposition for CRM among non-users

• Microsoft and Oracle have websites that build awareness around CRM solutions/ value proposition
• Training/ demo is not provided by most vendors
• INR pricing is followed by only Indian vendors

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Cloud vendors have not done enough to promote awareness and hence cloud
computing/SaaS is still a new terminology for majority of users and non users

Preferred platform for CRM solution Awareness of cloud computing

Cloud Opportunity
80%
1%

99%

Yes
20%
No
0%

Desktop Application Web Browser Mobile

Browser/Application

Cloud market continues to play low despite huge potential

• Around 3/4th of respondents are currently using desktop applications to access CRM solutions
• Cloud computing is yet to gain awareness and acceptance in Indian market
• Half of companies got the solution customized to their processes but only a fourth companies have
solution integrated with other applications used in the firm

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 IT heads are key influencers for CRM adoption and 3/4th of non-users don’t
have one!

CRM Non-Users CRM Users

10%

27%
Presence of IT heads in firm
73%
90%
Yes Yes
No No

Key influencers in decision making

18% IT Heads 87%

48% Partners of Firm 61%

6% Sales & Marketing 5%

3% Need based 2%

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Traditional marketing (cold calls and viral) techniques are unable to bring
about awareness
Source of information regarding the current solution

24%

17%

13%

1%
0%

Word of mouth Cold e-mail from vendor Internet Surfing Suggested by customer Seminar/Workshop

CRM vendors are trying new methods to create awareness around CRM
• Digital / Online marketing channels are less effective among SMBs due to very low Internet penetration
• Word of mouth/peer references are highly effective marketing techniques
• Companies are leveraging existing social networks like Facebook, LinkedIn etc. to create online
communities for branding

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Most SMBs prefer direct (physical) channels while Cloud vendors are looking
at digital channels

Preferred Channel for purchasing IT solutions Procurement Channel for CRM solutions

93%
Non-Users CRM Users
90%

7%
1% 1% 0%
2.7% 2.7% 1.4%
Channel Hardware Local ISV Others Online
Direct Selling Online Hardware Others Partners Reseller
Reseller

CRM vendors are trying new methods to create awareness around CRM
• Cloud CRM vendors are directing sustained efforts to educate the market about the benefits of Cloud
Computing
• Cloud vendors also organize seminars and workshops to bring about awareness but these techniques
are less effective than channel partner initiatives
• Companies regularly conduct training to acquaint the channel partners with the product offerings
and aid them in selling cloud offerings

Source: Analysis of “Zinnov Survey of Select Verticals (Sample size – 403)”

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 Zinnov suggests a three pronged approach to CRM solution providers

Know Your Customer Create Awareness

• Majority of the CRM users firms have size
of about 100-500 employees
• Non-users of CRM have very little
preference for brand therefore cloud
vendors have a huge opportunity to sell
their solutions
• Vendors need to create awareness around
how CRM can help firms build relationship
Recommendations with their repeat customers
• Showcase few case studies of firms that
have found CRM being effective in
improving their processes

Sell Right

• Awareness around utility and advantages of CRM tool needs to be created among
Sales and Marketing team in firms since they are the end users of the CRM
solution.
• IT heads are the key influencers in decision making about IT deployment and
therefore need to be targeted effectively for selling the CRM tool

Source: Zinnov Analysis

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 About Zinnov: Zinnov is a management consulting company with a focus on 1
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helping organizations globalize their business

• Started in 2002 with a focus on helping technology organizations globalize their

operations
Evolution • Global offices in Santa Clara, Bangalore, Houston, Gurgaon and Mumbai
• Assisted over 225 clients in their globalization initiatives

Focus Areas R&D Innovation Cloud SMB People

Global Technology Global System Industry

Customer Type Governments
Firms Integrators Associations

Growth Customer GTM Ecosystem Globalization

Service offering Strategy Insights Strategy Connect council

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 For additional information, contact….

Thank you

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www.zinnov.com

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