December 28

Application On Demand 2009

Business tools for the low IT penetration SME sector in Asia, with
Final
special emphasis on the Indian market
Project
submission:
Business to
Business
Submitted To:-
Dr.Saji Nair 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............................................................7

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

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

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

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

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

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

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

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

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 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...................................................................................................... 19

7.3 Options selected.........................................................................................20

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

7.4.1 AtMail Email Package............................................................................21

7.5 SCM and CRM Packages – In-house R&D.....................................................23

7.5.1 Research...............................................................................................24

7.5.2 Development........................................................................................24

8 Segmentation, Differentiation and Targeting Strategies...................................24

8.1 Segmentation.............................................................................................24

8.2 Target Segments........................................................................................26

8.3 Differentiation.............................................................................................27

8.4 Positioning ................................................................................................. 28

9 Brand name ..................................................................................................... 29

10 Integrated Marketing Communication ............................................................29

10.1 Media planning and budgeting..................................................................31

11 Projected financials.........................................................................................32

............................................................................................................................ 32

12 References...................................................................................................... 32

13 Annexures.......................................................................................................32

13.1 Annexure 1............................................................................................... 32

13.2 Annexure 2............................................................................................... 33

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13.3 Annexure 3............................................................................................... 33

13.4 Annexure 4..............................................................................................33

13.5 Annexure 5..............................................................................................34

13.6 Annexure 6............................................................................................... 34

13.7 Annexure 7............................................................................................... 34

13.8 Annexure 8............................................................................................... 34

13.9 Annexure 9............................................................................................... 35

13.9.1 Market Research.................................................................................35

13.9.2 Semi structured Questionnaire...........................................................35

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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 Services

We 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

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 • Cloud based Email archiving
• 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 Political
As 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 Economic
Due 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 Social
The 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 Technological
IT 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 Environmental
Electric 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 Legal
There 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 Analysis
Michael 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 acquisition
There 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.

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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.

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.

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 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.

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

Technol Develo Technol Devel

ogy p In- Outsou ogy op In- Outsour
Parameter Wtg. transfer house rce transfer house ce
CRM / SCM Package Email Package
Development / High Med High
Acquisition Cost 15.0% Med (10) (15) (10) Low (5) (15) High (15)
Maintenance and High Med
upgradation costs 12.0% Med (10) Low (5) (15) Low (5) (10) Med (10)
Level of
technological High Med Low
learning 15.0% Low (15) (5) (10) Low (15) (15) Low (15)
Fit with
organizational High Low
commitment 7.00% Low (15) (5) High (5) High (5) (15) Low (15)

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 Allows focus on or
aids core High Low
competence 10.0% Low (15) (5) High (5) High (5) (15) High (5)
Ability to leverage High Med Low
future potential 10.0% Low (15) (5) (10) Low (15) (15) Low (15)
Expertise level of High High
manpower needed 5.00% Low (5) (15) Low (5) Low (5) (15) Med (10)
Degree of prior High Med Med
experience needed 4.00% Low (5) (15) (10) Low (5) (10) Low (5)
Possibilities of
spinoffs providing High Low Low
new business 8.00% Low (15) (5) (15) Low (15) (15) Low (15)
Risk from High Med High
obsolescence 4.00% Low (5) (15) (10) Low (5) (15) Med (10)
Freedom of High Med Med
customization 10.0% Low (15) (5) (10) Low (15) (10) Med (10)
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

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

High
Probability of technical
Moderat
e
success
Low

Low Moderate High

Market
opportunity

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
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
23
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
24
Demographic
Size of the Micro Small Enterprises (5 Medium Enterprises
Company Enterprises crores (Investment upto 10
( Investment crores)
upto 25 lakhs )
Type of Rice Mills Power loom Electronic Goods
Industries Dal Mills Steel Re-rolling Chemicals
Steel Furniture Rice Mills Machine Tools
(Sample Set Engineering & Pharmaceuticals- Bulk
Only) Fabrication Drugs
Leather Products Bicycle Parts
Rubber Products Electric Fans
FMCG Engineering
Equipment
Diesel Engines
FMCG

25
Geograph
ic
States Andhra Pradesh Tamil Punjab Uttar
Nadu Maharashtra Pradesh
Districts Anantpur Chennai Akola Amritsar Aligarh
Chittoor Coimbator Chandrapur Gurdaspu Firozabad
East Godavari e Dhule r Noida
Guntur Erode Gadchiroli Jalandhar Kanpur
Warangal Karur Kolhapur Kapurthal Moradabad
Madurai Nagpur a Muzaffarnag
Nashik Ludhiana ar
Mumbai Patiala
Sangrur

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

8.2 Target Segments

As suggested in the preceding sections our Product Offerings are

26
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 M3
P1  
P2  
P3  

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

Differentiation
Product Dimensions Services Dimensions
Features First Movers Delivery Downloadable from the
Advantage server and hence delivery
is easy and quick
Unique Product Installation Installation automatic and
Offering convenient, suiting the
client needs and
requirement
Pay per use per Customer Learning modules and
user and on the Training Tutorials Available per
duration of use software and
downloadable from the
company server
Reliability Extremely Good as Consulting Superior and Efficient as
the products have Service the service is being
been developed by provided by one of the
our experienced best IT companies in India
team

27
Design Attractive Software Maintenance To be provided by the
Designs by our and Repair Company in the paid
expert engineers 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.

PERCEPTUAL MAP

Our service offering is a cost effective but high value product

High Use-value

Low Price High Price

Low Use-value

28
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.
• 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

29
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.
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
30
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.
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 budgeting

Please refer to Annexure 1 -7 for complete details of media budgeting and planning.

31
11 Projected financials
Projected profit / loss statement:

P\L(All figures in Rupee

Revenues
less cost of revenue
gross profit
Please refer to Annexure 8 for complete details of projected financials.

12 References
•

•
operatingexpenses
http://www.siliconindia.com/shownews/TCS_focuses_SME_sector_to_offer_ITaaS-nid-
49365.html
SME Study 2008 By Microsoft and AMI-Partners

sales and distribution

• 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
•

marketing
http://www.bizxchange.in/u47/S-16P-16A-2009102220091022161114937f305ac1eT-16N-/IT-
Zone-Feature-Article.html

13 Annexures

administrative ohds
13.1 Annexure 1
Magazine Magazine's online link Targeting Audience

EBIDTA
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 India

depreciation
Data Quest http://dqindia.ciol.com/ India
Business http://www.businessworld.in/ India
World
32

amortisation
13.2 Annexure 2
Advertising Rate Card ( as given in Business world)
Type Tariff (in US$)

Regular Positions
Double Page Spread US$ 2,900
Full Page US$ 1,500
Half Page US$ 10,00
1/3rd Page Vertical Outer US$ 775
1/3rd Page Product Flash US$ 650

Cover Positions
Inside Front Cover US$ 2,000
Inside Back Cover US$ 2,000
Outside Back Cover US$ 2100

Special Positions
1. Corporate Showcase
a. 8-Pages, with flash on front cover US$ 7,450
b. 4-Pages US$ 4,850

2. Gatefold
a. Cover: 2-Pages US$ 3,850
b. Inner: 2-Pages US$ 4,200

Other Positions
Page facing 'Contents' US$ 14,00

13.3 Annexure 3
Journals
URLS

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 IDC, Vice President Research, Regular speaker on future of IT and Software
Lundstrom integration in business
Mrs. Judy IDC, Research manager for Industry Insights' , Software services provider

33
 Hanover practice
Forrester, Vice President, Principal Analyst, serves Technology Product
Mrs. Laura Management & Marketing professionals and primarily conducts research for
Ramos Forrester's clients who are business-to-business (B2B) marketers.

13.5 Annexure 5
Independent Research Bodies
IDC
DATAMONITOR
Frost and Sullivan
Cutting Edge Information
Forrester
Gartner

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

13.6 Annexure 6

S .N o
13.7 Annexure 7
Media Planning and budgeting excel.

Media Plan.xls

1
13.8 Annexure 8
Projected financials for the project:
7 th A n n u a l S o
34
 Projected
financials.xls

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 respondents

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?
35
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?

36