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This presentation talks about the Important Characteristics of the Software Product Industry, Why India needs The Software Products Industry. Indian Software Product Industry touches 3m small enterprises today. It will touch 30m enterprises – small businesses, rural schools, primary healthcare centers, small farms, etc. - in 10 years
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iSPIRT – Indian Software Product Industry Round Table is a non-profit think tank formed by leading practitioners of the industry to assist in the cause of building a healthy, globally-competitive and sustainable industry. Visit www.ispirt.in for more details.
India as a Product NationThe Next Google can come from India
June 2014
Simplifying Terminology
SoftwareProductsSoftwareProducts
Telecom Services
Software Services
Restaurants
Auto AncillaryPlant
Telecom Equipment
OnlineContent
Taxi Services
E-commerceStartups
Defense
Aerospace
TechIndustry
AllStartups
TechStartups
Digital Industry
Product StartupsProduct Startups
Software Product Industryis at the intersection of “Tech Startups” and “Product Companies”
Industry ViewEntrepreneurship View
22
Important Characteristics of the Software Product Industry
33
SCALABILITY. Cost of production is low and business scales rapidly once the product is
established.
VALUATION. Markets value Product Companies farhigher than others, due to the non-linear
scalability and Intellectual Property
REGENERATING. One successful company spawns many more for service, support, distribution, etc. into a recursive growth
POTENTIAL. Innovation and new product development has endless potential, once
mastered.
Software Product Industry
A brief Introduction to the industry. Establishes the power of the industry and its potential for value creation.
44
What is the Software Product Industry?
55
* The Neti Neti (Not-this, not-this) definition has been traditionally popular in India, in defining a concept as distinct from other known or established ones
Tailor who can make shirts Ready-made shirts makers
SERVICE INDUSTRY PRODUCT INDUSTRY
Software products are not IT Services* IT services companies are like tailors who can either
stitch custom suits or alter a standard design for the client.
Software product companies make readymade suits (mass production). People select the suit they like, try it for fit, and buy it on the spot.
Distinct Business Model
As distinct as the Airlines (people moving service)
and Aircraft (enabling Airlines) industry
66
SERVICE INDUSTRY PRODUCT INDUSTRY
Service Industry is built on other people’s Products
77
TCS
GlobalServices
Company
Infosys
SAPOracle
Microsoft
Customers(India & Aboard)
Global Customers
Impact:
Viability and market success of products
is mainly established by adoption by customers,
particularly in Winner-take-all software product market
Growing Service = Growing Product Adoption =Growing Value Creation.
88
Airtel
Verizon
AppleSamsung
Cisco
IndiaCustomers
USCustomers
Product Flow
Value Flow
Recent Example:
WhatsApp bought by Facebook for $19 Billion
Over $40/user. Had substantial Indian user base.
Same price/user paid to Hotmail by Microsoft in 1997.
99
Trends indicate gradual, global
shift from custom-made
(expensive to build-own) to
mass-customized. Investments
into products is accelerating
world over.
Brand creates value.
Branded Products capture value
1010
Apple prints “Designed by Apple in California” on the back of
every iPod and iPhone it sells, sometimes in a ridiculously tiny
font size
Foxconn the leading manufacturer of Apple* products gets $8 Per iPhone**. Apple, the owner of the design and Intellectual Property has $319 in
operating margin per iPhone.
* http://www.technobuffalo.com/2014/03/28/foxconn-credits-apple-with-13-profit-bump-in-2013/ ** http://www.slate.com/blogs/moneybox/2012/09/25/foxconn_getting_by_on_8_per_iphone.html
Why India needs The Software Products Industry
The Macro-economic argument
1111
1212
Electronics Defense
Software
Communications
The Software Product Industry is the enabling
industry for many sectors
Innovation and Software Products are deeply Linked
1313
in many ways
The fastest pace of innovation happens in the tech world
The fastest pace of innovation happens in the tech world
Innovation leads to Intellectual Property (patents) and further leads
to product development
Innovation leads to Intellectual Property (patents) and further leads
to product development
Software Products are the quickest way to deploy innovation at scale
Software Products are the quickest way to deploy innovation at scale
Software Product Startups> Entrepreneurship >> Competitiveness
1414
Most new startups in India are software product startups
Increased consumption of innovative technology at an affordable cost
They solve important problems of small enterprises and consumers
Other industries too becomes globally competitive and attain scale
India takes its place in the world
Product imports are growing faster than Services exports
1515
Growth in Indian
IT Services
Exports to Slow
Down**
Nasscom. 2012
Growth in Indian
IT Services
Exports to Slow
Down**
Nasscom. 2012
India electronics import bill could
surpass oil* - senior advisor
Govt. of India
India electronics import bill could
surpass oil* - senior advisor
Govt. of India
* http://www.reuters.com/article/2011/11/13/india-wef-electronics-idUSL3E7MC08E20111113** By John Ribeiro, IDG News Service. http://www.pcworld.com/article/249598/growth_in_indian_it_services_exports_to_slow_down_says_nasscom.html
Now, the need to play the Product innings
1616
Natural ResourcesIron-ore, marble, etc. (unfinished)Leather, gems, etc.(semi-finished)
Body shopping (human)
Natural ResourcesIron-ore, marble, etc. (unfinished)Leather, gems, etc.(semi-finished)
Body shopping (human)
Made-in India ServicesTelecom (Airtel)Airlines (Indigo)
SW Services (Infosys)Hospitals (AIIMS)
Made-in India ServicesTelecom (Airtel)Airlines (Indigo)
SW Services (Infosys)Hospitals (AIIMS)
Made-in-India ProductsDefense
AerospaceElectronics
Software Products
Made-in-India ProductsDefense
AerospaceElectronics
Software Products
First innings
Second innings
NOW! Third innings
Need to build Higher-value Export Portfolio
Transforming IndiaOur Software Product Industry is solving India’s hardest problems
1717
Productivity Gains = Transformative Potential
1818
Software products offer solutions that can be
deployed in a distributed fashion to millions of
small enterprises and consumers untouched by
technology till today.
Agriculture Healthcare Education
Example. Tally accounting software product has helped nearly a million SMBs gain control on their finances and taxes
1919
Made in India. Made for India
Software Products for Agriculture
2020
Agriculture
Farmers can embrace new knowledge and information to improve efficiency and speed in the agri supply chain
Education
Software Products for Education
2121
Creation of innovative test-prep products and state-of-art teaching to bring in learning effectiveness.
Healthcare
Software Products for Healthcare
2222
Software based medical devices and personalized oncology treatment is improving productivity manifold.
SPI will provide innovation blowback to the rest of the world. Not just India for India.
2323
Tremendous untapped
potential to innovate exists in
India
What creates a successful industry?
This section outlines some of the factors that influence creation of a successful software products industry.
2424
Lack of Productization.We are unable to create value out of our successes. Examples.
2525
We conducted the
World’s largest
successful election. Are
we becoming the
“Microsoft” of Polling
machines?
Should we not be a
global leader in identity
implementation, apps
and services with
“Aadhaar”?
Why Indian Products are unable to gain advantage fromlarge domestic opportunities
2626
Can we tilt the balance?Creating level playing field.
2727
Buying Services rather than products leads to inefficiencies
2828
1. Cost of development is far higher than cost of customization.
2. Maintenance and update cost would exceed cost of development.
3. Lost product opportunity.
Main issues:Certificate
A simple survey of
software used by 57 large cities in India for
issue of a “Birth
certificate” shows that almost the every city got
it done on their own.
Certificate
A simple survey of
software used by 57
large cities in India for
issue of a “Birth
certificate” shows that
almost every city got it
done on their own.
Does the Government have a role in developing an Industry?
2929
Government as a Participant Government as a Catalyst
Many examples are available
where the government has set
the agenda that was fulfilled
by private enterprises
Software Product Markets = Winner-take-all.
3030
Corporatelocal
Subsidiary
DistributionStrategic alliances
CustomersCommunities
Analysts
opinionleaders
significantcontrol
directcontrol
* Branding, euphemistically** Depiction borrowed from Concept Green, LLC. Although the idea is very common.http://www.conceptgreen.net/buzz/blog/hello-world-welcome-to-concept-greens-inaugural-blog
Opinion*
Matters.Startups wielding less
opinion-making power,
lose out to established
players despite good
product
Government Could help.While the Private sector helps itself.
3131
Industry think tanks and organizations would create buyer awareness for “Made for India” products, Govt. should
create platforms for apps through APIs.
Govt. should promote incubation centers under PPP-model to improve
odds of success for startups.
Pool of Software products of importance
d
d
d
While the Industry promotes entrepreneurship and employment in startups as a good career option, the Govt. should draw focus of the best minds on critical
problems through Challenge Grants.d
Soft
ware
Pro
duct
Indust
ry r
eco
gniz
ed
as
a N
ati
onal pri
ori
ty
Mark
et
Maki
ng,
to c
reate
via
ble
dom
est
ic o
pport
unit
y
Make
it
easi
er
for
start
ups
to c
limb t
he
ladd
er
Str
ate
gic
so
ftw
are
te
chnolo
gie
s
d
Rew
ard
su
ccess
India’s ticket to becoming a Product Nation
Shift from Services to Products is not easy
3232
Why “Product Nation”
3333
Based on the Story of Israel
(called “Startup-Nation”) that
has become a power house of
Technology product startups
that gain global acceptance.
ISRAEL
Second largest in companies doing IPO on NASDAQ
Second highest number of tech acquisitions in the world
ISRAEL
Second largest in companies doing IPO on NASDAQ
Second highest number of tech acquisitions in the world
Software Products Industry can do what the Space Program did in the 90’s
3434
The train has not left the station
and a small nudge for Software
Products will deliver big wins for
the country
The possibilities are astronomical
Indian SPI touches 3m small enterprises today. It will touch 30m enterprises – small businesses, rural schools, primary healthcare centers, small farms, etc. - in 10 years
Creation of 1,00,000 Software Product Companies in India, leading to employment of 3.5 million technical people, and creation of $500+ billion in Market Value in 10 years
3535
Brand India
3636
Software services branded Indian
talent
Software products will brand Indian
innovation across the world
GREAT ENGINEERS GREAT IDEAS
Gradually change the branding (reflection in the minds of outsiders)
The Two-part Products StoryThe Current Theme
3737
Gradually shift from Current theme
“Made In India” or “India Inside”
Global Brands
Software developedin India
The Two-part Products StoryThe New Theme
3838
We are in the
best position to
understand and
meet the needs
of India
Our innovation
and scale can
serve global
market
demands
To a new theme of
“Made for India” + “Made from India”
Made fro
m In
dia
Made fro
m In
dia
Three fold controls The Software Product Industry could provide
3939
The choice of technologies that
could provide the best outcomes,
chosen through studied approach.
Focus on building
user experiences
that work best
under local
conditions
(e.g. Mobile First
approach).
Products made in
India could address
the current and
pressing needs of
the local market.
2.ConsumerExperience
1.Customer Priorities
3.Technology
Rollout
Enablers of the Transformation
Do we have the right enablers that are needed for the emergence of Indian Software Product Industry in a big way
4040
4 Major Technology Enablers
4141
MobileSmart phone thatcan run applicationand deliver servicesWhen and where you want
CloudPay-as-you-go
inexpensive infrastructure.Scalable as needs grow
APIFlexible, safe andeasy way to combineapplications that useeach other
Open SourceFree to use software
that can be combinedeffectively into apps
and platforms
$
Cloud makes Infrastructure Affordable and Accessible
4242
CLOUD CLOUD
“Public Cloud”(Lease Rented Apartment)
Infrastructure froma service provider.Pay for use only,
one machine at a time
“Private Cloud”(Self-owned Apartment)
Your owned Infrastructuremade easy to use
All paid upfront. Privacymeans confidentiality
Comes in Two Flavors
Cloud Providers
Any Corporation
Any Government
Build and own your Cloud. Tools available
One device formula User Computing Device = Smart phones with Apps
4343
India is seeing a surge in Smart phones (one device for
voice and computing needs) and could become the default
user computing device to build “Made for India” apps
Smartphones Are PCs..
...only they're more personal...
...and do nearly everything better...
Headlines from the article on LifeHacker: http://lifehacker.com/5681573/your-smartphone-is-a-better-pc-than-your-pc-ever-was-or-will-be
The Apps Economy: How it works.
4444
SoftwarePlatform
API Management
Key technologies of Cloud (distribution), API (secure, controlled access to platform), App
App Store(Marketplace on Cloud)
Apps(Paid or Free)
Developers End Users
Choose Appsthey need and
install
Sell apps theymake
The World is moving towards API
4545
Data
API* enables independent entities to build software (products) that can link and work together with ease. Integrated applications or products is necessary for
good user experience.
Core BankingApplication with API access
Personal Finance
App
TaxPlanning
App* Application Programming Interface (API) is fast moving to become a business concept than a technical one.
API Technology mature and now available
4646
Many productsand major appsProvide API service
AdvertisingApp
Games
Other well-known API providers
Tripit
TravelGoogle
MapsWalmart
ShoppingWalgreens
Pharmacy
4747
Free and open-source software now powers every computing need
Open-sourceFree software
$
* The world has realized that Open-source cannot compete on price alone
FreeSource Code
Expertise*Adoption
Innovation+
Certain critical areas of
technology may need National
initiatives to make open
source software usable and
practical
National Initiatives on Open-source Infrastructure: A Chinese Example
4848
• * People’s Republic of Open Source: China Preps National Linux Distribution
• The reference architecture is being defined by the Ministry of Industry and Information Technology’s The China Software and Integrated Chip Promotions Centre, or CSIP
* Some useful links on the subject: http://www.wired.com/2013/03/ubuntu-china/ Technical Evaluation Report. The Emergence of Open-Source Software in China [http://www.irrodl.org/index.php/irrodl/article/view/331/762]. Open Source in China http://www.slideshare.net/jaaronfarr/open-source-in-china-updated
Affordable Platforms that enable Product Innovation
4949
$
Cloud Computing
Smart Phones & Apps
API-driven Development
Open-source software
• Reduce capital expenditureon hardware infrastructure
• Subscription pricing affordable
• Designed for building software that integrate with each other
• Easy to build services that get widely adopted
• Smart phones would be thefuture of user computing devise
• Easy to build with small teams
• Reduce capital expenditureon software infrastructure
• Free, but needs work on making effective use
5050
Thank you