….DRAFT VERSION….

BIRLASOFT INC. - SALES FORCE AUTOMATION AT CRISIS:

Software as a Service (SaaS) or Software as a product (SaaP) (A)
Shilpi Jain, Mahadeo P. Jaiswal

Abstract

Birlasoft, a Global IT major, had been facing massive challenges in monitoring its sales force spread
over 20 global locations. Owing to the strong client base spread all over the world and the massive
sales task force, the organization needed to focus on a more efficient sales tracking system. Ravi
Kathuria, Senior Vice president – Global Marketing & Alliances of Birlasoft was keen to align the
organization’s wide spread sales force through Sales Force Automation (SFA) system. In this context,
SFA was expected to provide transparency and clear visibility of the sales pipeline. There was also an
expectation that SFA would help in improving efficiency of global sales force in terms of reporting
and customer analysis. At first, the organization decided to implement a home grown sales force
automation system, which turned out be a failure, owing to both internal & external factors. This led
Kathuria to explore other options which could meet their system requirements and could be
implemented in lesser timeframes with minimum budget. They evaluated multiple options and are
debating on which system to opt for. Evaluation of software and the right selection is one of the most
difficult decisions for a large organization. The inappropriate selection may have a direct and
immediate impact on the organization’s revenue, productivity and future plans.
This case examines various software delivery methods followed while deciding on new software
procurement. Several software and vendor parameters are included for analyses, as well as providing
an analytical structure, and process for evaluating software vendors. This case also underlines an
innovation which has introduced a complete paradigm shift in information application acquisition i.e.
instead of buying software as a product; organisations are increasingly procuring it as a service (SaaS
aka Software as a Service or adaptive computing or on-demand applications).

Keywords: ASP, automation, CRM-on-demand, on-premise, pricing, SaaS, SaaP, Salesforce,

INTRODUCTION

Birlasoft has established itself as one of the leading brands in software services. The IAOP

(International Association of Outsourcing Professionals) in their list of ‘2009 Global outsourcing 100’

had ranked Birlasoft among the top ten service provider in Australia and New Zealand region. It

generated revenue of around $160 million annually through services such as application development,

support and maintenance, enterprise application implementation, integration, infrastructure

management, and quality assurance and testing. Ravi Kathuria, Birlasoft’s senior vice president -

global marketing & alliances and Sanjay Gupta, Head Global Delivery were evaluating the feasibility

for an integrated Customer Relationship Management (CRM) system along with Sales Force
Automation (SFA)1 system. This system was needed to reorganise the sales force globally for

consistent output and reporting. The organisation tried to develop a system on its own but it was

unproductive.

Kathuria and Gupta had explored multiple options to purchase SFA software, instead of re-building it

internally. A few alternatives were shortlisted on the basis of their performance, cost, and deployment

time to replace the existing, underdeveloped, internal SFA system2. As their first attempt was a

failure, they were determined to overcome the challenges in their second attempt.

BIRLASOFT – ORGANIZATION PROFILE

Birlasoft Inc. is part of the global US $31.7-billion, CK Birla Group. This 150 year old group has

diversified interests ranging from automobiles, cement, paper, software etc. They are also involved in

philanthropic works such as hospitals, school etc. The group entered the information technology arena

in 1992-93. Initially, the organisation, Birla Horizons International, concentrated on professional

services with offices in New Delhi, New Jersey and California. In 1998, GE capital joined as a

strategic investor and the organization provides services to Fortune 1000 companies and many other

midsized organizations which were into banking, financial services, insurance, retail, healthcare,

manufacturing fields and also independent vendors. The organisation also won the Prime Minister's

Award for excellence in Public Administration for the year 2007-08 for the implementation of Risk

Management System (RMS) at the Central Board of Excise & Customs (CBEC) in India. They are

certified global business partners of HP, IBM, SAP and Oracle, consulting partners with Siebel.

1
Although organisation implemented complete CRM with SFA, but the focus of the case was limited to SFA
implementation.

2
SFA automates what the sales people do and assists with sales management. CRM strategies were oriented
towards the client and integrate all the touch points an organization had with the client across the client’s
lifespan with the organization. SFA increases number of clients, CRM was intended to keep the clients an
organization had and increase value from them. Some vendors claim to offer both; others keep these products
and processes separately.

3
US$ 1 = Indian Rs. 49.00 as on 1 September 2009. The market rate exchange to the US dollar fluctuates
marginally.
Dealing primarily in banking and insurance domain, the organization delivered services like;

application development, testing, support and, enterprise application (EA) implementation,

integration, infrastructure management, and quality assurance. It employed more than 4,000 people

and generated revenues of around US$160 million in 2007-2008.

The organisation follows hybrid global software delivery model, also sometimes known as dual shore

model. Headquartered in India, the organisation has offices in various other countries ranging from

the USA, Australia, Czech Republic, Europe, Singapore, and United Kingdom. The corporate and

development offices are in India (see Exhibit 1). Each office is primarily responsible for forecasting,

generating sales; order processing, billing and cash collection. The sales team of the organization

works in close coordination with client’s onsite technical people. These teams are also responsible for

project's program management and handle client-facing components of the project. Their activities

include gathering of requirements and user-interface development, interaction with business subject

matter experts and software architects onsite. Meanwhile, the offshore teams (i.e. based in India) take

care of coding, testing, and bug fixing. The dual shore model enables clients to directly interact with

Birlasoft’s onsite team and simultaneously enjoy the benefits of off shoring (i.e. reduced cost of

development and 24*7 work cycles to name a few). Ideally, 20-30% of work is executed onsite and

70-80% offshore, depending upon the criticality of the project.

SALES FORCE AUTOMATION (SFA)4

Sales force automation (SFA) is system that utilize computerized hardware and software to provide

automated collection, assimilation, analysis and distribution of information. This improves sales force

productivity (Morgan and Inks 20015). SFA systems consist of centralized database systems that can

be accessed through a modem by remote laptop computers using special SFA software, so that a

4
The definition and other concepts were discussed as per various academic literatures.

5
Morgan, A., & Inks, S. A. (2001). Technology and the Sales Force. Industrial Marketing , 30 (5), 463-472.
salesperson can get constantly refreshed information regarding various aspects of the job6. In other

terms, SFA is the application of information technology to support the sales function7 by improving

the speed and quality of information flow among the salesperson, customer and organization8. The

range of SFA functionality is listed in Exhibit 2. SFA affects the sales function at five main levels9:

• Sales force Productivity • Information Processing

• Communication Effectiveness • Perceived Sales Person Competence
• Customer Relationship Quality

All these levels are discussed in detail in Exhibit 3.

BUSINESS CHALLENGES

Sales Force and Sales Process in Crunch

Birlasoft had large pool of customers worldwide. Their sales force had spread across various

geographic locations and was expected to work in close coordination with the corporate office in

India. Each office was primarily responsible for forecasting, generating sales; order

processing, billing and cash collection. And at the end of each quarter, they had to submit

their performance report in a prescribed format. On the other hand the actual practical scenario

was far away from the reality. Birlasoft’s sales force was highly fragmented and every region was

working in isolation. There was no centralised database available, and for the corporate office, it was

a herculean task to prepare an accurate & real-time picture on sales forecasts and sales pipelines on

quarterly basis. Often senior managers failed to set precise sales target for future calendar years due to

6
Parthasarth, M., & Sohi, R. (1997). Sales Force Automation and the Adoption of Technology Innovation by
Sales People: Theory and Implications. Journal of Business and Industrial Marketing , 12 (3/4), 196-208.

7
Buttle, F., & Ang, L. A. (2006). Sales force automation:Review, Critique and Research Agenda. International
Journal of Management Reviews , 8 (4), 213-231.

8
Speier, C., & Venkatesh, V. (2002). The Hidden Minefields in the Adoption of Sales Force Automation
Technologies. Journal of Marketing , 66 (3), 98-111.

9
Boujena, Othman, Johnston, Wesley J., & Merunka, Dwight R. (2009), the Benefits of Sales Force Automation.
Journal of Personal Selling & Sales Management, vol. 21 (2), 2137–150
lack of systematic and organised data. They were unable to track actual sales targets and potential

sales leads. In fact, there were few occasions, when salesperson kept on rolling old leads and would

convert them into prospective customers only when they were unable to achieve set goals.

Ravi Kathuria was concerned about this:

During our sales reviews, rather than discussing how we were doing in terms of our sales, we

would end up deliberating on the accuracy of the data and how can we reconcile it to get a

fair view.

Lack of automation was another issue which was leading to inefficient sales process at Birlasoft.

Barring the US, the salespersons were using Excel spread sheets and Maximiser tool for reporting

(specifically in Europe). The manual way of doing things would lead to data inconsistency. Managing

leads and service fulfilment also became problematic.

Kathuria discussed about the key issues:

Our sales force was working in silos and every functional unit at different geography was

using different customer relationship management (CRM) and sales force tracking solutions.

There was no simple consolidated view of the organization as such, data was available in

multiple systems and it was always very difficult to slice and dice to achieve real insight into

how we were performing and what measures we can implement to improve service?

Our sales processes, given the disparate nature of systems, were completely out of sync and

so we had to find a way to align them better.10

In addition to above, sales teams were struggling to achieve their sales targets. On an average, a

salesperson was expected to generate minimum 3 opportunities (demos to the clients) every week,

while the actual number was averaged to only 1.5-2 per week. Kathuria was concerned about this

shortfall and believed that SFA would be worthwhile to improve the number of opportunities per

10
Choudhary, Rajendra “Birlasoft grows its sales conversion by 3x”, “Express Computers, July 12, 2010. Source:
http://www.expresscomputeronline.com/20100712/expressintelligententerprise08.shtml, accessed
November 15, 2010
salesperson and clearly estimate “what percentages of those opportunities were successfully converted

into actual sales?”

Role of Economic Downturn in World

According to the U.S. National Bureau of Economic Research, the recession began in December 2007

[8]. The whole US economy was shaken and many organizations declared bankruptcy. The financial

crisis was linked to reckless lending practices by financial institutions and the growing trend of

securitization of real estate mortgages in the United States11 (Late-2000s recession). The US

mortgage-backed securities, which had risks that were hard to assess, were marketed around the

world. The increase in oil and food prices worsened the situation. Sub-prime loan losses emerged in

2007 exposed other risky loans and over-inflated asset prices. With the mounting loan losses and the

fall of Lehman Brothers on September 15, 2008, a major panic broke out on the inter-bank loan

market. As shares and housing prices declined, many well established investment and commercial

banks in the United States and Europe suffered huge losses and even faced bankruptcy.

Such business environments had impacted exports business in India and foreign investments from US

organisations, further reducing revenue margins for both clients and service vendors. Companies

withheld their expansion plans; margins were reduced. Clients were cancelling their bulk orders in IT

implementation to have stricter control on outflows; especially International Banks who had

outsourced their operations to Indian software organizations, kept their future deals on hold.

Birlasoft was affected too. The organization had to put most of its future plans on hold. In fact they

did downsize 15% of their workforce across nations. Birlasoft’s sales which were rising exponentially

every year, showed a decline. Sales for financial year April 2006-March 2007 were approximately

40% higher than the previous year. However in 2007-2008, the rise was only 20% compared to the

previous one. Birlasoft competitors were offering similar services at cut throat prices with very low

margins. This was an alarming situation; Birlasoft could not afford to lose their perspective leads and

11
The text in the paragraph was taken from Wikipedia.org
existing customers. Kathuria, as a sales head realized that their reputation in market would be at stake

if they were unable to meet customers’ expectations on-time, especially at the time of global crisis.

It became imperative to streamline sales force and customer resources, and sales force automation was

the key to enable strategic positioning of the organization. This was the time when they had to act

smart and segregate their sales leads maturely. Precise information was required to track prospects,

sales revenue and business opportunities. In summary, strategic need was to identify customers and

areas which required more focus, and what can be compromised for the time being, till the crisis gets

over.

Problem Escalation: Slipping of Potential Leads

For any organization, sales leads are precious. Birlasoft had another challenge to retain leads within

the organisation. Typically, the specifics of a lead captured by sales executives should be updated in

the sales lead database on regular basis (a typical sales process in an IT organization is shown in

Exhibit 4). In Birlasoft, this was a manual process and not practiced on a regular basis. There can be

incidences when employees (specifically mid-level sales executives) pull potential leads with them to

their competitors after leaving Birlasoft, at the expense of the organisation. Birlasoft, who incur a

huge process cost for these accounts follow ups, lend up in achieving business loss.

Kathuria was in a catch-22 situation, as he had to resolve issues related to systems, manpower,

processes, and simultaneously retaining clients. For how long they would continue with disparate

systems like Maximiser & Excel sheets for data tracking? He wanted to improve the sales cycle of the

organization and manage data centrally. He wanted to provide an instant access to his worldwide

sales force by way of automated application software. It was extremely essential for them to

implement sales force automation system in the coming financial year 2009-2010.

PROPOSED SFA

For generating significant growth, the organisation had to focus on identifying and closing new sales

opportunities with existing clients and also to find new customers that would be receptive to

Birlasoft’s core offerings. Improving sales productivity was essential for both organisational goals.
Hence in January 2007, the organisation decided to build their own customer relationship

management (CRM) system with an integrated module of Sales Force Automation (SFA). Aligned

with the sales process, the proposed system was anticipated to provide business intelligence in six

major areas:

Managing Client’s Information: In sales process the organization is highly dependent on the depth

and breadth of the information, which Kathuria believes that can be achieved by automation. For

example: Information must have the breadth to cover the client’s organization structure and

demographics, their buying behaviour, financial/credit information, and transaction records. With

such information readily available, the sales executive can understand the benefits, liabilities,

obligations, and risks involved, and are in a better position to device strategies to pursue the

opportunity.

SFA offers “Track a client” option, using which one can track a lead in terms of legal, financial/credit

standing. It provides information regarding, whether the perspective client have purchased similar

products or services before; and if the sales executive had won similar deals in the past, what were the

reasons and whether they could repeat the success; and if the deal was lost, what one should do to win

this time? This way organization can manage their clients globally and everyone will have universal

information. Additionally the system keeps an update of the contact person’s information such as his

designation, role, academic qualifications, affiliations, awards, etc. Understanding of such information

helps in building relationships with the dealing authority at client’s side. Besides that, using inbuilt

data mining techniques, the sales personnel can leverage the application’s ability to launch special and

customized webinars, email campaigns etc.12.

Managing Sales leads: It was observed in the past, that sometimes one lead was assigned to multiple

sales executives and hence it was difficult to track the status of the lead. Duplicacy of the data resulted

in massive confusion among sales people and there were chances when perspective clients were

contacted by 2 or more sales executives, questioning the organization’s (Birlasoft) credibility. Often

12
For more details refer to paper: R. Lawrence, Perlich, C., Rosset, S., Khabibrakhmanov, I., Mahatma, S., &
Weiss, S. (2007). A Data Mining Case Study: Analytics-driven solutions for customer targeting and sales force
allocation. The IBM Systems Journal.
teams had little visibility on the client’s previous sales history, pattern of buying and requirements,

which is imperative for future growth.

SFA application has a ‘lead management’ module, which can resolve most of the issues discussed

above. The list of features include: lead database with lead status, lead assignment, timely reminders

on leads, prioritization of leads, greeting mails, notification on overlapping of lead assignment,

automatic lead-routing based on sales territory, product specialization etc. The system manages

specifics of clients, their preferences, business objectives etc. It can automatically assign leads to the

sales force considering their capacity and competence levels. Once the lead is captured, it can analyse

its potential value, the prospect’s location, and interest. Thereafter, the system will assign an

appropriate account team based on pre-defined policy of assignee job loading status, territory,

qualification, skills, industry expertise or other criteria. Further, based on the system’s

recommendation, and applying his own experience, the manager can confirm the assignment. Once

approved, the system will then send a dashboard notification to the concerned assignees for further

development. Accordingly, the sales lead gets converted into an opportunity and the sales executive

(assignees) may set up appointments with the client to understand their requirements, for demos,

proposals or quotations as appropriate. The assignee is expected to fill in details in the SFA system on

daily basis; failing to do so will result in immediate notifications to the assignee’s manager. In

summary, using ‘lead management’ module one can track the sales cycle in accordance with the

organisation’s pre-set policy and the procedures. It also helps in additional knowledge conservation

and its management.

Managing Opportunities: Also known as account management process. Using ‘opportunity module’

in SFA, the sales executive documents the profile of the prospect, the details of account team serving

the prospect, the requirements, the proposed solution, the value of the opportunity, the sales stage

status, the estimated contract date and the probability of closing the deal. Interaction records and

action-item records associated with interactions are also recorded in the system. The sales executive

has all the information to move forward. Later, depending upon the progress of the opportunity, the

sales executive can make adjustments into the fields like ‘estimated contract date’ and ‘the probability
of closing the deal’ within the opportunity record. Once approved by the immediate manager, these

changes will immediately cascade and available in revenue forecast reports for team visualization.

Managing Pipelines: In Birlasoft, executives were reporting about incidents through emails or

smartphones like Blackberry. Using this module, every input by sales personnel on pipeline

components can be reviewed and analysed by the manager in real time for instant action and

corrective measures. It enhances the capabilities of manager to accurately forecast the demand and

revenue, which may results in higher profits and align expenses with revenue growth.

Deal Management: In Birlasoft, the teams were managing multiple versions of Excel worksheets for

tracking. These worksheets contained information regarding the quotations, discounted prices, service

clauses etc. Duplication or absence of accurate information may result in confusion among the team

members. For example: Latest information like: negotiations and inclusion of value added services do

not reflect in the final proposal to client. Similarly, the same revenue potential can be counted twice:

one in the lead stage and other in the opportunity stage.

SFA’s ‘deal management’ module brings transparency and handles such overlaps in transition

processes automatically. The quotations are generated directly from the opportunity module, so that

one does not count same revenue potential twice, deceiving the forecast. Alternatively, a new

quotation may perhaps be created and linked with an old opportunity to achieve the same effect. The

sales representative will follow the embedded quotation guidelines and the approval process in

making an offer to the customer. Quotation revisions can be performed throughout the negotiation

stage, until the customer accepts the offer. This way manager will have crystal clear information

segregating leads with opportunities.

Managing Sales Revenue: The SFA system can manage sales quota (budget allocated) and allocation

of sales quotas to individual sales executive as well as the automatic aggregation and tracking of

quotas for teams, groups, and regions throughout the enterprise. Authorized users may edit the quotas

at any time with instant aggregation results. Against the set quotas, the proposed SFA can track the

actual revenue achieved by individual sales executives. The manager should be able to track the

progress in real time. Besides this he can perform revenue forecasts depending upon the opportunity
and quotation modules synchronization. He can also review real time, whether executives have

adjusted any prices, deal closing dates etc. Any changes in an individual’s revenue forecast will be

immediately reflected in real-time and reported to the manager. Availability of such capabilities in

SFA would be very useful for Birlasoft.

Reporting: With the implementation of SFA, the analytical capabilities of salespeople and sales

managers are expected to improve because of availability of precise information and faster access to

data. The data is well-organized, carefully stored, and information is available in variety of forms, e.g.

reports, visuals graphs etc. The reports can be categorized in to five groups: opportunity reports,

activity reports, customer service reports, market reports and competitor analysis reports. The types

and level of reporting may vary in different SFA applications.

Others: The sales force tracking system module within SFA helps to build a central repository of all

customer accounts, automate the marketing, sales & service processes, starting from campaigns to

creation of customer accounts, tracking leads, opportunities etc. This will offer better understanding

of customers and provide global visibility across all departments. Once a sales lead turns into sales

opportunity, all information about that process can be shared with accounts, sales, implementation

team heads, and further enabling transparency across all departments within the organization.

This feature was significantly useful for Birlasoft. To meet dynamic business needs and competition,

it was necessary to have fast access to key business metrics and improved visibility across the units.

This will drive better business oversight and decision-making to Birlasoft’s sales managers. In

addition to above, Kathuria had plans to integrate Google maps functionality and social media

components to provide additional information links about potential clients to his sales force. This

would facilitate the sales staff to identify the physical location of customer sites and even view the

birthdays of the key customers and wish them well accordingly.

In summary, Birlasoft wanted to build a single organisation view, performance insights, account

intelligence, and higher transparency and visibility. Therefore systems like SFA in-place would play

an instrumental role in knowledge conservation and its management.

 ROUND 1: THE IN-HOUSE SOLUTION FAILURE

The management was confident about the capabilities of SFA, and expected benefits; hence a team of

five IT professionals was asked to evaluate different options available in the market. Soon the team

realised that if they adopt any new system from the market, existing business processes13 were

required to change as well. They had to examine certain parameters thoroughly: outside vendor’s

service support, hidden costs, inter-operability and compatibility with their requirements etc. To

overcome such issues and have better control, the management decided to develop and deploy tailor-

made software in-house.

In its first phase of development, four modules: contact management, opportunity and lead

management, marketing automation and business intelligence were chosen (See Exhibit 5 on SFA

modules). A core technical team was dedicated for design and development (D&D). The projected

completion time for phase I (on-premise build14) was 6 months and project’s estimated cost was US$

630, 00. The management had concerns over the cost and time frame; nevertheless they showed

confidence in their home grown team and sanctioned to proceed with the development. It was

perceived that if this product would succeed, they will commercialize it under the brand Birlasoft.

This way the organization could easily enter into the product domain.

The organisation adopted iterative software development model, and the requirements were reviewed

with sales team repeatedly. The system designing was done in-house and the prototype was build.

Once the prototype was approved by sales team, numerous iterations were implemented to build the

beta version. In acceptance testing phase, the technical team discovered that the sales guys were

unable to align their current processes with the new software. Several rounds of meetings were held,

13
Organisation was not interested to outsource the application. Moreover in 2006, SaaS based applications were
not visible in Indian market; especially the result demonstrability was unknown amongst users.

14
Build - In the field of computer software, the term software build refers either to the process of converting
source code files into standalone software artefact(s) that can be run on a computer. One of the most
important steps of a software build was the compilation process where source code files were converted into
executable code (Source: Wikipedia)
but every time issues like: disintegration, inappropriate reporting, inconsistent process flow arose. As

a result, requirement specifications were never frozen.

Moreover the turbulent business environments raised several new challenges. Employees were

leaving organization; as a consequence systematic knowledge transition to new entrants was withheld.

Project managers were unable to mitigate risks associated with unforeseen circumstances. The beta

version of phase I got delayed by almost three months, resulting in increased cost. On looking at the

challenges and business need, the management decided to replace their partially built SFA system. A

review session was conducted with senior management, and following a review it was decided to hunt

for an apt solution.

ROUND TWO: INVESTIGATING EXTERNAL OPTIONS

Once decision was made, Gupta called Birlasoft’s implementation team to conduct a feasibility study

and earmark those parameters which were overlooked in the previous development. Four factors were

listed important:

Failure to Consolidate Existing Processes: It was found that the sales teams at different

geographical regions were following different procedures, although macro process was same

worldwide. Therefore, analyses of these processes were crucial to ensure that the software

functionality aligns with the business process. They need to spend time to map out the existing

process with special focus to understand in-depth, how the data moves from one stage of sales cycle

to another. The gaps need to be fixed and the sales process had to standardize across locations.

Inappropriate End User Involvement: Resistance to change was another problem with

implementing new sales software. It had been observed that people were reluctant to change their

routines and habits. In Birlasoft about 20% of sales people push back hard. They threatened to quit if

forced to change. About 60% of sales people showed mild resistance, and the remaining 20% were

enthusiast about the new change. For success, it was imperative to involve users in the process and

understand their concerns.

Unveiling the Tacit Knowledge: Sales people tend to keep account details secret unless they get

confirmed orders. Most of the information remains tacit. In a sales system, only the sales person

knows the details of existing sales relationships and opportunities. It’s a challenge for any

organisation to identify ways to get necessary information out of a person’s head and convert it into a

digital format, so that one can make efficient use of it. Sales people found it easier to maintain

information in their personal diary, rather than feeding it into the system. Filling out a new contact

form on the system was often considered tedious and time-consuming. Therefore, to improve the

usage of the SFA system, Birlasoft needed to adopt innovative mechanisms for data entry and

implement some policy at administration level. The organisation planned to use digital pen and card

scanner to minimise sales executives time for input in the system.

User Acceptance: It was observed with in-house development that user involvement was not

recurrent. The major portions of requirements were captured in initial stages of prototype building,

but later there was no frequent communication among the teams. This lead to rejection of many data

flow processes and types of reports in the beta release.

Therefore, the organization decided to opt / build a system which would take care of above mentioned

issues and simultaneously it should be ease to use and deploy, flexible and cost effective.

Sanjay Gupta revealed:

We had three key criteria in our mind for evaluating new integrated SFA solutions. It had to

be easy to use, flexible so that we can tweak it enough to match it with our existing and future

requirement, and quickly deployable.

 THE DILEMMA BEGINS – WHICH IS THE RIGHT SOLUTION

Keeping scarcity of time and above objectives in mind, a comprehensive team of evaluators was

formed for instant decision making. Available software procurement choices were categorised in to

three: one was to access and use proprietary systems (Build / SaaP, perpetual licensing, off-the-shelf),

another was to adopt an open source system, and third was to outsource it as a service (i.e. through

ASP or SaaS). All three options were examined critically.

Build / SaaP (Proprietary): Rebuild In-House

Birlasoft re-looked into their existing system, on which they were working for past one year. It was

difficult for organisation to side-line its own brainchild. Therefore, before making any final decision,

the team investigated into the possibilities of re-designing it. Kathuria asked the development team to

submit a revamp plan in a week’s time, and shortly they submitted their report with new timelines.

Requirement Analysis 2 months

Customization 3-4 months
Pilot testing and bug fixing 2 months
Final implementation 4 months

The time estimated for re-work was approximately 12 months with an additional capital investment of

US $ 100,000. This proposal had few positives and more negatives. Positive aspects are that with in-

house development, management can govern the project at their own pace, as managing external

service providers was complex; hidden costs could be controlled. These hidden costs included legal

costs associated to putting together a contract between two companies and the time spent in

coordinating the contract. Moreover, hiring an outside vendor may lead to a threat to security and

confidentiality of data. Most importantly, customized software encompasses current processes and

builds an electronic framework to automate them. One doesn’t have to bring major changes in

processes and people can get familiar with the software within a few days.

Negative aspects are that, requirements keeps on changing as users perceive that with in-house they

can request any change any time. As a consequence, the requirements never get sign-off and project

gets delayed. Secondly, to build a domain specific application (e.g. CRM, SFA) in-house, it is
necessary that the organization should have domain expertise. Lack of domain knowledge often

results in poor product design. The internal system does not imbibe the best practices of the domain

owing to non-availability of versatile systems skills. As a result, the project management just

incorporates current or ‘visible’ functionalities into the system. When business need to revolute at a

fast pace, as in the case of Birlasoft, the project may fail to turnaround the changed functionality in a

shorter period.

SaaP: Buy - Off-the-Shelf

Buying off-the shelf is another form of perpetual licensing in which the buyer purchases a perpetual

use license from the software producer. Popularly known as packaged software or product software’

where the software is ready to deploy, tried and tested risk free applications. These packages are

typically based on client-server architecture. The buyers pay upfront cost for licenses, server

infrastructure, customization, and maintenance. The creators uphold all proprietary rights and make

earnings through the sale of number of copies. One cannot change the source code of the software.

The cost of development of the off-the-shelf product is distributed over a number of buyers and thus

the pricing is spread over the number of licenses that will be sold. The purchaser has to make

additional investments for the cost of resource management, e.g. hiring skilled professionals,

infrastructure setup and maintenance, to make it operational. Off-the-shelf products are typically

developed by single enterprise for commercial selling. This kind of procurement is comparatively

cheaper than in-house customized development.

Few companies offer customization for off-the-shelf software products at the expense of more money

and time of deployment. Updates are expensive in perpetual licensing. Each time there is a revision in

software purchased, the organisation needs to shell out an update fee, and few products may not have

any updates for a long time, thus making the organisation use obsolete software which might have

repercussions on business. This was another lucrative option available to Birlasoft.

Kathuria looked at the products from Siebel and an upgraded version of the existing Maximizer

solution being used in their US offices for some time. But for Kathuria on-premise solution just didn’t

fit in:
 Going for an on-premise solution would have meant that we have to deploy multiple instances

of the same solution across our business operations and constantly spend resources to

manage and update them. This would have led to a lot of unnecessary overheads.

Open Source: Sugar CRM

Open Source Software / Free Software (OSS/FS), had been gaining prominence for more than a

decade. Open Source Software licenses give users freedom to run the program for any purpose, to

study and modify the program, and to redistribute copies of either the original or modified program

(without having to pay royalties to previous developers)15. The organisations earn revenue by

providing support towards its implementation and maintenance. Open source SFA SugarCRM16 was

available in the market as ready to use application. Hence Birlasoft evaluated it as well.

Evaluators found that SugarCRM was flexible, easy to integrate, easy to use, and a low cost

alternative. However it was precluded by a senior team member Sathish. Sathish, N., was a Siebel

CRM program manager with ten years of professional experience in the field. He had used

SugarCRM earlier and found that it had certain major functionality issues. For example the

application did not support dashboard customization, forecasting, chat, referral tracking, billing-

invoicing, and management of contact history, which were considered to be the most important

features for sales force automation. Besides that, SugarCRM was venture capital backed and lacked a

commercially viable business model. Birlasoft was apprehensive about adopting the open source

model: what will happen when their venture capital money runs out- how will they get support and

upgrades? Besides that, software was not robust enough in terms of data integration and security.

Sathish explained the problem with an example:

15
David A. Wheeler, “Why Open Source Software / Free Software (OSS/FS, FLOSS, or FOSS)? Look at the
Numbers! April 16, 2007. Source: http://www.dwheeler.com/oss_fs_why.html, accessed December 27, 2010.

16
SugarCRM was an open source software vendor, which provides Sugar Customer Relationship Management
Software on site and on-demand.
 Sugar CRM database layer had major integration issues. For example: In “sales stage”

database, if we commit any data changes in any one of the module or master table, the same

does not reflect in other linked tables / modules.

Outsourcing: Application Service Provider (ASP)

Next in the list was to outsource the system to an Application Service Provider (ASP). ASPs provide

the rental delivery of commercially available application services, from shared facilities over a

network, preferably using HTML, to multiple customers. In ASP, the user organization has to

purchase the required number of licenses and execute the software on hardware owned by a third

party17. Every time a new customer joins in, the provider has to set up a dedicated and highly

customized environment. The service provider maintains dedicated setup (hardware, serves, network

infrastructure bandwidth etc.) for each user organization. Often their data centres are equipped with

heterogeneous servers and configurations. Depending on the service level agreements (SLAs), they

allocate dedicated subject matter experts (teams) to their clients. Similarly, on customers demand,

they customise the application and provide it as a hosted service to the customer18. Procuring software

from an ASP was in practice for more than a decade with the emergence of internet enabled

applications, although majority of such partnerships were unproductive.

Reasons being many: typically ASPs offer standard solutions to their customers; however customised

applications are made available at extra cost to high valued customers. The cost of customising and

maintaining the modified versions of commercial applications is much higher than projected. ASPs do

not have control over the features and development of the commercial applications; hence they are

unable to deploy customised products effectively. Therefore sometimes, besides contracting,

customers have to hire in-house expertise to make sure the applications are available 24*7,

consequently ending in cost overruns. Customers are dependent on service providers for business

17
Port, L. (2009, June). ASP vs. Saas: Fun with Acronyms or a Sweeping Technological Shift. Peer to
Peer.

18
Luit Infotech, “Difference between the ASP model and the SaaS model”, Source: www.luitinfotech.com,
accessed January 2, 2011.
critical functions, limiting their control on the systems. If organization chooses to flip between

applications that may corrupt the original data form and obstruct Quality of Services (QoS).

Moreover, it was complex and laborious to integrate & transfer processed customer and sales data

from one system to another in ASP. The huge cost of building and maintaining data centres and

running customer-specific enterprise applications crippled many ASP ventures. Technically and

financially, hosting an application with an ASP was considered as an unreliable option, told Sathish:

We would be landing up paying massive upfront cost towards license fee, maintenance and security.

Outsourcing: Software as a Service (SaaS)

In SaaS, the subscribers share the common environment. The infrastructure components like, the

software application, web servers, setups and configurations, database layouts etc. remains same for

every subscriber; however, they all work in separate instances, ensuring privacy and confidentiality.

This type of setup is also known as ‘multitenancy’19. Typical SaaS enterprise applications are Web 2.0

enabled which offer open environment and dynamic web pages where users can interact in two-way

communication with other users20. SaaS offers integration among various modules of Enterprise

Systems. Existing applications can be combined to create new ones. Using tools like AppExchange21,

users can create new applications and share them with others at a nominal price and on-demand.

These applications may or may not have any relation with the service vendor’s own application

software offerings. In SaaS there is no need to purchase a software licence. Customers are sharing a

common environment; hence, as more customers subscribe to the SaaS application, the operating

19
Multitenancy is a term derived from an analogy to tenants in a building. Instead of customers renting space in
their own individual buildings (the ASP model), all customers rent space in the same building. Source:
http://www.jdsupra.com/documents/616a4013-582e-495b-8dea-b8353b625e8e.pdf

20
The relationship between SaaS and Web 2.0 is discussed beautifully by Michael Platt in the article ‘Web 2.0 in
the Enterprise.’ The same is published in ‘The Architecture Journal’, accessed from the Source:
http://msdn.microsoft.com/en-us/library/bb735306.aspx#jour12web20ent_topic5

21
AppExchange provides a common system by which users can gain access to a wide range of applications
supplied by independent software vendors (ISVs) through World Wide Web. Source:
http://www.bloorresearch.com/analysis/8342/appexchange-the-potential-to-change-the-face-of-
applicatio.html
costs will decrease for the service provider (economies of scale). Additionally, application or system

upgrades become simpler to install on the common platform, as they apply to all customers

universally. As a result, SaaS vendors are able to offer low monthly subscription fees to its client that

otherwise can be very expensive.

There are several reasons to recognise why SaaS was gaining popularity over ASP? Firstly, in early

90’s when the ASP model was launched, the internet and network technologies were emerging; hence,

the seamless connectivity and network speed were major challenges. Secondly, application service

providers introduced their services in the market without solving the issues related to performance,

security, customization and integration22. This leads to distrust in the ASP delivery model. Now the

situation had been changed as new technologies evolved, majority of internet, network related issues

being resolved, and user organizations are aware about the pros and cons of new technologies, and

delivery models. Users are better equipped to take advantage of SaaS, especially the increase in cost

savings was motivating organizations to adopt the SaaS approach23.

Ashish Goel advocated SaaS and proposed it for further evaluation. He was appointed as Deputy

General Manager - Siebel Practice Lead at Birlasoft. He was heading Siebel Projects at Birlasoft with

350+ Siebel Consultants:

In SaaS the user doesn’t own the license of the software. Instead, SaaS provides shift from

one-time, up-front payment model (a product model) to a monthly or usage-based

subscription payment model that includes infrastructure, support, configuration, hosting and

maintenance. This is an upcoming model of software delivery and uncommon in India.

Organisations like salesforce.com, Right Technologies, Oracle-Siebel are offering SFA on

SaaS in International market.

22
Heger, D. A. (2009). A Performance Centric Introduction to Cloud Computing. Retrieved January 12, 2011, from
A D H Technologies Web site: http://www.dhtusa.com/media/CldPerf.pdf

23
The excerpts of this paragraph are taken from an article published at the website
http://EzineArticles.com/637889 on 15th August 2011.
SaaS overcomes many barriers associated with packaged solutions and ASP service delivery model

(See Exhibit 6 for details on SaaS features). SaaS offers immense benefits in terms of reduced

infrastructure requirements and administration overhead. SaaS mitigates problematic IT issues such as

scalability, performance, network uptime, disaster recovery and maintenance. Accessing a business

application over the internet is as simple as browsing an email.

Birlasoft team attended sessions on SaaS based SFA systems from multiple vendors who were pioneer

in the system delivery. SaaS looked attractive but evaluators had several other concerns towards its

security, data files ownership, training, system connectivity & downtime etc. Samir Pandit, who was a

National Manager (CRM-On-Demand) at vendor C, assured them on it, as their organisation owns the

best data centres in the world with multi-level security systems. Another concern was that the

application cannot be customised at 100%, the way it was in perpetual licencing (SaaP). Lalit Mishra,

a Certified Consultant – from vendor B informed them that on SaaS, one can have three levels of

customisation.

Level I: User Interface - Customization can be done on each tab, by adding user-defined custom

fields.

Level II: Platform based - Customization can also be done at the "platform" level by adding

customized applications to a Salesforce.com instance that was adding sets of customized or new tabs

for specific vertical- or function-level (Finance, Human Resources, etc.) domains.

Level III: Database. Customers can chose the Database Management Software as per their

requirement and customise the data files.

One more concern was that SaaS based application might not authorise any outbound integration,

which was an important requirement for outsourcers like Birlasoft. Outbound integration is a process

where service providers integrate the customer’s applications with their systems to provide 24*7 data

transfers, maintenance, support and monitoring. This query was resolved by Sathish:

We can easily integrate our systems with Oracle Fusion Middleware, which Birlasoft was

already using.
Another worry was that if organisation decided to go ahead with SaaS; they had to deal with

technology transformation challenges. SaaS adoption means complete paradigm shift from on-premise

to subscription based model. Besides managing technological change, Birlasoft had to fine-tune their

core competencies, business processes, and training methods in addition to handle sales people’s

resistance to change, strategically.

At the end of this whole exercise evaluators analysed on-demand SFA with other available options to

understand expected ROI and budgetary support. For the sake of comparison, certain assumptions

were made. The costs were calculated for 100 user licenses initially and inflation was not considered

in three cases. The Exhibit 7 displays various cost components and assumptions.

Since this was the second trial for organisation towards their software procurement, they wanted to be

extra cautious. Kathuria revealed.

The low cost software package was not always the best solution because the software may

never get fully implemented or accepted by its end-users due to cumbersome operations or

limited functionality. The organisation wanted to opt for a system which will deliver value

and increased revenues resulting from a software solution that was easy to use and implement

and delivers a powerful decision supports system to maintenance and facilities departments.

All maintenance and operations related concerns were compared between SaaS and SaaP. On the one

side where SaaS does not require a significant upfront hardware and software investment, SaaP allows

for the traditional purchase and installation of software behind an organization’s firewall providing

complete control. Once purchased, the organization owns it forever. Their findings are summarised in

Exhibit 8.

Seven days of hectic presentations were over and Kathuria had to make a decision on software

adoption route. Which one would take him to the vital success? What all important parameters they

should consider while taking an adoption decision? Should they go ahead with available alternatives

or re-engineer their in-house semi-finished software? SaaS looked attractive in terms of

implementation and reduced overheads, but was it realistic? What other analysis the organisation
could perform to be sure on SaaS capability? In case, his organisation decides to adopt SaaS based

SFA, it would be required to change 40% of its business processes. Should organisation consider

change in its business processes at this stage? If this change was inevitable, how they should prepare

their sales force across the globe? It was seen in past that sales people were reluctant towards entering

data on sales leads on daily basis. They found it time consuming and wastage of effort. Additionally

they did not want to share customer contact details till the deal gets finalized. Hence another

stumbling block was to overcome the unwillingness of sales task force towards sharing account

details on web. What steps they should take to mellow down the resistance from sales force for

critical success? Should organisation subscribe more business applications on SaaS, if SFA

implementation succeeds?
 EXHIBITS
Exhibit 1
BIRLASOFT OFFICE LOCATIONS

Location City Number of Offices

USA New Jersey 1

California 1

India Noida 3

Chennai 1

Bangalore 1

Hyderabad 1
Europe United Kingdom 1
Germany 1
Netherlands 1

Sweden 1

Czech Republic 1

Australia Sydney 1

Melbourne 1

Asia Pacific Singapore 1

Hong Kong 1
Malaysia 1
Total Number 18

(Source: Downloaded from www.birlasoft.com on January 17th, 2010)

Exhibit 2
FUNCTIONALITY OFFERED BY SFA SOFTWARE

Account management Lead, opportunity and pipeline management

Contact and activity management Product configuration and visualization
Event management Sales forecasting
Order and contract management Territory management
Document management and product encyclopaedias Work-flow and process development
Incentive management Proposal generation and quotation management

(Source: Constructed from a review of vendor websites and collateral material (Buttle, Ang, & Irania,
2006)24

24
Buttle, F., Ang, L. A., & Irania, R. (2006). Sales force automation:Review, Critique and Research Agenda.
International Journal of Management Reviews , 8 (4), 213-231.
 Exhibit 3
THE FIVE LEVELS OF SALES FORCE AUTOMATION

1. Sales force Productivity

The objectives of SFA are to help salespeople better accomplish their daily activities with less number
of errors, which are common to manual sales processing. The other benefits are reduce support costs,
improved closing rates for delays, and increased average selling prices. Effective SFA implementation
can lead to enhanced productivity through better customer prospecting, development, and account
profiling. When a salesperson uses SFA, he is equipped with timely and accurate information to
work. These results in improved capacity to understand customer needs, provide alternatives, make
better decisions, and develop more valuable customer relationships. Therefore, SFA tools enable
better territory management by increasing informed and knowledgeable salespersons’ availability to
customers. SFA planning functions allow for downtime identification in the salesperson’s schedule
and then direct new leads to the salesperson during those times, this way leads are never dropped or
lost . Other controls provide the executives access to leads in their own territories only and to
manually share specific leads with other users. In addition to that, salespeople can access a centralized
SFA system while travelling and identify the closest accounts to plan and make their sales calls.
Contact management tools can enhance salesperson efficiency by enabling contacts organization
based on different criteria (industry, region, potential purchase, etc.). Finally, an organization can
expect SFA to deliver faster response times which is crucial to improve customer service quality.

2. Information Processing

SFA applications are designed to improve salesperson ability to gather, analyse, and share product,
customer, and competitor information. Centralised CRM database can provide faster access to a huge
amount of information on products, customer records, competitive offers, and new leads. Therefore,
salespeople can better inform the customer about product specifications and usage situations that
enables the organization to offer more products and services and perform more appropriate customer
data analyses. During initial customer contacts, SFA can help salespersons by allowing them faster
access to targeted information, thereby reducing the time needed to prepare for meeting presentations,
as well as the number of follow-ups when the customer requests additional information. Having
wider information about his customer a sales person can grab customer’s core interest and
demonstrate the same in his meetings or presentations and make the sale. On the other hand variety of
customisable reports may help sales executives to access and analyse real time data for future
planning.

3. Communication Effectiveness

SFA applications can enhance salespeople’s ability to communicate clearly and rapidly with
customers and contacts which improves their responsiveness and capacity to fit customer needs.
Interactive presentation tools enable salespeople to make more effective comparisons between their
products and competitive offers, to demonstrate a personalized content, and to provide customer-
oriented solutions through automated sales configurations. It also enable easier and direct information
exchange using instant messaging and dynamic chat, resulting in less communication inhibitions.
From the Birlasoft’s standpoint, the greatest potential of SFA stems from shared contact information
and increased coordination across the organization’s various customer service functions.
4. Salesperson Competence

SFA increases the perceived competence of salespersons by increasing both the volume and the
quality of market intelligence and the speed of access. Salespeople can review customer purchase and
payment record, prompting them to ask questions that improve their understanding of existing
customer needs and future requirements. The software also provides scope to manage opportunity. It
enables sales teams to work together to close deals faster by centralizing the data. They are required
to update deal information on daily basis. This helps to track milestones, and recording all
opportunity-related interactions. Since sales force can easily monitor their sales pipelines, it enhances
the capabilities of manager to accurately forecast the demand and revenue, which may results in
higher profits and align expenses with revenue growth. Forecasting also gives companies critical
visibility into future product and service demand trends. This way they can build trust and
commitment with their customers resulting in repeat orders and prolonged business relationships.

5. Customer Relationship Quality (CRQ)

It is an outcome category that crystallizes on the customer side the effect of SFA on sales force
abilities and behaviours. CRQ refers to a buyer’s trust in a salesperson and satisfaction with the
relationship25. It is highly attributed to salesperson’s behaviour in terms of his responsiveness, speed
in answering customer queries, diligence etc. SFA facilitates the development of buyer–seller
relationships: for example; developing customer trust by showcasing their ability to demonstrate
customer interest by emphasizing product benefits, providing solutions to customer problems, and
being readily available when needed. By accessing databases, the salesperson can retrieve the
appropriate information that will solve the buyer’s problems with regard to his or her objectives and
constraints.
Exhibit 4
A TYPICAL SALES PROCESS

Sales and Marketing Campaigns

Generating leads (through Reference, Cold

calls etc.)

Opportunities (Follow up and Demos)

Sales (Signing up of Contracts)

Clients (Repeat orders)

25
Crosby, Lawrence, A., Kenneth R. Evans, Deborah, Cowles, 1990, Relationship Quality in Services Selling: An
Interpersonal Influence Perspective: Journal of Marketing, Vol. 54, 68-81.
(Source: Constructed from the website: http://metatarget.com/index_en.html on January 10, 2011)

Exhibit 5
MODULES IN SFA SYSTEM

S.NO Category Description

1 Multiple Address per Contact

2 Validation - Identify potential duplicates for a new contact entered
3 Account Org Structure Mapping / Contact Hierarchy
4 MS Excel compatibility - Upload, import & Export of contacts
Contact
5 Record Temporary contact information and later convert to prospect / lead
Management
6 Easy Conversion of Contact to Account, Prospect etc.
7 Data &Business Integration
8 Duplicate contacts merge
9 Notepad for each contact, document attachment and future reference.
Target/named account management - priority, goals, status, pitch/value prop
10
definition at different levels, etc.
11 Opportunities - sales cycle/stage based capture of details
Customer visit management - Bid/RFP, objectives, team, milestone dates, agenda,
12
etc.
Bid/RFP management and tracking - team, milestone dates, evaluation criteria,
13
SWOT, etc.
Resource requirements - by opportunity/project for all closed deals and existing
14 SFA - projects
15 Opportunity & Grouping/segregation on various factors - source of lead etc.
16 Lead Leads assignment/management/tracking
Management
17 Grouping of prospects on the email response
Complete visibility of leads generated through marketing up to closure stage and
18
beyond
Influencers (e.g. research analysts) management - definition, interaction planning,
19
recording
20 Integration with Birlasoft website (capturing leads)
21 Track Proposal Generation status
22 Document Repository connected to each account, opportunity with audit trail
23 Campaign Execution - Mass Email - No Limit Constraints
24 Registration for seminars / events, and workflow based reminders & updates
Marketing
25 Integration with existing contacts, opportunities and the CRM database
Automation
26 Scripts / Pitches for Direct Marketing
27 Campaign / Event Performance Tracking, Contact Management of participants
28 Data Slice & Dice
29 Customizable Dashboards & Reports - Easy Access
Business
30 Format Compatibility - Export Reports as Excel, PDF
Intelligence
31 Scheduled workflow based automatic generation and dispatch of reports
32 Sales Funnel Visibility & Projections based on multiple parameters
33 Simplicity of Use
Others
34 Development Tools to Self Configure Application & Layout
35 Self-creation of customized reports
36 Integration with ERP and accounting systems? Which?
37 Key Performance Indicators
38 Automatic Scheduling and delivery of reports (EMAIL)
39 Workflows
40 Dashboards - Pre Configured & Self Configurable - Ease and simplicity
41 Audit Trail / Track Changes - Date and person making change
42 Knowledge Management / Documentation
43 Grouping and Consolidation and Leads, Contacts and Data
44 Outlook / Exchange Server Connectivity
45 Security / Access Control - Access, Views, Screens and dashboards
46 Automatic Alerts/Escalations based on workflows and rules
47 Performance - Stability and Time to process requests
48 Performance - In case of web-based access to data
49 Online help and support/training documents
50 Flexibility to add user defined fields
51 Electronic routing and tracking of approvals if required
52 Internal Search Engine - Simple & Advanced Search

(Source: Birlasoft)
Exhibit 6
SaaS FEATURES26

Compared with ASPs, current SaaS based services differ in the following key ways:
1. Development of Web 2.0 technologies. Dynamic web pages enabled on-demand services like
Google, iTunes, YouTube etc., leading to the emergence of new prospects of growth.
2. Low Costs. Complexity of business process was growing linearly with competition in the market
so was the enterprise application development. It increased the cost exponentially to the point
that it presents a serious impediment to business growth. SaaS offers subscription based, utility
based pricing and no upfront cost for IT infrastructure or resources
3. Time to Market. Organisations have no patience to wait for 18-24 months for implementations.
SaaS enabled enterprise systems could resolve these concerns among governing bodies.
4. Multi – Tenancy. Application delivery that typically was closer to a one-to-many model (single
instance, multi-tenant architecture) than to a one-to-one mode.
5. Centrally Managed. Centralized feature updating, which obviates the need for downloadable
patches and upgrades.
6. No Download or Installation. Since software pre-configured on service provider’s server,
software was user friendly and just a click away from the desktop. The adopter organisations were

26
Compiled from Sources:
Choudhary, V. (2007). Comparison of Software Quality under Perpetual Licensing and Software as a Service.
Journal of Management Information Systems , 24 (2), 141-165.

Dan, M. (2007). The Business Model of "Software-As-A-Service Dan. IEEE International Conference on Services
Computing (SCC 2007). USA: IEEE.

lassila, A. (2007). Offering Mobile Security as a Service. proceedings of the 40th Hawaii International
Conference on System Sciences. IEEE.
 no longer required to have the knowledge or expertise ordinarily required for desktop and
application management.
7. Easy exit – In case of dissatisfaction with the service, the customer had ability to switch across
service providers with easy data migration.
8. Regular Installed Updates - SaaS customers do not need to track the installed version of virus
software, as the vendor manages them centrally.
9. Monitoring and Auditing. It had been observed that organisations invest largely in IT
infrastructure but not being utilised optimally. SaaS vendors offer benchmarking on the usage and
provide regular reports to the user organisations. On low usage rate, organisations can build the
policy to reinforce the system usage.

Exhibit 7
COST COMPONENTS AND ASSUMPTIONS (ALL COSTS ARE IN US $)

In house - Build Open Source - SaaS

SugarCRM
Customization and Included in 6 man months @ US $ 4000 @ US $ 3300 for 3 months28
Integration development cost p.m 27
User Acceptance 3 man months Nil
Testing
Application 3 months with 1 server @ Nil
Infrastructure Testing US $ 500 p.m.
Deployment
Training (Train the In-house trainer, One time 10 persons @ US $
Trainer, 1:1029) for cost included in 1000
one week development cost
Program Management For first two years 6 months full time @ US $ 3 months full time @ US $
full time @ US $ 6000 p.m., next six months 6000 p.m., next nine months
6000 p.m. part time @ one third cost part time @ one third cost i.e.@
Shared from 3rd i.e. US $ 1500 p.m. US $ 1500 p.m.
year at fifty percent
of the cost.
Data Centre Rentals, Included in US $ 1500 p.m. US $ 5000 p.a.
Security and development cost
Monitoring (12
months)
User Licenses, Nil One time US $ 1000 each Each user license @ US $ 49
Subscription (units = p.a.30.
100)
AMC ( 2 people Nil 20% of the total cost of Nil
resources) licenses
Software 18 months with 10 Included in license cost Nil
Development persons @ US $
4000 p.m.
Software Maintenance 2 people resources, 2 people resources, each @ Shared Resources, each @ US

27
p.m. denotes per month

28
This cost may be nil if no customization required other than the standard offerings from the vendor

29
1:10 denotes that one trainer would be trained initially, who would further train 10 more people.

30
p.a. denotes per annum
(internal) each @ US $ 4000 US $ 4000 p.m. $ 7120 p.a.
p.m.
(Source: Compiled by case writers on the basis of inputs provided by respondents at Birlasoft)

Exhibit 8
COMPARING OPERATIONS AND MAINTENANCE PARAMETERS

Parameters SaaS SaaP

Access 24/7 Global Access provided by Vendor either through Intranet need to build by customer
internet or private network who owns the license

Customisation Because of multitenancy, it was a complex task while Not of much concern for the
and Integration integrating with existing real time systems, not of organisation. They possess domain
much concern with standalone applications. expertise.
Application Only user interface need to install, application was layered installations, a mutual effort
Installation hosted by the vendor itself. exerted by vendor and customer
Database External to the organisation, at vendor’s server Hosted and maintained by
Location organisation internally
Database Automatic scheduling by the vendor Schedules arranged by the Customer
Backups
IT Support / Highest Possible Standards as vendor was serving Need to hire domain experts by the
Expertise multiple diverse customers and need to maintain its customer, hence extra cost
reputation. Moreover domain experts were available
Software License ownership was nil, however the data was Customer holds the license copy of
Ownership exclusively owned by the customer the software along with data
ownership
Flexibility Customer can subscribe or drop number of user Customer pay one time for the number
licenses and software modules as per the requirement of licenses. They have to estimate the
requirement beforehand, and in case
the requirement changes, need to
upgrade all existing ones at extra cost
On the Web Vendors maintained highest possible Standards. Their All security infrastructure need to
Security data centres were larger and better protected. build and maintained by the customer,
Providing multi-level security, like: data encryption, conversely they may outsource it
user authentication, perimeter defence and operating
system & database security layers
Updates Seamless/Instantaneous by the vendor at no extra cost Customer get only patches from
manufacturer, for new version, they
have to buy the license again
Upfront Costs Low as capex was nil and operating expenses were Since all infrastructure and resources
variable depending on requirement. Most importantly costs need to bore by the customer. It
vendor economics aligned with customer satisfaction was very high
Annual Upfront it was US $0. The access fee per user seat was 10 - 15% of list price of the software
Technical included in annual subscription fee
Support Fees

(Source: Compiled by case writers on the basis of inputs provided by the respondents at Birlasoft)