Friday, April 03, 2009

Business leads IT!

This is an impressive story!. The story was featured in Indian daily - Economic Times, 2nd April, Bangalore Edition.

A group of companies in Garment exports industry in India have decided to setup an IT firm. The key objective behind this IT firm is to produce software for their business operations, so that they could save over Rs.1000 crores every year. About 10,000 business units are expected to benefit from this new venture.

This is a perfect example for Co-Opetition. The member companies may be competing in their respective market segments, since they are in the same industry. However, they have come together to solve a common problem. The proposed ERP-class solution will help them track export consignments in a real-time manner through IT solutions as well as mobile phones.

By investing in developing a new ERP software for their own needs, they can dramatically reduce/eliminate their individual investments in IT. Moreover, they also plan to go for a hosted solution where the individual exporter can pay around Rs. 4000 per month [approximately. 100$] apart from one-time license fee.

Currently, this group of companies spend close to Rs.200 crore [around $50 million] on IT every year & they are planning to develop the product with a seed money of around Rs.8 crore [around $2 million].

In addition to the bottomline savings, the association also aims to rise the topline by selling the IT solution to other similar industrial clusters in India. The association is talking to Microsoft and SAP to co-develop the software.

Some of my observations from this story:-
- New business models are emerging in ways and means we aren't familiar.
If a company needs to be competitive, it should not be just asking the question - Are we ready to adopt?. Instead, It should ask - Can We shape such trends?
- Business houses no longer shun themselves away from IT & Cutting edge Technologies. Instead, they are about to Lead others.
- Business Solutions at Compelling Price Tags is the way to go.

If a federated association can drive such inspiring initiatives that can improve bottomline & topline, is there anything Enterprise-IT can learn from those practices?

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