Defying Convention

Wednesday, July 2, 2008

If one believes in the story of a relentless, meteoric rise, Bangalore-based Affordable Business Solutions or ABS as it is well-known, is just the right case in point. The quintessential trail blazer, true to its name, has achieved steady success in just a matter of four years since its inception, and strictly on its own terms. Co-founders, Srikant Rao and Ravindra Kini, recount their story, which abounds in interesting facets of the company’s continued tryst with the SME.

Breaking the Mould: The SME Way
Setting up a joint business in 2004 was a conscious decision for the two friends, who decided to pool in their expertise in the industry and leverage it for their own venture. Recalls Rao in jest, “We plunged head-long into ABS to resolve a mid-life crisis. I am a sales and marketing person, while Kini has a finance and HR background; so our combined experience was quite vast and diverse.”

After ruling out obvious business options like ITES and IT solutions for large enterprises, Rao and Kini started ABS. In a marked departure from the convention prevalent then, ABS was going to center itself on overall functional solutions for the SME market.?

The duo had to counter ?well-meaning’ advice from various quarters that intended to deter them from the SME market, since technology would never be well-received there. The other obvious hurdle was the fact that the mid-size manufacturing industry in India was virtually over. The next evident question was, “Who actually would be ABS’s clientele?” Recalls Rao, “We did not know any better, so we decided we would walk-in and meet prospective customers directly and have impromptu sessions with them to understand their needs, and then work out where we could add value.”

Rao and Kini were also very clear about the definition of SME. It was not the clich?d revenue- and size-oriented parameters that ABS was going to consider. Instead the decisive factor would be the manner in which the customer positioned itself as a flat organization. Rao maintains, “There are organizations doing a business of say, Rs 10 crores, but have a huge hierarchy of people we have to encounter. On the other hand, there are Rs 100 crore companies, which have the promoters who directly talk to us. We automatically disqualify the former as a non-SME and opt for the latter.” It was the understanding of this simple philosophy that was going to help ABS to win customers over a period of time.

Moving Beyond IT: The No-Frills Approach
Going a step further, unlike many management consultants, ABS suggested to customers that they need not make upfront payment for the services rendered by them. Said Rao, “Changes in an organization become apparent over a period of 18-24 months. Hence, we gave customers an option to pay over the same duration, if they were satisfied with the results of our inputs.”

Not settling to become a mere reseller of software, ABS went on systematically identifying ?non-IT’, or in other words, the functional areas of service, for its clientele and delivering an entire ?Change Management’ package suitably to customers. Adds Kini, “We did not merely propose the changes and walk away with our cheque. It was akin to a turnkey project, where our involvement was total in helping the customer gain overall competitive advantage. We now call it Business Transformation.”

Taking a direct cue from its philosophy of ?Aggregating the Best’, and the ?Bottom of the Pyramid’ theory, the challenge in the process was to help the smaller customer scale up without compromise on quality, but at a cost affordable to him. This was achievable by merging the commercial competencies of hardware, software and functional solutions as a comprehensive package for the customer. ABS has bundled together what they perceived as the best of brands in these domains, Microsoft, IBM and Tata Communications, to name a few.

Ask Rao as to how they achieved the end, and whether this was a difficult process, and pat comes the reply, “No, on the contrary we firmly believed that we had to be frugal to be able to deliver the best.” This meant that ABS had to downsize its trappings without compromising on the delivery to its clients; this approach also struck a chord with the price-sensitive segment the company was operating in.

Interestingly, ABS has also taken the initiative to form a consortium of ?stand -alone’ freelance consultants in Bangalore and in other cities. Kini said, “ABS cannot possibly deliver every component always. So, we have a network comprising of people we know, who would execute particular parts of a project – be it marketing, finance or production planning – on a revenue-sharing basis.” The consortium enables ABS access a larger customer network than what would have been possible if they had worked on their own. So, it’s a matter of little surprise that the company, till date, does not have a sales team, and has won projects solely on the strength of references and word-of-mouth.

Keeping in mind its mission to provide ?affordable business solutions’, ABS soon figured out that for a mid-sized organization, the cost of an ERP solution was quite prohibitive. Instead, hosting the solution for customers seemed the ideal way to give customers the ERP feel. This entailed no capex to the customer, no maintenance commitments whatsoever – again, a concept well-ahead of its time. Rao reflects, “About 4 years ago, outsourcing software was unheard of in India. We took the lead and decided to host Microsoft ERP solutions.” The Software-as-a-Service (SaaS) model triggered some amount of skepticism among customers who had queries ranging from “why outsource?” to “how will you support us in case of an exigency?” Many customers initially could not accept the fact that a problem could be comfortably resolved offsite – from the ABS premises itself – at the click of a few buttons online. Kini says, “We had to demonstrate the possibilities ourselves.”

ABS’s Microsoft SaaS customer base now stands at around 700 users per month, and will continue to be an area of focus. An indication of ABS’s bond with Microsoft is the fact that the software major has inducted the company into its ?Inner Circle’ of partners for Dynamic Business Solutions. “There are about 60 such partners worldwide,” claims Rao. This goes on to show that it is not merely the volume of business, but the dynamism of ABS’s ideas,?? and functioning that has apparently impressed Microsoft.

?Reverse Franchising’ for the Future
ABS has now evolved a novel concept of ?Reverse Franchising’, a throwback to the time-tested franchisee model. Rao explains excitedly, “Reverse franchising is our way of inviting aspiring entrepreneurs across various walks of life to join hands with us.” But, the twist in the tale is that the aspirants do not straight away get to become partners of the business; they have to undergo a fairly grueling process of apprenticeship with ABS for a year, following which, they are given charge of new ABS business locations. The idea behind this, opine Kini and Rao, is to ensure that the candidates are well-grounded in functional experience and at the same time, they imbibe the values that ABS stands for. The experiment has spun off ABS Mysore and Cochin, while new ABS units are waiting to start off operations.

With a host of fresh concepts and ideas in place, and most importantly, an exponential growth curve projected for the coming fiscal, ABS seems all set to blaze many more trails. Rao and Kini sign off saying, “It is simply about aggregating the best.”

Source: Channelworld India (link opens in a new window)