Small and medium businesses (up to 999 employees) in India are on track to spend about US $640 million on packaged software purchases this year, up more than 25 percent over what they invested in all of 2006, according to Access Markets International Partners.

Spending on databases, accounting, networking, productivity and system software will account for more than 90 percent of the total software spending by SMBs this year. SMBs prefer to pay only for the features and modules they use.

"We expect the Indian IT market to maintain this bullish trend because of increased IT awareness among SMBs," says Nirupam Chaudhuri, Research Manager with AMI Partners. "SMB users have become more alert and they know what they need to be able to accelerate their business. A small percentage of IT-savvy SMBs have progressed to the third wave of IT adoption and are now demanding tailor-made solutions with superior support services."

"These days SMBs need to be convinced on all the features a Software package contains, and are only willing to pay for features they plan to use," Mr. Chaudhuri says. "In keeping with this trend, vendors have also launched solutions and packages in which pay-as-you-use features are incorporated, thus allowing SMBs to access only the modules they've paid for."

"Hosted applications have surged as well," Mr. Chaudhuri says. "Recent advances in security and a growing level of awareness of the benefits of hosted applications have gone a long way to reduce inhibitions about information security. The prevailing low bandwidth costs have added impetus to the adoption of such solutions."

The top management in SMBs wants a snapshot of all processes in the company in real time. Thus, such analytics applications are gaining traction. There is an increased focus on factors such as employee productivity, enhancing customer interaction systems, automating and streamlining operations, round the clock connectivity, information protection, etc. These factors are in turn driving adoption of the appropriate packaged software and solutions.

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Tags: smb - ami+partners - india

Prashanth Rai