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Concept Arbitrage: PayCycle & Intuit

Posted on Thursday, Oct 25th 2007

I wrote a widely read Concept Arbitrage series sometime back. Here are some additional thoughts on that topic. The focus of the series is on various venture ideas that have been successful in the US, and can be replicated in India.

Well, Software-As-A-Service (SaaS), applied to financial management disciplines like Payroll, Financial Accounting, Tax Preparation and Filing, Bill Payment, Cash Management, etc. for Small-Medium businesses (SME) is an area that Indian entrepreneurs should look into.

To learn more, I suggest you read my interview with Jim Heeger, CEO of PayCycle. I will follow this up by further coverage on this topic, and more interviews of entrepreneurial activities that I am seeing here in Silicon Valley.

In terms of larger companies, the notable ones are Intuit (Financial Accounting, Tax, Payroll), ADP, PayChex (Payroll), NetSuite (ERP), etc.

Now, if you are Indian entrepreneur and are working on this or a related area (Benefits, for example), I would like to hear from you.

This segment is a part in the series : Concept Arbitrage

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Sramana,

I think Tally Solutions is a good example of a company that has successfully built a business in the financial management/accounting space for SMEs in India. Tally is the defacto standard for accounting & book keeping amongst SMEs in India. In fact, when they hire for those functions SME’s specifically look for certified Tally professionals.
They are slowly expanding into emerging markets and is bound to turn out as a great success story emerging out of India.

Gautam Friday, October 26, 2007 at 2:45 AM PT

Yes, I am aware of Fact and Tally, but they’re not SaaS solutions. They’re straight accounting packages from what I know. Has that changed?

Sramana

Sramana Mitra Friday, October 26, 2007 at 8:12 AM PT

Agree they are not SaaS, but they have managed to successfully build a huge installed base. SaaS is a delivery mechanism at the end of the day. They have cracked the hard part of achieving distribution scale amongst SMEs — converting into a SaaS model should be easier now compared to a someone starting as a SaaS trying to achieve that level of penetration.

Gautam Friday, October 26, 2007 at 9:41 AM PT

Without a question, Gautam. Having access to and knowledge of the customer base is incredibly important, and hugely leveragable.

sm

Sramana Mitra Friday, October 26, 2007 at 9:55 AM PT

Sramana, even with all the SaaS hype in the Indian market, the rental model is something that has yet to catch on. Indian companies still believing in owning the entire process and are uncomfortable with the idea of letting their data reside in the cloud.

As an ERP company we’ve did the SaaS route back when it was called something else: “ASP”. Customers may talk SaaS but they eventually sign up for the self hosted version of our ERP. While we see no significant signs of change yet we hope it will. For no other reason than the fact that we can streamline our support response times from the current 24-48 hours to less than 12.

You can see a live demo by going to http://ascomp.com >Reckoner as a Service. Select the demo database ‘J2Training’ and use the user name sa without any password. We currently use this to train new users for the self hosted web version of the software.

Abey John Monday, November 12, 2007 at 2:59 AM PT

Hi Abey,

The Indian market is generally at least a few years behind the US market. SaaS has started gaining momentum in the US only in the last 2-3 years, so you would need to be patient, educate the market, etc. (which I imagine that companies like SAP are also doing now), before the market hits its stride.

However, if you like up your ducks, you will be well-positioned when the market momentum hits.

A lot of Indian Concept Arbitrage would need to be about anticipating trends and timing.

Sramana

Sramana Mitra Monday, November 12, 2007 at 9:22 AM PT