“You are actually helping MSMEs to run their business. You are doing a good job”.
This statement came, yesterday afternoon, when I was discussing with a prospect while agreeing with them to implement our product, AcTouch.com, in their factory. We agreed to do a pilot implementation in one unit to understand the nitty gritty before we bring in other units. This is a 30 year old manufacturing company with 3 units spread across Bangalore. Let me call this company as “BIL”.
I tried to understand more on what CEO was trying to say as first time a customer was praising us that we are helping the MSME sector and it was a proud moment for me.
He explained me in detail, but let me summarise here.
His larger business problems are increase in competition and every year his customer (he supplies to large OEMs) is squeezing the profit margins while his cost is shooting up. He decided to go for an ERP to ensure the process are streamlined and reduce the redundancy etc. Multiple software vendors were approached. Soon he begin to worry on the total cost of ownership (TCO) that can be broken as below.
1. ERP License cost
2. 15% to 20% AMC, which is to be paid every year else the support service is stopped.
3. Implementation fees – This could spread from 3 months to 8 months depending on the requirements and would result directly into cost.
4. Latest Hardware to manage the application
5. Hiring new Resources (paying 2 times more than his experienced employee’s salary) to manage this ERP post implementation
So the solution he found is to recruit 2 people (Purchase, Stores and Sales), who will maintain the data in MS Excel and provide him the necessary information. Yes, there is a delay in getting the right information and sometimes, it is difficult to take a decision based on this. But he is OK with that. Because his annual cost for this is 1/10 of the total software and maintenance fees of an established ERP product.
This meeting resonated my strong views on Software Licensing model and forcing the Business Owners into “IT Persons”. Until we provide a better alternate to the current challenges, many MSMEs will be afraid to touch us from a long distance.
It is essential for the business to know their regular cash flows and sometimes need to tighten their belts. But this is possible provided they have the right information at right time. However the information required for a Purchase or Stores department is different from that for a CEO. One is operational while the other is the financial health of the company. Read my earlier article on “MSMEs and Need of Financial management”
During our sales calls, I found some instances where the consultants or other software vendors misused these Business Owner’s trust. Few of our prospects took nearly 2 weeks to start believing us. We visited our prospects multiple times, before they decided to SEE our product.
There are cases where some of our prospects, who use our product during the 14 DAYS FREE trial, called me at night 10 PM. I do not know whether these prospects were testing us or there is a genuine reason to discuss, but we provided the necessary guidance and support. Today they are our customers.
Few prospects took nearly 4 to 6 months before they become our PAID customers. It took a lot of efforts and time to earn their trust and we had to be consistent with our promises and deliveries. Now they are our champions and helping us to get more customers and business.
I strongly believe that our customers pay for our bills.
I worked with software industry (Enterprise Resource Planning (ERP), Banking and Treasury Software products) for the last 20 years.
Personally I do not agree to the software product licensing concept where OUR product is licensed to a customer to use it and in turn we make him an “IT Expert” to manage OUR software, take OUR database backup on his HARDWARE rather than RUN his Business for which he bought OUR software. Irony is, he PAYS money to TEST and IDENTIFY Bugs in OUR software and we collect the money as “Annual Maintenance Contract”.
So we developed a cloud solution, AcTouch.com, where customer has an option to use the product while we manage all software upgrades, regular DB backups and make sure that he runs his business without any problems. I normally write about MSMEs and their pain points that I encounter during my interaction.
Everyday I learn from MSME Business Owners.
You can also check the link at LinkedIn at https://www.linkedin.com/pulse/how-build-customer-trust-nityananda-rao?trk=mp-reader-card