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‘FREE FOR SMEs’


Free and Low Cost ICT Solutions for SMEs

IAMAI Knowledge Series 1


© IAMAI, 2010
All rights reserved. No part of this report may be reproduced, either in part or in full, without the prior permission of Internet & Mobile Association of India
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‘FREE FOR SMEs’


Free and Low Cost ICT Solutions for SMEs

IAMAI Knowledge Series 1


CONTENTS

Page

About the Study 3


Structure of the Report 3
1. Introduction 4
2. Internet-based Services Across the SME Value Chain 6
A. Marketing 6
B. Purchase and Sales 11
C. Logistics and Information Systems 13
D. Documentation and Data Management 15
E. Business Communication 18
F. Accounting 19
G. Human Resource Management 20
3. Overall Assessment 21
End Notes 26
References 28

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About the Study
Adoption of internet-based technologies, such as “E-commerce” and “Cloud Computing”,
has changed the very nature of how business organisations operate and manage their day-
to-day functions across the globe. Apart from these, there are a wide range of downloadable
IT tools and online applications, which are being used by business organisations to increase
efficiency and productivity.

However, use of internet for business operations among small and medium enterprises
(SMEs) is still at a nascent stage in India, primarily due to lack of affordability and awareness
as well as poor computer literacy and penetration of internet services beyond a handful of
cities.

This paper reviews various types of free and cost-effective tools and services available on the
internet that can be used by SMEs for increasing their productivity. To appreciate the
potential impact fully, the services have been analysed under different business processes
along the SME value-chain. We also list examples of such applications and online tools.

Structure of the Report


The report is structured into three main segments. The first section gives an overview of
SMEs in India and the potential of internet to enhance growth and productivity of the sector.
The second section is the core of the study, which brings out how internet can be leveraged as
a cost-effective medium to achieve higher efficiency in the key business processes of the SME
value-chain. The third section concludes the report with an assessment of current adoption
of internet-based technologies by SMEs in India and their future potential. This is followed up
with End Notes and References.

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1. Introduction
Importance of micro, small and medium enterprises1 (MSMEs) as one of the most vibrant
sectors of the economy is widely accepted. It has created tremendous employment
opportunities and currently employs over 60 million workers. It is estimated that in terms of
value, the sector accounts for about 45% of the manufacturing output and 40% of the total
exports of the country.

In recent times, the integration of information and communication technologies, especially


the internet, has revolutionised operations across businesses. Some industries such as
travel, hospitality, international trade, business services, banking and finance have
completely transformed their operations and service delivery models by leveraging
technology.

However, the benefits of internet are highly under utilised in India. Even in cases where
internet and IT are used, these are restricted to a few basic processes such as communication
and documentation or industry segments. Even if one ignores micro-enterprises, which are
extremely small in terms of size and investments and have a limited scope of using internet
and technology, there is a considerable small and medium enterprise (SME) sector where the
adoption of technology can be much more comprehensive. A recent study by Assocham
predicts that by 2012, the SME sector is expected to contribute 22% to India's Gross Domestic
Product, up from 17% at present. This paper primarily focuses on the SME sector as potential
gainers from greater adoption of internet and internet-enabled services.

In the new globalised economic scenario, it is becoming increasingly important that the SMEs
adopt and leverage internet as a tool to increase productivity and enhance competitiveness.
Today, a host of free and low-cost services are available online, which can be used by these
enterprises to increase efficiency for the entire range of business processes across their
value-chain. Many of these are global tools and allow companies in India to benefit from
best-in-class services available to their international peers. Besides, there are many tools
that address the requirements of Indian companies2 or can be customised to meet specific
needs of different industry segments.

There are two categories of tools and value added services that can be accessed using the
internet:
1
Based on investment in plant and machinery (for manufacturing enterprises) and on equipments (for enterprises service sector
enterprises), the enterprises have been classified into micro, small and medium types. (Please refer to endnotes for detailed definition)
2
For instance, accounting and book keeping, tax and legal tools which meet the requirements of Indian regulations
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1 Products and services that can be downloaded into a user's computer and used either
off-line or on-line. This requires the users to have a computer with necessary
specifications as well as basic operating system and software installed in the computer
beforehand.
2. Products and services that can be used online in real-time by accessing internet
irrespective of the computing3 device used or the location of the user. In fact, there is
now a move towards a new technology called cloud computing where all the software
and hardware requirements to use applications are handled by a remote server. This
technology, which is currently under development globally, is expected to gradually
shift the entire desktop operations into an internet environment, by enabling users to
access and work on their remote server with installed software programmes; all with a
web-browser and a good internet connection. This will further increase the ability of
internet to generate value for enterprises by increasing their productivity and thus, will
enable them to grow their businesses.

This paper analyses the entire range of internet-based tools and services currently available
to the SME sector either for free or at a nominal cost4. Today, these services encompass the
entire range of business processes of a small-scale operation.

It is however important to recognise that processes such as communication and


documentation with more immediate use of technology have witnessed the maximum
innovation. Similarly, even in the case of small-scale businesses, there have been industry
segments such as travel, research, accounting and book keeping and other business services,
where technology had a direct role to play in increasing productivity. In such cases, the
adoption of internet-based technology solutions has been relatively high.

Therefore, to appreciate the potential impact of these services fully, these services have
been analysed under different business processes across the SME value-chain. Further, these
processes have been categorised as operational processes and functional processes. This
also allows us to put in to context the current adoption, future potential and scope for
improvement in productivity.

Cloud computing is internet-based computing, whereby shared resources, software and information are provided to computers and
other devices on-demand. The term "cloud" is used as a metaphor for the internet. Everything an information system has to offer is
provided as a service, typically involving the provision of a dynamically scalable and often virtual resource as a service over the
internet.
Although the tools and services are free or come at a very nominal cost, there will be cost of accessing the internet to benefit from
these products and services. However, it would be fair to say that the current cost of broadband internet in India is not prohibitive.
Currently, a 256 kbps unlimited download plan from private operators is available for Rs.650-1000 per month; BSNL/MTNL for Rs.350-
600 per month. Plans with data download limits are available at lower price points.
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2. Internet-based Services Across the SME
Value Chain
Free and cost-effective online applications are available for all typical business processes of
SMEs. However, there are a number of operational processes that are more technical in
nature and are industry specific such as designing, production, quality control and safety.
Even though there are online software applications to support these processes, there are
specialised tools meant for specific industries and purposes5. In line with our focus, the paper
presents some of the more generalised areas of business operations of SMEs and highlight
how internet-enabled technologies can help them in increasing efficiency and achieving
faster growth.

A. Marketing
Some of the biggest challenges that SMEs face are reaching out to the target audience for
their products and services and locating new markets to expand their businesses. Most of the
SMEs find it difficult to allocate funds for marketing due to budgetary constraints and depend
on goodwill, personal-contacts and word-of-mouth for their sales. The general trend is to
invest in tangibles such as plant, machinery and office space. However, with greater
availability of information loyalty of buyers cannot be taken for granted and systematic
marketing should be an integral part of the business in order to achieve higher growth. Free
and low-cost marketing and brand-building by using the internet as a medium, comes as a
boon in such a scenario. Box 1 (Page 9) lists internet-based marketing services specifically
targeted at SMEs.

a. Business to Business (B2B) Marketplaces


SMEs generally find it difficult to advertise their products and services in paid media such as
newspapers, banners and television. It is also not possible for them to meet large number of
potential clients physically in order to market their products, which makes targeting
international buyers even more difficult. B2B marketplaces can provide solutions to many of
these issues that restrict SMEs from expanding their market. There are several online B2B
marketplaces that offer a wide range of services specifically targeted at the SME sector.
These services can be utilised for various aspects of marketing either for free or by spending
some nominal amount. These are platforms where both sellers and buyers can leverage the

5
These specialised processes are out of scope of this paper and have not been covered in detail. Examples of Free online tools targeted
at small business organisations, specifically from software development industry have been provided in End Notes.

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power of internet to have worldwide visibility, interact and conduct business. These portals
also support their communication needs and help them display an array of products in
variety of ways. Some of the major services offered by B2B portals include:

?
Listing of the enterprise: SMEs can list themselves in the directory of enterprises on
these portals and provide details about their products and services. This service is
provided free by most of the B2B portals. Although there are usually restrictions in
terms of numbers of products that can be uploaded for free, there are B2B portals that
allow suppliers to upload unlimited number of products and services. These portals are
great platforms for suppliers to interact with potential buyers and have been very
successful for export-oriented SMEs. Both national as well as international players
looking for specific products can be members of the directory. Any potential buyer
searching for similar products or services can view the offerings and contact the
suppliers through mail or phone.
?
Sales leads: These refer to some specific product/service requirement of a potential
buyer posted on the portal. This lead can be used by listed enterprises to sell their
products as per the requirement.
?
Web-site building: Those SMEs that do not have a website of their own can access this
facility to build a simple website for free that can be used as an interface to reach out to
prospective buyers.
?
Tenders: A large number of local, national and international tender documents are
available on these portals. These can be accessed for free and the bidders have to incur
costs only while applying. At present, IndiaMART.com is the only portal in India that
offers free tender service in the market.
?
Trade shows: These portals regularly update the members regarding various local,
national and international trade shows where they can participate and promote their
products.
?
Latest news on the sector: The SMEs can keep track of various activities and policy
changes in both domestic and international markets and get up-to-date information
about sector's performance.
?
Value-added services: These are generally paid services offered at a much lower rate
than the market. For instance, partnering with a payment gateway for online money
transaction, accessing MIS software, taking help from a recruitment consultant for
getting employable candidates are some of the value-added services offered by these
B2B portals.
?
Building Credibility and Bridge Trust Gap: In order to make a purchase decision by
global buyers, they need relevant, unbiased information about the business status of
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the sellers. Most B2B portals have processes in place to check authentication and data
validation of the supplier6. They offer various credibility products by which suppliers
can establish their credibility and win confidence of buyers from across the globe.
These products highlight suppliers' legal, statutory and infrastructure capability
information and add authenticity to their online profiles/websites.

b. Social Media Marketing


Free world-wide visibility through participation in online social media such as social
networking sites, blogs, online platforms for picture, video and presentation sharing and free
press release distribution is becoming an increasingly effective way to gain exposure for small
business owners, who have neither the time nor resources to devote to an all-out marketing
campaign. It is a simple way to keep current and potential customers informed of new
developments and capabilities. It is worth mentioning that content shared through online
social media also helps in search engine optimisation and provides it greater longevity. There
are various ways for SMEs to promote themselves through online social media marketing.
Some are mentioned below:

?
Professional and social networking: There are two ways of promotion on these
platforms. One way is to book space for advertisement on these sites, which is either free
or involves a nominal charge. Another way is to create a profile about the SME that looks
and behaves like user profiles to connect and engage with the prospective clients and
business partners across the world. SMEs can promote themselves by posting sales,
discounts, or specials on their web profiles/pages. For instance sites such as “Facebook”
and “Orkut” can be effectively used to converse and interact with existing and potential
consumers and business partners to build mutual rapport and trust. These sites are
fantastic tools in giving brands a voice and a personality. To achieve this, one needs to put
forth a unique personalised style while interacting with potential customers. Some of the
sites offer free business listing for SME services. For instance, “ibibo city Ads” is a case in
point that enables small businesses to find and publish information or communicate with
one another. Another option is to buy the premium ad space, which appear on the profile
page of other users. SMEs can choose to either pay for clicks or pay for views. Here, the
business groups can target their exact audience with demographic and psychographic
filters.
?
Blogs: Online writing though blogs can be used to share thoughts, ideas and concepts.
SMEs can take advantage of this online tool to share their knowledge and service
6
For instance Indian B2B portal Indiamart offers seller authentication service known as “Trust Seal”. They also offer video profiles of
suppliers to prospective customers.
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offerings. Blogs are short bursts of information, and can include teasers that drive traffic
to the main business website or attract prospective customers. Simple, pre-formatted
blogs can be created for free through various websites. SMEs can include a link to the
blog in every email sent from the company. SMEs should aim to post regular updates on
blogs related to product features, business performances and new service offerings.
?
Video sharing: Online Platforms such as “YouTube”, present a lot of possibilities for
businesses looking to market themselves by expanding their web presence. A video
about the product features or service offerings by an SME can be uploaded in such a
website and the relevant link can be emailed to the potential clients to present industry
expertise or a video version of the capabilities brochure. SMEs can also ask their satisfied
customers to sit in front of the video camera and provide a reference for future
customers. YouTube makes it easy to upload videos to the web for easy sharing and even
easier searching.
?
Presentation sharing: There are websites such as 'Slideshare' using which presentations
can be uploaded online for free and shared with clients or business partners. SMEs can
upload presentations regarding company profile, capabilities and products. The best way
to do this is to post a web-link of the presentation to the prospective clients.
?
Picture Sharing: Websites such as 'Picasa' and 'Flickr', can be used to upload and share
pictures and images. These are efficient and secure ways of promoting businesses by
SMEs by sharing pictures, banners and images for various various purposes such as
upcoming events, product offerings, marketing brochures and sales offers.
c. Visibility through Search Engines
Having online presence through a website of its own is one of the basic requirements for an
organization to appear in any online search result through online search engines such as
“Google” or “Yahoo”. Many SMEs which do not have a website can take advantage of online
website-building applications that can be used for making simple websites for free.

“Search Engine Optimization” is a method by which SMEs can optimize their websites so that
they can be properly captured by online search engines when potential buyers, investors or
partners search for enterprises producing a specific product or offering a specific service.
This is a completely free service.

Besides, there are paid services where the enterprise can choose to appear in online search
results with certain taglines and pay on the basis of either the number of clicks on the ad
which leads to their sites or the number times the ad is displayed. For instance the global
search engine giant, “Google” has a programme called “AdWords” through which text ads
can be created that can appear when certain keywords are searched by people online. In
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2009, through a special offer to SMEs, Google asked them to avail advertising coupons worth
Rs 2,500 and register their websites with Google's AdWords platform to start advertising
online with a budget as low as Rs 200 a day and increase it as per their business demand.

Please refer to Box 1 for a few examples of online portals and applications that can be used by
SMEs for marketing purpose.

Box 1: Examples of Online Tools for Marketing

a. B2B Portals
The following portals offer the basic services for free and in some cases charge a nominal amount to offer premium
services.
• IndiaMART.com
• Tradeindia.com
• BizXchange.in
• Busytrade.com
• Itrademarket.com
• Indianyellowpages.com
• Sme.in

b. Social Networking Sites:


• LinkedIn.com: Professional networking system that can be used for marketing, business development and
searching for new business contacts, customers and employees.
• Twitter.com: Short 140 character bursts can be used to post links of recent blog posts or product reviews,
breaking news and updates on the product and service offerings by the business enterprise.
• Facebook.com: SME's can choose to market their service offerings by targeting its audience aptly by using its
premium ad space or by creating a web profile, which is a free service.
• Ibibo.com: SMEs can choose one of over 230 categories to list their business on ibibo CityAd for free and get
leads on their mobile directly through ibibo's free SMS service. Other way is to use iPromote to promote
business or website to others present or not present on ibibo.

c. Blogs
• WordPress: One of the most popular free blogging platforms. WordPress can be downloaded free of charge
from the site. (WordPress.org)
• TypePad: This platform is free for the first 14 days only, but the 2-weeks trial period should give business owners
enough time to decide whether it is the right choice for them. (TypePad.com)
• Blogger.com: Free blogging platform

d. Google Maps
• “Google Places” can be used to create free listing of a business in Google Maps. When potential customers
search “Google Maps” for local information, they'll find the listed business with its address, hours of operation,

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even photos of the storefront or products. It's free.
• “WikiMapia” is an online map and satellite imaging resource that combines Google Maps with a Wikipedia
system, the largest online encyclopaedia. It allows users to add information, in the form of a note, to any location
on Earth. It is free and over 650,500 users from around the world currently are registered.

e. Google Sites
Google Sites is a free and easy way to create and share web pages. (sites.google.com)

f. Free Business Guide and News updates on SMEs


• SME Toolkit: This is an online resource centre to empower Indian SME's and help them become globally
competitive. It also has free downloadable software tools such as the 'Business Plan Maker' the 'Website
Builder' and a large collection of 'How To Articles'. (http://india.smetoolkit.org/india/en/index)
• SME Times (http://smetimes.tradeindia.com/)
SME News (http://news.indiamart.com/)

B. Purchase and Sales


Internet-based technologies, especially electronic commerce (e-commerce)7, offers SMEs
the opportunity to cut business transaction costs and find new customers and suppliers,
especially in markets they have not easily been able to reach before – either internationally
or regionally. Apart from finding new customers, it also helps SMEs in serving existing and
new customers better, offering more value to them. This goes a long way in building brand
recognition, customer loyalty and therefore higher sales. Box 2 presents examples of
e-commerce portals that can be used by SMEs for sales purpose.

a. Business-to-Business (B2B) E-commerce


By becoming a member of an online B2B e-commerce site, an SME can have a low cost, highly
functional and easy-to-use channel for its sales operations. These are cost-effective
marketplaces which provide SMEs with free listings in their directory, giving them easy access
to all traders (Buyers and Suppliers) listed in the directory. It also enhances their visibility in
the product catalogues for importers, exporters, manufacturers and suppliers. They offer a
wide range of services that can be availed for free and then upgraded to premium accounts
for better listings, visibility and responses. Apart from helping businesses in getting direct
trade leads, online marketplaces also support their communication needs through online
chatting tools. Both buyers and sellers can benefit by services offered by B2B e-commerce
sites.
7
E-commerce or Electronic commerce consists of buying and selling of products or services over electronic systems such as the internet and
other computer networks. Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange
of data to facilitate the financing and payment aspects of the business transactions.
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Potential buyers can freely navigate through the e-commerce sites to search for products and
suppliers. If they find a product of their interest, they can send a query and directly contact
the suppliers. The other effective way for buyers to find the required product is to register
free and post unlimited buying leads—which are like wanted ads that tell the suppliers
exactly what the buyer wants and get quotations in their inbox from qualified suppliers.
These sites also offer instant messenger service that lets the buyer chat and send files to
trading partners in real time.

As for suppliers, most of the e-commerce sites offer to create free websites for registered
SMEs to display their products. However, premium members get customised listing for their
products and better visibility in keyword searches. Through an e-commerce application a
whole ordering process can be tracked from payment to delivery and bring greater efficiency
in customer service. They can search for buyers and contact them directly or through instant
messaging services. All sellers can reply to posted buyer's leads. Both sellers and buyers also
get free personalised trade alerts daily/weekly in their inbox that notifies them of latest
opportunities, new offers and new product and company listings. Some of the B2B sites also
enable SMEs to join discussion groups with their peers across the globe, and thereby share
information and experiences. This is valuable especially to entrepreneurs who are
geographically isolated from peers in the same business and helps create business networks.

b. Business-to-Consumers (B2C) E-Commerce


There are numerous B2C shopping sites that offer fresh and used consumer goods and
products for sale online. These online platforms follow highly customer-centric practices that
include free home delivery of the products, multiple payment options (such as cash on
delivery, internet banking, credit card, cheque pickup and EMI options), product reviews and
price comparisons. Sellers and manufacturers can register for free by filling up an online form
and can start displaying their products and services on these online platforms. However, free
registrants might face some restrictions in terms of number of products they can display on
these sites. Some of the e-commerce platforms also offer auction services, which enables the
sellers to sell their products at dynamic prices based on supply and demand. These sites offer
either manufacturer's or seller's warranty and therefore require sellers to supply quality
products to ensure brand value.

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Box 2: Examples of Online Tools for Sales

I. Online Applications
a. B2B E-commerce sites
• Indiamart.com: One of the largest B2B marketplaces in India, IndiaMART.com brings bulk buyers and
suppliers together through business directories, online product catalogs, buy-sell offers, industry specific
marketplaces, sourcing guides, trade shows participation, free listing, free tenders and many other value added
services.
• Trademart.in: Buyers and sellers get free listings in 27 business portals. As a free member one can use search
tools, contact each other directly. Buyers can post sales leads and send inquiries to suppliers free of cost. Sellers
can post products to sell and contact certain buyers who accept quotations from free members.
• Alibaba.com: Global leader in B2B e-commerce with over 6.5 million members in 240 countries worldwide. By
registering free a business enterprise gets a free company website and can display up to 50 products. The site
gives free trade alerts and free 'trendsget', which gives the trends on the most searched products, most inquired
products, categories with fewer competitors and more.
• ecplaza.net: Features are similar as Alibaba.com. In its ad-service, there is “one-a-day" option, which is a way
to promote only one company, product or service to the target customers of the world for a day in all pages of EC
Plaza website.

b. B2C E-commerce sites


• ebay.in: Registration is free but restricts the seller in terms of number of product categories.
• indiaplaza.in: It has over one million online transacting customers globally. Provides both free and paid
services.
• shopping.rediff.com: Provides sale and purchase of three services: consumer products, gifts and auctions.
• naaptol.com: Comparison based social shopping portal. Product listing is free on this site.
• shopping.sify.com
• homeshop18.com: Operates in a multimedia environment including television, web, catalogue and print to
reach high quality products and services directly to customers across the country

II. Downloadable Tools


There are free ERP tools specially designed for SMEs that can support in efficient management of entire sales
process. As the coverage of these tools is more comprehensive and not limited to purchase or sales, they have been
discussed in the subsequent section. Refer to Box 3 for examples.

C. Logistics and Information Systems


Logistics involves the integration of information, transportation, inventory, warehousing,
material-handling and packaging, and occasionally security. Logistics is a channel of the
supply chain which adds the value of time and place utility.

a. E-Commerce Technologies
E-commerce provides real-time information which is essential for companies to reduce the
costs related to logistics activities such as distributing, storing and retrieving products. It
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provides companies with related information on the flow of goods and the status of orders
which helps in conducting prompt delivery using the most reliable mode of distribution
across the distribution channels. However, it is argued that when adopting e-commerce
technologies in logistics activities, companies need faster, more responsive and demand-
driven distribution operations in order to fulfil customers' needs. Companies would need to
take into account all factors such as good Internet facilities, compatible systems and
sufficient human resources that could affect the success of developing e-logistics within the
companies. Please refer to Box 2 above for a few examples of e-commerce platforms that
offer a range of cost-effective logistics related services for SMEs.

b. Enterprise Resource Planning (ERP)


Enterprise Resource Planning (ERP)8 is a term used to describe a software application that has
the capability to provide end-to-end support in smooth management of businesses
connecting all the components of a business value chain. It is an amalgamation of a
company's information systems designed to bind more closely a variety of company
functions including human resources, inventories and financials, while simultaneously
linking the company to customers and vendors.

Even though ERP tools can be used in all areas of business operation, there are many smaller
versions with fewer functionalities that can be used for operations such as inventory control,
order management, warehouse management, purchase orders and invoicing. ERP software
can be a very helpful technology for businesses of all sizes.

Proprietary ERP software can be too expensive for small or medium business owners. On the
other hand, there are a lot of free and open source ERP projects available for download from
the Internet.

Some of the free ERP applications which are available online are mentioned in Box 3.

8
Enterprise Resource Planning (ERP) is an integrated computer-based system used to manage internal and external resources including
tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow
of information between all business functions inside the boundaries of the organization and manage the connections to outside
stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business
operations into a uniform and enterprise wide system environment.
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Box 3: Examples of Free ERP Tools

• Compiere is free and open source business ERP software for small to medium sized businesses. It integrates
functional features such as order management, supply and inventory management, and accounting.
• Opentaps has an ERP software that is a general ledger which works best for inventory, warehouse and order
needs.
• Jazz ERP is software that is focused for small to medium sized companies who want an ERP system focused
specifically to the purchase and selling process, workflow, accounting, projects, manufacturing, human
resources and payroll.
• Openbravo is a professional web-based online open source ERP solution and package. It is easy-to-use and
provides ERP modules and packages such as integrated accounting, sales management, CRM solutions,
procurement, inventory, manufacturing and production, and customer support service management, and
project management. Openbravo can be used as an apparel, garment, food, and textile ERP for free.
• BlueErp is web-based online ERP accounting freeware for sales management of small and medium business. It
provides ERP modules and features such as double entry accounting, sales order management, analytical
accounting, accounts receivable, user defined sales analysis, purchase orders, accounts payable, recurring
invoices, inventory management, and general ledger.

D. Documentation and Data Management


There are numerous free downloadable tools as well as online platforms which can be used
for documentation, presentation, data analysis and record keeping. It allows users to create
edit and save data online while collaborating in real-time with other users. They can also be
downloaded and saved to the user's computer. Some of the services offered by these online
applications are as follows:
Word processor: Using online word-processors all kinds of documentation can be done for
free by SMEs such as creating business plans, project reports and various other business
documents.
Spreadsheet: This can be used for a number of data-handling operations such as record
keeping, creating tables, conducting basic data analysis and creating charts.
Presentation: Presentations can be prepared online for purposes such as marketing, brand-
building and business promotion.
Form: Online forms can be created for various purposes and can be mailed to others.
Drawings: Organizational charts, flow charts, design diagrams and many more drawings can

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be prepared easily for free by using online drawing editors that are cost-effective.
Data storage: Online data storage facilities are available where data and information can be
saved online on a web-server and can be accessed through internet anytime.
Data back-up Solutions: Free online and off-line data back-up solutions are available where
important data can be effectively stored in an external media or a remote server to prevent
loss during a natural disaster or system failure.
Calendars / Planners: Users can create events, make schedules using online calendars and
share calendars with teams and groups. They can view their calendar by day, week or month.
Such a facility helps an enterprise to plan their activities better by eliminating confusion
between co-workers about the upcoming tasks.

Some of the tools available online for documentation and data management are
mentioned in Box 4.

Box 4: Examples of Online Tools for Documentation and


Data management

I. Online Applications
a. Offering from Google
• Google Docs (docs.google.com): Free, web-based word processor, spreadsheet, presentation, form, drawings
and data storage service.
• Google Calendar: Free time-management web application. Lets users create events, manage multiple
calendars and share calendars with teams and groups. (www.google.com/calendar/)
• Picasa: It is free software for organizing, editing and printing photos. (http://picasa.google.com/)
b. Offerings from Docstoc (docstoc.com):
• Docstoc Embed: Allow to showcase presentations, PDFs, word documents and spreadsheets on Blog or
Website.
• Docstoc OneClick: Allows one to upload any document(s) to Docstoc by right clicking on the file(s) from the
desktop. One can send large email documents (up to 50 MB) without attaching files, mainly as weblink.
• Docstoc MyDocs: Fastest and friendliest way to store, preview and manage documents online. One can store

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all documents (.doc, .xls, .ppt, .pdf) in their own customized, personal online folders for anytime, anywhere
access.
c. Contactoffice.com: Personal and/or shared office tools, such as calendar, address book, documents, notes,
tasks, forums, meetings, bookmarks, webmail, etc.
d. Editgrid.com: Free advanced online spreadsheet with templates and collaboration features.
e. Thinkfree.com: Free online web office, word processor, spreadsheet, presentation program, blog, etc.
f. Calculator.com: Online calculators for currency conversion, time calculations, unit conversions, business,
finance, etc.
g. Icebrrg.com: Lets anyone easily build online forms for websites and blogs with no requirement for
programming, software or special skills. Only a web browser is required and they handle the programming and
hosting.
h. PDF Convertor: Free online web-based PDF converter. (freepdfconvert.com)

II. Downloadable Tools


a. Free Word Processing Software
• Open Office (openoffice.org): Complete professional freeware office suite, with professional word processor,
spreadsheet, etc. Versions available for Linux, Windows, Solaris.
• Softmaker Office (softmaker.com): A Microsoft Word-compatible word processor and a Microsoft Excel-
compatible spreadsheet on Windows for free.
• Page Plus (freeserifsoftware.com)
• Scribus (scribus.net): Word Processor for small business
• AbiWord (abisource.com): For business owners
• TeeChart Office (http://www.softpedia.com/get/Office-tools/Other-Office-Tools/TeeChart-Office.shtml):
Freeware, open source charting and plotting tool with hundreds of charting styles and multiple configuration
parameters. Includes importing data and exporting charts to several formats (JPEG, PNG, GIF etc.). Versions
available for Linux and Windows.
• PDF Creator (sourceforge.net/projects/pdfcreator): Freeware, open source, easily creates PDFs from any
Windows program. Use it like a printer in Word, StarCalc or any other Windows application.
• hellopdf.com: Free PDF to Word Doc Converter
b. Free tools from Microsoft for viewing documents (http://www.microsoft.com/downloads)
• MS Word Viewer: It can be used to view, print and copy Word documents on a computer that does not have
Word installed.
• MS Powerpoint Viewer: It allows one to view and print full-featured presentations created in PowerPoint 97 and
later versions for those who do not have Powerpoint installed.
• Excel Viewer: Viewer for MS Excel spreadsheets for those who do not have MS Excel installed.

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E. Business Communication
Business communication is one area for SMEs where internet has contributed significantly,
both in terms of cost saving and efficiency enhancement. Current adoption of internet-
based technologies in business communication by SMEs is very high. E-mail today is the
default mode of communication to interact with clients, vendors, partners and investors.

Time consuming activities such as sending images through e-mail attachments can now be
avoided by taking advantage of websites such as 'Picasa' and 'Flickr', which can be used to
upload and share images. Not only are these efficient, but they also allow the user to share
securely without delivering the data. These tools are extensively used by designers to share
drafts and work-in-progress with their clients. Besides, there are free online tools which can
be used to send large attachments. Again, online platforms such as 'Slideshare' can be used
as a business communication tool to upload presentations on the internet for free and share
with clients, colleagues or business partners.

SMEs can also benefit from free online applications to prepare business documents that have
a professional look and easily communicable to the clients or business partners. A variety of
ready-to-use templates are available for creating business letters, forms, survey
questionnaires, business plans and proposals and invoices.

Box 5 lists down examples of a few free online tools that can be used for efficient business
communication.

Box 5: Examples of Online Tools for Business Communication

I. Online Applications
• Google Apps Standard Edition: This free Google application makes it easy for a group of people involved in a
small business to collaborate and communicate online with up to 50 customized email accounts as per a
company domain that already exists. (http://www.google.com/apps/index1.html)
• Surveymonkey.com: Free online survey software & questionnaire tool. Enables anyone to create professional
online surveys and publish custom surveys quickly, and then view results graphically and in real time.
• YouSendIt (yousendit.com): Lets users securely send, receive and track files on demand. Sending files up to a
size of 100 MB file is free, larger files require a paid account.
• Faxzero.com: For sending free fax from computer.

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• Freebusinessforms (freebusinessforms.com): Provides free business software and forms, which are readily
available for download.
• Docstoc OneClick: Large documents can be mailed as a link with attaching files.
• Slideshare.net: Online resource for sharing and exploring presentations, documents and PDFs. Individuals &
organizations upload documents to share ideas, connect with others and generate leads for their businesses.
• Google Picasa Web Albums: This free online application from Google can be used to create online photo
albums to share with others globally.

II. Downloadable Tools


• Free Templates Depot (freetemplatesdepot.com): Free templates to download, edit, and print such as –
invoice, memo, resume, powerpoint presentation, invoices, flyers, invitations etc.
• WorldLabel.com Templates (www.wordlabel.com/Pages/template_1.htm): Address label, CD label, mailing
label, shipping label, audio cassette label templates etc.

F. Accounting
Internal and external accounting as a source of information for owners and managers of
small enterprises and their different stakeholders is steadily growing. Appropriate
accounting information is important for successful management and control of business
operations. However, it is of crucial importance that the accounting systems used by SMEs
meet these needs and yet avoid unjustified administrative burden.

With the advent of technology, it is now possible to manage a range of accounting operations
with cost-effective online accounting system. Such bookkeeping and accounting systems
have become valuable management control tools by integrating various areas of the
business operation into a single reporting format, thus providing a much greater ability to
manage total operations and save time and money by automating repetitive processes.
Small and medium enterprises can use online accounting tools for the following purposes:
?
Simple Accounting: Keeping records, managing and controlling cash accounts, payables,
receivables, printing checks and reconciling bank accounts.
?
Financial Management: Managing financial system for multiple companies or locations,
for easily handling different currencies, daily transactions, daily balances, cash flow, and
calculating interest.
?
Inventory Management: For managing invoices; categorizing stock items, verifying
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actual on hand stock and controlling stock level, and obtaining reports on consumption.
?
Invoicing: Some free online sites are available for creating and customizing invoices with
company's logo and emailing them directly to customers.

Box 6 lists down examples of a few online accounting tools that can be used by SMEs.

Box 6: Examples of Online Tools for Accounting

I. Online Applications
• Tally (antraweb.com): Premium financial accounting software, designed mainly for small businesses and
shops. Nominal pricing for single user access. Free online help and service centre is also available.
• myAbakus (myabakus.com): Free accounting, bookkeeping and financial management software designed to
help run and control business and keep it organized, online and on the right track.
• Numia (Numia.biz): Free online bookkeeping software that provides an easy way to keep users accounts
information online with reliable and secured data transfer. Capable of serving needs of multiple national
accountancy standards and allows accounting with multiple users.

II. Downloadable Tools


• OneStep Accounting (enablecomputing.com): Free accounting program for Windows, especially designed for
SMEs. Includes general ledger, invoicing, bill paying, and inventory tracking.
• Turbo Cash (turbocashuk.com): Free open source accounting package.
• Adminsoft Accounts (adminsoftware.biz): Freeware accounting program for small businesses. Runs on
Windows.

G. Human Resource Management (HRM)


Quite often, one of the major hurdles faced by SMEs is their poor ability to attract, retain and
nurture the professionally oriented and motivated people. A good and active recruitment
process along with a proper employee management system is a must for SMEs to remain
competitive and grow.

In today's world, as more job seekers use the Internet for job search, posting online jobs
advertisements on job sites and social networking sites have become an integral part of
hiring strategy. In addition to job postings, these websites can be accessed for screening
candidates to get a more well-rounded view in terms of their skills, accomplishments and
overall fit within the company.
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a. Job sites
Job sites offer a wide range of customized solutions designed to meet the recruiting needs of
small, medium and large enterprises. SMEs can choose from offerings to suit their individual
needs and budget. Some sites offer free job listings, SMS services or free registration for job
fairs. But most of the services offered are nominally priced, starting from as little as Rs 1000
to Rs 1500 per month. Basic services offered by the job sites in India are:
?
Resume database search: An employer can opt for resume database search to make
their hiring more effective and productive. They can subscribe to these services for a
specific period of time. Some job sites offer free SMS service as an add-on to help
businesses better target their desired candidates. Although these services are priced,
they are very effective and the cost is often much lower than the traditional search
process.
?
Job postings: This is one of the best ways to get jobs noticed by qualified candidates on
the internet. SMEs can go for quick/classified job posting, premium or bulk job postings
based on their requirements and budget. Along with the job posting services, they also
get all the tools they need to manage responses.
?
SMS services: With cost effective SMS based solution, businesses can proactively reach
suitable candidates by sending SMS to shortlisted candidates at a single click and receive
their responses and applications in their inbox. Organisations can speed up their hiring
campaign with either one way or two way SMS communication options.
?
Branding Services: SMEs avail this service if they have specialised hiring needs like
targeting a specific demographic group and are also looking for increasing their brand
awareness as an employer. These are paid services and they ensure high visibility to the
candidate traffic directly from the home page thereby ensuring increased and instant
response to the job listings. Companies can increase their visibility by subscribing to
display their company's logo, banner or web-link on the job site, which ensures better
recall value for job-seekers.

b. Social Networking Sites


An SME, as an employer, can visit various professional and social networking sites today to list
jobs and search for the potential candidates. Jobs are generally posted on the various forums
created on the sites or specialised groups dealing with a narrow domain or industry to target
the right candidate. For posting an opening on any social networking site, one needs to be a
registered member, which does not involve any cost. An employer can also authenticate and
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research about a candidate for his over-all fit based on the public profile created on these
sites by the job-seeker.

Box 7 shows examples of a few free online platforms that can help in human resource
management of SMEs.

Box 7: Examples of Online Tools for HRM

I. Online Applications
a. Job sites
• Monster (monsterindia.com): Search resume service comes with 1000 Free SMS
• Naukri (naukri.com)
• NaukriHub (jobs.naukrihub.com): Job posting and resume search is Free
• TimesJobs (hire.timesjobs.com)
• Shine (shine.com/recruiter/freejobs.html): Free job posting
b. Social Networking Sites
• LinkedIn
• Facebook
• Orkut

II. Downloadable Tools


Various ERP applications for human resource management (Refer to Box 5)

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3. Overall Assessment
The Internet, with its wide range of free and cost-effective services, has immense potential
for significantly improving the efficiency and productivity of SMEs. It can help them achieve
world class quality and create a global market without having to travel or invest in traditional
resources which are beyond the reach of SMEs.

However, this will depend on two interrelated things. First is the supply side which includes
improvement in the availability and quality of service of internet as well further reduction in
cost of access. This also includes better affordability of computing devices. This will increase
penetration and the size of market, improve viability of service providers, fuel further
innovation and increase the availability of industry-specific and more relevant online
technologies. Second, on the demand side, is adoption of technology which depends on a
combination factors such as computer literacy, ease of use, immediate relevance in terms of
increasing productivity, enabling better control mechanisms and more importantly, bringing
down costs.

The following exhibit provides a qualitative assessment of the current scenario and future
potential of free and low-cost internet-based services in enhancing efficiency of various
business processes for SMEs9.

9
This analysis is based on current trends and expectations and has been developed after in-depth research as well as discussions with
industry. However, it rules out game-changing innovations in the future that can significantly change the ease of use, availability, and
therefore, adoption of these services.
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EASE OF USE CURRENT POTENTIAL SCOPE FOR
Excellent Poor
IMPROVEMENT
Availability Adoption Availability Adoption
OPERATIONAL PROCESSES

Production Process Medium

Marketing Medium

Purchase and Sales High

Logistics & Info. Systems High

FUNCTIONAL PROCESSES

Documentation & Data Mgt. High

Business Communication Low

Accounting High

Human Resource High

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In general, current availability of internet based free or low-cost services and applications is
better for functional processes. However, adoption has been highest in areas where both
ease of use and potential increase in efficiency was immediately visible. These include
business communication, marketing and to a more limited extent, documentation and
accounting. Independent technological breakthroughs have equally contributed to current
adoption, especially in the case of business communication.

In terms of future potential, functional processes present the maximum scope for
improvement in terms of adoption of free and low-cost online services. The only exception is
business communication which already has significant adoption levels. The scope for
increase in adoption is also high for purchase and sales process as technology and cultural10
barriers to e-commerce come down further. In contrast, online applications supporting end-
to-end production processes are not likely to be as widely available in the free-to-use space
given the relatively limited market and high levels of customisation required for effective
deployment of these solutions. Besides, the demand pull from users is also likely to be low
relative to other processes as these solutions can be complex to use.

It is clear that free and low-cost internet enabled services have had significant impact in
increasing the productivity of SMEs and help them compete in a globalised world. But the
scope for further improvement is immense.

Although there is further scope of innovation, relevant technology is today available for most
processes that are carried out by SMEs. To that extent, the key is achieving much higher levels
of adoption — which will increasingly depend on availability of better and cost-effective
internet services on one hand and greater awareness and computer literacy on the other.

10
This includes developing confidence in quality of goods and services procured with virtual marketplaces establishing their brand and
quality assurance policies, greater acceptance of internet based payment systems to carry out both B2B and B2C transactions.
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End-notes

A. Definitions of Micro, Small & Medium Enterprises


In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act,
2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:
a. Manufacturing Enterprises: The enterprises engaged in the manufacture or production of goods
pertaining to any industry specified in the first schedule to the industries (Development and
regulation) Act, 1951. The Manufacturing Enterprises are defined in terms of investment in Plant &
Machinery.
b. Service Enterprises: The enterprises engaged in providing or rendering of services and are defined
in terms of investment in equipment.
The limit for investment in plant and machinery / equipment for manufacturing / service enterprises,
are as under:

Manufacturing Sector: Service Sector:


Type of Enterprise
Investment in Plant & Machinery Investment in Equipments
Micro Enterprises Does not exceed twenty five lakh Does not exceed ten lakh rupees:
rupees

Small Enterprises More than twenty five lakh rupees More than ten lakh rupees but
but does not exceed five crore does not exceed two crore rupees
rupees

Medium Enterprises More than five crore rupees but More than two crore rupees but
does not exceed ten crore ruppes does not exceed five core rupees

B. Examples of Free Online Services for Software Development


Following are two examples of free online tools targeted at small business organizations, specifically
from software development industry:

a. Microsoft BizSpark: Start-ups can access Microsoft's current full-featured development tools,
platform technologies, and production/hosting licenses for immediate use in developing and
bringing to market innovative and interoperable solutions. There is no upfront cost to enrol in
Microsoft BizSpark. Also, they can receive professional support from Microsoft and get connected to
“BizSpark” Network Partners around the world. In BizSpark, start-ups have the opportunity to
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achieve global visibility to an audience of potential investors, clients, and partners by profiling their
company in the online Start-up directory. (http://www.microsoft.com/bizspark/)

b. Office Live Small Business: Provides small companies with everything needed to create
a professional web presence for free, including easy-to-use website design and management
tools and 100 email accounts. When a small company signs up for Office Live Small Business,
they get a website, web hosting and web design tools, site traffic reports, a contact
management system, and online business applications to help manage their business free of cost.
(smallbusiness.officelive.com/hi-in/)

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References
?
“Annual Report 2009-2010”, Ministry of Micro, Small and Medium Enterprises, Government of
India.
?
“E-Commerce Readiness for SMEs in Developing Countries: A Guide for Development
Professionals”, Judith E. Payne, LearnLink, U.S. Agency for International Development (USAID)
?
“ICT Adoption among MSMEs in India, A Survey with Special Focus on Online B2B Market
Places”, Internet and Mobile Association of India (IAMAI), 2009
?
“Consumer E-Commerce Market in India 2006/07”, Internet and Mobile Association of India
(IAMAI)
?
“The Use of Internet Applications in Managing Logistics Activities Among Palm Oil Industry
Participants”, Nitty Hirawaty Kamarulzaman and Nolila Mohd Nawi, Department of Agribusiness
and Information Systems, Faculty of Agriculture, Universiti Putra, Malaysia
?“Use of the Internet for Efficient International Trade, Guide for SME Managers”, UNCTAD
secretariat, United Nations New York and Geneva, 2004
?
“e-Commerce in India: Making a comeback!”, NASSCOM Newsline Issue No. 57, NASSCOM, July
2006
?
“Survey on Indian SMEs”, ASSOCHAM, Tradeindia.com

Sources of Information
? SME Toolkit (http://india.smetoolkit.org/india/en/index)
? Microsoft Start-up Zone (http://www.microsoftstartupzone.com/pages/home.aspx)
? ERPwire.com (http://www.erpwire.com)
? Freebyte.com (http://www.freebyte.com/)
? Microsoft Office Live Small Business (http://smallbusiness.officelive.com/hi-in/)
? Best Indian Websites http://www.bestindiansites.com/e-commerce/

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About IndiaMART.com
IndiaMART.com is India's largest online B2B marketplace connecting global buyers with suppliers through
business directories, online product catalogs, buy-sell offers, industry specific marketplaces, printed media and
trade shows participation.
Founded in 1996, the company has a presence in over 100 cities pan-India. With approximately 1000
employees, IndiaMART.com offers an extensive range of value-added products and services to over 500,000
members and over 5 million global buyers across industries and verticals.
IndiaMART.com has won numerous awards over the years including Red Herring 100 Asia & Emerging India and
the company has been widely covered by media such as CNBC, BBC, BusinessMoney, CNN, Businessworld,
Economic Times, Financial Express, etc. Its existing investors include Intel Capital and Bennett, Coleman & Co.
Ltd (Times Group), India's largest print media group.

For more information, please visit: www.indiamart.com/press-section/

About Internet and Mobile Association of India (IAMAI)


The Internet & Mobile Association of India (IAMAI) is a not-for-profit industry body registered under the
Societies Act, 1896. Its mandate is to expand and enhance the online and mobile value added services sectors. It
is dedicated to presenting a unified voice of the businesses it represents to the government, investors,
consumers and other stakeholders. The association addresses the issues, concerns and challenges of the
Internet and Mobile economy and takes a leading role in its development. the association’s activities include
promoting the inherent strengths of the digital economy, evaluating and recommending standards and
practices to the industry, conducting research, creating platforms for its members, communicating on behalf of
the industry and creating a favorable business environment for the industry. Founded in January 2004 by
leading portals in India, IAMAI is the only specialized industry body in India representing the interests of online
and mobile value added services industry.

For more information, please visit: www.iamai.in

About CERG Advisory


Started in April 2004, CERG Advisory is a corporate consulting and economic research organisation. CERG
Advisory specialises in developing empirically driven market prioritisation and intervention schemes for
businesses, socio-economic policies and programs based on extensive research and tailor-made surveys. In the
area of research and policy analyses, CERG Advisory focuses on macroeconomic research, industrial and sector-
specific analysis, socio-economic impact assessment and political-economy issues.

For more information, please visit: www.cergindia.com


Published by: Dr Subho Ray, President, on behalf of Internet and Mobile Association of India, 406 Ready Money Terrace, 167, Dr. Annie Beasant Road, Worli, Mumbai 400 018