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With $40 Mn Revenues In 2016 – Deskera Looks To Build The Perfect ERP SaaS Platform For Asian SMBs

With $40 Mn Revenues In 2016 – Deskera Looks To Build The Perfect ERP SaaS Platform For Asian SMBs

“I don’t consider Deskera a startup anymore.”

So begins Shashank Dixit, founder of global ERP (Enterprise Resource Planning) solutions platform, Deskera. The company was formally founded in 2008 and has been in operation since 2005 when Shashank and the three co-founders Somesh Misra, Brajesh Sachan, and Paritosh Mahana ran the venture from their college dorm. This was the pre-VC/funding era, where the only way to run a business was to avail a line of credit from lenders (banks, NBFCs) or generate revenue through paying customers.

Having a business meant having a viable, growing product. And Shashank has run the gamut of SaaS entrepreneurship – from starting up in his early 20s, to moving up step by bitter step, to scaling it in the top tier markets, having 300 employees across eight offices, and making millions in revenue – understood the importance of productising the idea.

“ERP is my wheelhouse, rather became my wheelhouse, because back in the early 2000s too, you had SMBs in manufacturing, distribution, and services working out of two or more offices who needed business software to keep track of inventory, stock, accounting processes for the same. Spreadsheets are redundant in this case, but SMBs refused to switch to business software as they weren’t willing to pay for it.”

The way Shashank explains it, ERP encompasses accounting (financials plus day to day expenses), supply chain as well as operational processes. The more an SMB grows, the complexity of its resource planning goes up exponentially and the inflection point requires an ERP to solve problems continuously and automatically.

Deskera’s first product was launched in 2008, a basic, cloud-based, ERP software for accounting and inventory. The company was able to leverage this first-mover advantage for the simple reason that they believed in the most native use of the cloud – software that can be used from any device whatsoever, be immediately accessible whenever required. Additionally, the number of users should not hinder the performance of the platform – be it 1 user, 10 users or a million.

Shashank explains, “Imagine, you’re an SMB with an office in Bengaluru and one in Mumbai. With both of them performing different functions – one is your operations headquarters while the other deals with stock inventory. How do you have them both work on the same process without having a standard way of access on a central data centre? This is where cloud comes in – to be used anytime, anywhere, anyhow.”

Then too, existing ERP providers such as Tally and SAP (two of the biggest names in the SaaS vertical) sold their software in compact discs, floppy disks which could be used specific to a single laptop, and have singular access. As the smaller outfits in India still don’t have the capacity to justify buying a laptop, thus, data access on these platforms was extremely restricted.

This is where Deskera comes in, by using its cloud-based ERP platform – a client could access all their data on their smartphone/tablet itself.

Building The Perfect ERP For SMBs: One Interaction At A Time

Deskera offers modules for purchase and inventory management, sales and billing, customer management, and product management. It also has a separate financial reporting feature in its ERP that works extensively with account management, specific to paying taxes.

When Deskera first began operations, it offered solutions for accounting and inventory. But as the company on boarded clients, it realised the key problem that most ERP solutions eventually face is that of building the perfect ERP solution.

“SAP, Tally and Oracle all began in the late 70s and early 80s. It took them 40 years to reach where they are now – catering to every ERP need that a business has.”

The Deskera team recognised that each new business is individual and unique when it comes to ERP needs. And a variety of permutations and combinations have to be configured to suit these businesses. The platform basically had to constantly customise itself in order to keep up with client needs. For instance, the payroll and accounting function dealt with an important part of every employee – taxation. This process required the presence of a number of forms (sometimes 80-90) and full compliance on each of these forms.

Shashank focusses on compliance when he elaborates, “The decision is binary – either you provide a holistic solution covering every aspect of the enterprise need, in this case accounting, or you don’t do it all. There is no third option, where you do just a little bit of the process and not the rest.”

The latest iteration of the Deskera product keeps all of these pain points in mind as it delivers solutions in the realms of ERP, CRM, and HR. When prompted to explain how the company zeroed in on these particular verticals to operate Shashank opines that these are the core business process required to create a smooth business flow for any operation – be it a small one with 10 employees or an organisation which has thousands of staff. “The idea is to create a sea change in business operations. We accomplish this by offering structurally sound customisable processes for individual businesses.”

Challenges Versus Adoption

For the first few years of launching the platform, Deskera counted CAs and accountants as their biggest clients, as well as their biggest challenge. “CAs and accountants who do bookkeeping for small firms are the true gatekeepers of these businesses. They guard their domains with existing software which doesn’t allow access to everyone. And convincing these people to adopt Deskera was one of our initial obstacles.”

The idea was to first make people use it, find ease of use, transparency, and efficiency as differentiators and then automatically recommend it.

He attributes Deskera’s success among SMBs to the fact that the chain of command flows both ways with a cloud-based, ERP solution. Whether it is a CEO or a department head or an employee, control of information comes from the top-down (as opposed to when it rests with only an accountant using a desktop-bound software). Data access is unrestricted and available to be viewed on their fingertips.

“Building a full suite of products, constantly reiterating on each to include more services and fulfil more needs is a key part of the process – and the challenge we tackle at Deskera.”

Selling A First World Product To Emerging Countries

Shashank counts the decision of taking Deskera global as a key turning point.

In 2012, countries in Southeast Asia went live with GST (Goods and Services Tax) – namely Malaysia, Thailand among others. And Deskera’s was one of the first few solutions to be approved by the Singapore Government as GST compliant. Adoption was swift and steady from thereon.

At the same time, India too was seeing an explosion in the startup scene, with entrepreneurship showing a steady uptick for the first time in decades. Combining both these events ensured that the company was cash positive after eight years of operation in 2012, and showed $1 Mn in revenues, as per the founder.

But dealing with Asian and Southeast Asian comes with its own set of challenges.

“You ever heard of the expression: You’ll never get fired for buying IBM? Well, we learned how wrong we were in Asia with this mindset,” Shashank chuckles. According to him, Asian consumers don’t understand boundaries, as opposed to a customer in the US. They want every single solution offered to them inside one app – HR, accounting, payroll, project management etc. They are extremely finicky and demanding and haggle on price.

“In Asia, the thumb rule is – no one buys from IBM. They are not interested in what brand you’re selling. It’s the product that matters.” Shashank mentions that Asian clients look for affordability plus more value for less money – they want the full suite of services and solutions and then some.  “In such instances, appeasing 3-40 customers is easy, but when 10,000 users want everything, that’s when SaaS startups die,” he adds.

While this was initially a hindrance because the product needed iteration along with compliance for each, as evidenced by the GST rollout in SEA countries, what it did mean was – companies were willing to take a chance on a lesser known brand too. As per Shashank, it took 10 months to convince the first customers to buy the product, but the next influx of customers came within 10 weeks and so on, till the company made its first million.

Deskera now has a presence across India (Mumbai, Delhi, Ahmedabad, Bengaluru, Pune), Singapore and the US (San Francisco). Recently, the team entered Bangladesh’s SMB market too. As per The Daily Star, the company has partnered with Sheba Technologies Limited, a sister concern of Sheba Group as part of the initiative. They have also partnered with VISA to provide their solutions to 12 Mn -15 Mn SMBs through the Visa Business Hub (‘VHB’) in Singapore, according to an official release.

They count Fortune 500 companies such as Dell, Google, Grant Thornton, StarHub, Sushi Tei, SIDC and Senwan Group as marquee customers, with mid-sized outfits such as Singapore ISP company Transcab following suit. SMBs across Asia (India, Bangladesh, MEA) make up the bulk of their client base.

Eight Years To Make $1 Mn In Revenues, Just Four More To Reach $40 Mn

Deskera has raised $20 Mn in convertible debt from SoftBank, Aris Prime, Partners Asset Management, Tembusu Partners, and Tikehau Capital, as per Shashank.

The company is firmly focussed on the Asian SMB market – where it is the number one GST-compliant vendor across Singapore, Malaysia, and Thailand.

Shashank reiterates that it took the company almost eight years to generate the first million in revenues, and only four more to reach $40 Mn. With this leap in numbers and growing almost 100% over the last three years, Shashank was able to make a few observations regarding the Indian SaaS market, given his longevity and skin in the game.

“The problems of selling SaaS from India is number one, lack of talent who can speak the language of the SMBs – who, typically need a lot of handholding and convincing before they sign on the dotted line. Plus, Indian society has a very distorted view of businessmen as a whole, which is just changing now, so that degree of respect is missing too. And lastly, educating younger employees on basic things like accounting, inventory etc.”

He also iterates that SaaS is a long tail game and anyone who isn’t in it for the long haul i.e. 10-20 years, is bound to fail.

But Shashank is also hopeful for India itself as a sustainable SaaS market. With 20 Mn SMBs and growing, there is a lot of inherent opportunity for companies to serve this market without having to look outward (something that Deskera and companies like it faced a decade ago). The Indian consumer market share has grown in the last few years to encompass a sizeable market.

“While dominance is not guaranteed, it is important to position yourself in the right place and get the timing right.”

2016 was also when the GST rollout was announced in India, to be executed by July 2017. And Deskera, with its GST-compliant model already proven in Southeast, is poised to be a first-mover in India too, as per this Firstpost report. “The complete structure isn’t out, but we do know it is going to be similar to Singapore and Malaysia. And, since we serve these markets, and with probably a similar structure in India, we can offer GST-compliant enterprise services.”

Perhaps, this practical philosophy accounts for the jump in revenues that Deskera made – declaring INR 300 Cr or $40 Mn, last year. So, understandably, Shashank is optimistic about the next five years with respect to the SaaS wheelhouse Deskera is dominant in. “Enterprise software is run as a marathon. Not a dash or a sprint. The youngest, most successful SaaS company is Salesforce, valued at $50 Bn. And Salesforce began in 2001.”

There have been no recent up and comers in the industry and young entrants need to acknowledge this before entering. As per Shashank, the industry is still in its early twilight years and it will take at the very least a decade for the next Salesforce to emerge, if not more.

I Focus On Building My Own Business, Competition Can Take Care Of Itself

Deskera counts legacy companies such as Microsoft Dynamics, SAP, Oracle as competitors. And relatively newer entrants such as Intaact, NetSuite ERP, and People Soft. While the legacy companies have captured distribution, network, market share, and the newer entrants are definitely taking a hefty share of the SaaS pie, Shashank has a holistic view vis-à-vis competition.

“I focus on building my own business. That’s all I can do. Competition is like colouring crayons. We need more of them to get a better picture of the market. But, at Deskera, we look to fight our own wars, look inwards and serve our customers the best way we can. Besides, competition is not an either-or game, this early in the SaaS market. Everybody can survive here.”

So his advice for fellow SaaS entrepreneurs is to think long-term and continue building for the next 10 years. He also cautions them against underestimating the Indian SMB space.

“We need to look at emerging Indian SMBs, build India-specific products with an Indian price list and have an Indian support team. Making it will not be mission impossible then,” he ends.