The author studied at IIT Kharagpur and IIM Calcutta. He has worked as an Investment banker, entrepreneur and a technology manager. He writes on business technology issues at www.myopen-window.blogspot.com and runs a learning site "Tech for Non Geeks" at http://sites.google.com/a/email.iimcal.ac.in/techfornongeek/Home

It's exciting times to be a SaaS entrepreneur. The SaaS (Software as a Service) business opportunity allows Indian companies to move into the product space from purely services oriented models. VCs have started recognizing this opportunity as is evident from the recent investment of Draper Fisher Jurveston and NEA-IndoUS Ventures into Hyderabad-based Pressmart India. Pressmart provides SaaS based e-publishing and digitization services targeted at the print industry. The Pressmart solution allows them to deliver their content across multiple digital platforms—Web, mobile, RSS, podcasts, blogs, social networking sites, articles directories, and search engines.

SaaS based businesses make transition to products possible because it dramatically reduces the costs related to software distribution, product management, and planning. In a traditional enterprise space, these activities are strongly woven into direct customer interaction. SaaS makes these interactions distributed over time and space.

SaaS based applications are likely to scale quickly in areas where niche applications can be targeted at specific industries. The Pressmart offering is in that category. However, SaaS applications can also be horizontal across industries. Salesforce.com is a classical example of a horizontal application. But, there are other opportunities out there.

One of the early entrants into this field is Hyderabad-based Dimdim, which offers Web Meeting and Web Conferencing solutions. Dimdim is founded by DD Ganguly, a serial entrepreneur and is funded by Nexus India, Index Ventures, and Draper Richards. Dimdim has been able to bring in disruptive innovation in the market place by leveraging on open source software and providing a free (till 20 users) product that can be used by individuals and small businesses. "Ganguly's approach to marketing was 'viral and spreading the buzz around the Open Source community' and the company got all its customers through the Internet". Dimdim's experience really shows that satisfied users can create a substantial publicity through the 'word-on-the screen'. Dimdim was also able to leverage BPO-type processes to set up and manage inside sales and services delivery. The one function that is completely located outside India is hosting, where costs are prohibitive.