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Why Moscow-Based Kladana Considers Indian SME Sector As The Next Big Market For Cloud Computing

SUMMARY

After successfully onboarding more than 96K small businesses in Russia, Kazakhstan, Uzbekistan and Belarus, Kladana entered the Indian market in 2022

The ERP cloud solutions company helps small manufacturing, wholesale and ecommerce companies manage and automate their business processes

As per reports, about 35% of Indian SMEs will migrate one-third of their core workloads to the cloud by 2024

Industry 4.0 is already upon us, and a cyber-physical world is fast emerging where smart machines call the shots, and the agility to adapt determines business success. For companies of all sizes and industries, this also means a rapid shift from manual to digital, especially via the cloud, that ensures fast operations for maximum efficiency and cost-effectiveness.      

The growth of affordable cloud computing in the B2B realm is good news for small and medium enterprises (SMEs) all over the globe as they seek access to technology to boost their businesses but lack the resources of deep-pocketed corporate giants. Nine years ago, a report by McKinsey Global Institute (MGI) came up with a comprehensive picture of how SMEs could become micro-multinationals propelled by digital technologies and the resulting globalisation. The new era has finally arrived in a post-pandemic India, driven by growing digital literacy and a level playing field enabled by easily accessible, affordable, scalable cloud technology.

According to the SME Chamber of India, SMEs contribute 40% of total exports and 37.54% to the country’s GDP. It is no surprise, therefore, that smaller enterprises across the country are now keen to adopt cloud-based business services to stay ahead in their digital journey. 

With more than 63 Mn SMEs in India and the cloud computing market set to reach $17.8 Bn by 2027, growing at a CAGR of 23.4%, tech giants like Google Cloud, Amazon Web Services (AWS) and Microsoft Azure are already gunning for this market. But joining them in the race is another global contender – Kladana – the B2B SaaS brand of Moscow-based MoySklad (My Warehouse).

The ERP cloud solutions company helps small manufacturing, wholesale and ecommerce companies manage and automate their business processes. Users can register on Kladana free of cost and access its all-in-one solution, including inventory and warehouse management, transaction and finance management, CRM, analytics, documentation and more. For manufacturers, it helps in planning, stocktaking, raw materials transfers, packaging and selling of ready-to-use goods. 

After successfully onboarding 96K+ small businesses in Russia, Kazakhstan, Uzbekistan and Belarus, Kladana made its strategic foray into India in 2022. The brand is registered locally and the company opened an office in Mumbai to boost its India operations. To date, it has onboarded 40 SMEs and aims to grow to thousands in the coming years. 

For Aleksandra Brovchuk, Kladana’s regional CEO in India, the country was an obvious choice for the company’s next phase of expansion. “Before entering the Indian market, we thoroughly analysed a number of countries. India won in all respects,” she said. 

During a discussion, Brovchuk also emphasised India’s impressive economic growth as a key criterion for expansion. “The country boasts a rapidly expanding economy, 63 Mn small and medium-sized businesses, to be precise. In comparison, Russia has a significantly smaller SMB count at only 6 Mn,” she said.

Besides, most Indians have a good command of the English language. This linguistic advantage made it easier to tailor its solutions for the Indian market.

In FY23, Kladana clocked a global revenue of $15 Mn. And it targets a 53% increase or $23 Mn in the current financial year. Brovchuk believes Kladana’s India entry will be vital for achieving this feat.  

Why Moscow-Based Kladana Considers Indian SME Sector As The Next Big Market For Cloud Computing

Empowering Small Entrepreneurs Via Cloud

In 2007, Askar Rakhimberdiev and Oleg Alekseev embarked on their entrepreneurial journey while balancing their day jobs in managerial roles. They often spent their evenings at a Moscow café, where the initial codes and interfaces for MoySklad were developed. 

It was officially born in 2008, but with the launch of its beta version, the founders faced the daunting task of finding an investor. “Russian VCs were not ready to invest in cloud solutions and the value of SaaS was not so obvious at the time,” recalled Rakhimberdiev. 

However, Estonia-based Ambient Sound Investments (set up by Skype founders) saw its potential and bought a 30% stake in MoySklad for $200,000. Within a year, it bagged 50 clients, which would multiply exponentially as the company ventured into new territories.

The company attributes the growth to its commitment to empowering small entrepreneurs. Brovchuk adds that one of its key differentiators is the platform’s easy-to-use interface and users do not need any technical skills to access Kladana.

What’s more, Kladana is integrated with the widely used virtual storefront builder Shopify. This is a great advantage, as the integration enables businesses to synchronise orders and product availability, allowing them to automatically add items to online stores and manage sales and transactions without hassles. Besides, the software helps businesses generate comprehensive financial reports, analyse cash flow, monitor profits and losses, store data securely and manage CRM activities.

As for manufacturers, the company seamlessly automates the entire production cycle within a single integrated system. According to the company, this is especially useful for small manufacturers who often rely on excel sheets for maintaining varied lists and documents such as goods lists, bills of materials and production order graphs. In addition, it calculates the unit costs of all items so that production costs can be tracked throughout.

The ERP system has made significant efforts to localise its app and website to operate smoothly throughout India. For instance, it has added local currency transactions and ensured all transactions are GST-compliant. It has also created text and video tutorials to simplify product use for its B2B customers. The platform has invested $1.5 Mn as part of its expansion efforts in India and most of the money has gone into product development. 

How Kladana Plans To Win Over Indian SMEs In A Crowded Cloud Market

The rising demand for cloud computing and SaaS (software as a service) has prompted global platforms to explore India’s lucrative but less-explored SME sector. Nevertheless, it is a bold step for an outlier to enter the local market when the economy, in general, was struggling to cope with geopolitical conflicts and the fear of stagflation. 

Also, the SME landscape in India is not without its challenges. For starters, shifting from traditional business processes to the cloud or adopting SaaS are still met with some resistance, as small businesses often find the transition and the transformation quite overwhelming. But this may not be a limiting factor for long, as cloud computing, once the domain of corporate giants, has become a critical growth factor for small businesses. 

According to the IDC, about 35% of Indian SMBs will migrate one-third of their core workloads to the cloud by 2024. This initiative aligns well with their pursuit of enhanced business agility and future resilience.

Given this ground reality, global and homegrown cloud service providers are now vying for a market share, especially in the Tier II and III business markets. After all, this ecosystem is huge and may soon outpace its Tier I peers. 

Unsurprisingly, global behemoths like Amazon, and the like have developed customised solutions for their new clientele. For instance, Amazon’s AWS Smart Business Hub caters to the SMEs’ growing requirements such as unifying and managing fragmented data, controlling IT costs and enhancing data security. On the other hand, Google Cloud allows SMEs to analyse and streamline data, offers cloud storage, solutions to monitor performance among other solutions. 

Homegrown players are also taking note of this trend. Companies like Cyfuture Cloud, BrowserStack and CloudCodes offer a diverse range of cloud solutions, and they have a better understanding of the domestic market, giving them a unique advantage.

But Kladana is well aware of the state of things. It is also confident that 15 years of global exposure in creating cloud solutions for SMEs will give it a cutting edge. “We entered the Indian market for the long haul. We have opened an office here and hired a local team who works with clients and communicates with them in English and Hindi. We have even localised the products and demo materials,” said Brovchuk.

Aware that hand-holding will be needed to onboard and retain first-time users, the platform offers free demos and extends the services of a robust customer support team.

It also focuses on creating value in a price-sensitive market. That’s why Kladana offers a monthly payment plan, and users can opt for the cheapest one without long-term commitments. 

The company said that the basic plan starts at INR 990 (excluding GST) per month and includes several features such as transaction management and CRM.  

It will also invest in brand building/advertising, scaling up its India team and is exploring a partnership programme with IT and consulting companies  in 2023. Kladana also has ambitious plans to cater to Amazon and Flipkart sellers in 2024, thus strengthening its market presence and capabilities.

Asked whether the Indian SME market would get too saturated too soon, given the neck-and-neck competition among service providers, Brovchuk said there would be immense scope for growth. “Cloud software is a quick and inexpensive start. No specialists or large budgets are needed to implement it. I think in the near future, all small and medium businesses will work exclusively in the cloud as it is an optimal solution,” she added.

 Meanwhile, tech companies will continue to innovate consumer-quality cloud solutions (given their range and ease of use) and make a beeline for the enterprise cloud market in India. Of course, the bar is bound to get a lot higher in the SME space and other sectors. But it will be interesting to watch whether global big tech and homegrown players can carve their niches and create unique value propositions to flourish in this space.

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