This document outlines 23 principles of successful Indian software product companies as identified by Dr. T R Madan Mohan. Some of the key principles include:
- Identifying market opportunities based on IT adoption, regulations, efficiency needs, and friction in paper-based processes.
- Developing "minimum viable products" focused on core functionality before adding additional features.
- Building modular products and aligning with dominant technology platforms to reduce costs.
- Pursuing a disciplined and controlled development approach, limiting customization and variety initially.
- Focusing sales approaches on named accounts rather than broad marketing, and emphasizing different metrics for inside, indirect, and direct sales teams.
- Scaling through
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23 principles of successful product companies
1. Browne & Mohan
Board & CEO Advisors, Management consultants
23 principles of Successful Indian Software Product Companies
Dr T R Madan Mohan
2. Browne & Mohan
Board & CEO Advisors, Management consultants
What has made some companies to grow and techno-entrepreneurs undaunted by the magnitude
sustain momentum tick in the tough times? What of risk, and efforts have pursued their dreams in
common principles underlie their success? Copious creating and sustaining India based software
management literature exists on why some product development. Newgen, Nucleus, ESS,
companies grow and some not. Kim and Vishesh Infosystems, Ramco, Tally, ICICI Infotech,
Maubrogne (1997) identified differences in five Polaris, iVitesse, Pramati, Trio, EX, Wings, FACT,
major dimensions of strategy between high growth Busy Infotech, Godrej Infotech, Base Information,
and other companies. Accordingly, the high growth Srishti, Druvaa, Subex, Infrasoft, Zoho, and many
companies attempt to change the industry more Davids have taken birth to challenge the
conditions, focus on bettering themselves than just Goliaths of the world.
beat the competition, let unprofitable customers
go, shed commodity resources/skills and think in Amidst, the high growth of software services
terms of offering total solutions to the customers. industry, from self-doubt and bureaucratic apathy,
Hagel and Brown (2005) argue that growth Indian software product industry has grown in
opportunities will be monetized by companies that years. From just about $113 Million in FY 1999-00,
deepen distinctive internal capabilities, mobilize the Indian software product industry revenues
resources of other companies and accelerate (both domestic and exports included) has grown
learning. Garud et al., (2003) have established the about $1.81 billion in FY2011-12. There were about
value of modularity and standardization in meeting 228 companies earning revenues from product
demand variety. Collins (2001) in his widely related delivery and services. In 2009, the number
acclaimed book “good to great” identifies, the of companies had almost doubled, their numbers
value of executive leadership, getting the right touched 549. However, the last two years have
people, focus on what a company is good at and been quite challenging. While there are several
creating a culture of discipline, as the core companies that have done well, there are equal
principles of great companies. On the product numbers that have found the going tough in last
development side, Reis (2011), Brown and two years. Many companies have been vanquished
Eisenhardt (1998) have brought out the value of because of 1)Lack of domestic industry support,
building core (Minimum viable product or MVP) to 2)Lack of implementation of set-aside for
reduce time to market and patching modules government and defence procurement,
against market opportunity. Leonard (1995) 3)Inappropriate policies, 4)Lack of penetration in
highlighted the value of maintaining creative international markets, 5)Aggressive GTM of MNCs,
tensions in high-performing teams. 6)Branding and other issues. However, few
companies have survived and grown even in these
Starting and growing a Software product company tougher times. Newgen Software exhibited a
in India not a mainstream activity as the industry is healthy bottom line and top line growth. Polaris
dominated by service companies. With benevolent bagged some prestigious projects in domestic and
markets service companies found it easy to attract international markets. Srishti software found global
people to be shipped off-shore, and many qualified OEM partnering for its HMIS solutions and even
and otherwise IT resources found it easy earning in Chinese hospitals adopting a truly India built
foreign currency, often doing routine maintenance product. Zoho, the trailblazer in cloud offerings
jobs. To attract and retain talent, offering them consolidated its growth by offering newer solutions
intellectually challenging development was not around CRM, and productivity tools, often
easy. Academic institutes failed to instil the rigour, competing and winning against the global giants.
regimen and approaches required for product Druva Software, Pune based back up product
development. Rather many college managements company, acquired over 120 customers in the last
invested in rudimentary soft skills preparing their year and its products insync and Phoenix has seen
wards for service industry absorption. Early huge traction across enterprise, SME and Soho
finance, till recently did not exist and institutional segments. Sapience (earlier known as Innovizetech)
banking at best avoided investment deeming witnessed demand for its productivity product even
support for these ventures risky. However, few in the tougher times as companies realized the
3. Browne & Mohan
Board & CEO Advisors, Management consultants
need to manage the resources more efficiently. eschew in a client premises. From here, strip down
Home grown CRM companies such as PK4 with its to basic version that forms the core of all their
Impel CRM discovered their light features and right product modules, develop that first. Quest
pricing building traction in economic downturn and Informatics for example, looked at complete after-
customer adoption growing. Banking software sales enterprise processes right from service to
product companies TCS, Infrasoft, Lasersoft, repair process and developed core sales, service
Mindmill, and Polaris have benefited from demand and parts processes. Only three Parts of the
from domestic Co-operative banks and SAARC. In products with some extensions could morph into
this article, I summarize twenty-three principles warranty management, field service management,
that I learnt through my years of association with etc. Plan Product Technology Road map, versions,
the successful product companies. and features.
Principle 1: Friction, Product Opportunity and Principle 4: Build modular products
imitation
While it is important to have features and ideas
Successful product companies identified markets from multiple perspectives, product development
based on 1)IT adoption, 2)Regulatory requirements, has to be a controlled innovation. Choices have to
3)need for operational efficiency, 4)scaling and be made on prioritising the features, support, UI,
growth of enterprises in the industry and 5)friction etc. to ensure the core properties of the products
due to paper-human interfaces. All successful are eschewed and available for early users to try.
product companies were “strategic imitators”, Successful product companies build modular
developing an available solution or an offering to products. Quest Informatics mapped 16 products
local market. This helped them to ride on the for its after-sales ERP, and identified 4 core
market making activities carried out by other firms. business processes cutting across all these
modules. The basic core was developed first, and
Principle2: Bricolage Product ideas the market priority modules were released later.
While cloud and hosted models are expected to
The companies sought ideas from multiple sources,
thrive, many enterprises may resort to in-premise
beta clients, product demo teams, end users, etc.
deployments owing to regulatory and other
Crossdomain while designing its cloud based
requirements. Distribution of products through
“PeopleWorks” involved CFO, HR directors and CEO
various channels would require different customer
to understand the requirements from individual
engagement cycles, information content
perspectives, evangelized the beta with few
(brochures), and support. Idea is to develop only
companies, actively sought the improvements and
the core that could be supported through different
quickly built a robust product meeting all customer
delivery modes, somewhat similar to MVP
requirements. Glomantra in pursuit of its VPA
proposed by Eric Ries. Glomantra and Quest
product found the feedback from India’s largest
Informatics tried this approach successfully while
portal very useful as the enterprise application of
developing their Virtual personal assistant (VPA)
search and personalization was similar to the VPA
product “Mybantu” and Field service management
tool they were developing. Use of the product in
(FSM) product.
enterprise environment offered very useful insights
for the team to develop and fortify the product Principle 5: Disciplined Product development
against the global competition.
Focus should be on minimizing customization, and
Principle 3: Design for a platform not product reduce variety at early stage to benefit from low
code, feature and support variety. Average time to
While conceptualizing the product, the architects
establish stable beta with maximum features
visualized the extant product form, more like a
happened about 26 months and companies that
platform encompassing several products. This
controlled variety prospered. Srishti software,
helped them to see the big picture, what all process
Polaris benefited from the economics of scale in
and activities would the product or its modules
design, bug removal, improvement and delivery.
4. Browne & Mohan
Board & CEO Advisors, Management consultants
Principle 6: Align with larger technology platform became a globally recognised challenger in Web
based Content Management system with its Kreatio
While a complete platform agnostic is a desirable product.
state, companies that limited their product
availability on to two dominant platforms were Principle 10: Focused sales approach
able to manage their releases and upgrades easily.
The objective is to reduce transaction cost of Successful product companies emphasized
managing change. Increased market acceptance, alignment in sales structure – process and
and network effects of technology platform benefit incentives. Companies invested in all three sales
products. motions, inside, indirect and direct. Sales process
and measurement focus differed significantly
Principle 7: Offer multiple Product variants and across the three different motions. For inside
over time reduce the tiers teams the emphasis was on “intelligence”, indirect
sales team was on “partner meets and funnel” and
When feature and price point relationships are direct team was on funnel quality and conversion.
fuzzy or the customer segment contiguous, it is a Product companies built their sales team quickly
better strategy to offer few product variants. While and reviewed continuously.
many companies start with at least 3 (typically,
silver, gold and platinum), or 5 variants, over time Another unique aspect of successful product
customer preference converge to not more than 2- companies is related to the sale approach they
3 variants. Too many variants confused customers, used. All them pursued named account strategy
burdened sales personnel and increased the cost of than corporate bombing as a strategy and sufficient
tracking and monitoring usage. Tejas, Ramco, Sage intelligence went into the segment definition, and
and others also pursued versioning and hosted named account identification. Successful
model in tandem to reach out to customers. companies spent more time planning their targets
than unsuccessful ones.
Principle 8: Incremental innovation and related
platform diversification Principle 11: Harvest and Crop
Average investments required to develop a world Product sale, unlike hardware or solution sale
class software product in Indian environment requires harvesting the clients in a season and
happens to be around $3 Million and the break- enchasing them later. Engaging clients with latent
even happens only on the 4th year. Successful needs, preparing them for the adoption and roll out
product companies pursued continuous required patience, high dose of common sense and
incremental innovations extending the features and plain old relationship management.
products in the same markets right after two
successful client roll outs and the product is Principle 12: Bottom heavy top-led sales teams
stabilized. AurinPro successfully pursued this
Many companies believe in investing heavily in top
strategy to benefit from related platform
end resources for product sale and do not invest
diversification.
sufficiently in middle and lower levels. A unique
Principle 9: Plan for unrelated diversification after structural aspect of all successful product
3rd year of existing product line companies was, they had more numbers in inside
sales teams, but led by senior direct teams. Sales
Successful product companies initiated unrelated visibility into last mile was high and the sales teams
diversification into newer verticals or completely were mean and lean.
unrelated product areas in the 3rd year of existing
product lines. The companies benefit from Principle 13: Marketing led Sales: Successful
overlapping of growth-maturity cycles of different software product companies investing in marketing
product lines. Polaris found great success in activities that supported and facilitated sales.
payment exchange product. Srishtisoft extending Improved branding, community connects, PR
its learning from KM products and consulting, (including brought awards), was useful in creating
5. Browne & Mohan
Board & CEO Advisors, Management consultants
the mindshare and sales appointments in both services revenues, they were cautious in over
domestic and international markets. investing on services resources. Srishti, Tally, Tejas
Networks limited their services play and
Principle 14: Scale through Partner consciously promoted partners to support their roll
out and de-risk themselves.
Successful product companies used partners not
just to increase their scale of operations but also Principle 18: Create and maintain healthy internal
consciously serve specific segments that did not competition
justify their own resources and investment.
Partners and resellers help in market coverage, Successful product companies sustained healthy
delivery and post-deployment support. Companies competition between teams and key business
that invested in marketing and vendor leaders. One aspect all companies abhorred was
management resources, processes including middle level managers bottling up talent from
training and certification realised better results. bottom. Companies crafted novel structures that
Product companies had to plan for version that were time bound to legitimize competition and
would be supported by partners, design right innovation, and abandoned them once their goals
partner payoffs and engage them continuously. were met.
Principle 15: Institutionalize “Do-Improve- Principle 19: Create Sense of ownership and
Innovate” work Discipline urgency
Successful software product companies do not One common hallmark of all successful product
need noble prize winners, but committed followers companies was that they created a sense of
who could first do activities as told, improvise ownership across the organization. Teams and
activities within their control and innovate activities members had their explicit goals, and focused on
even when interdependencies exist. Newgen and delivering the outcomes. Board and senior
Srishti founders picked bright engineers from non- management invested in inducing a sense of
IIT’s, trained them in product development and urgency not so much in sales, but in new product
imbued in them product company culture and over development, delivery, & customer responsiveness.
years have developed a second line of architects
and innovators capable of developing new Principle 20: Design appropriate Incentives
products.
Successful product companies had incentives not
Principle 16: Hire and promote for positivism and just for sales, but also for technology teams. Most
attitude companies used relative incentives as the group
sizes were small. Some companies had dispensed
Academic degrees and honours did matter, what away with quarterly performance incentives, but
tilted the scale on employee selection and growth tied the overall incentives by per project basis. The
was their positivism and attitude. Product sales team motivation and performance were high
companies, especially those started with limited as they would receive their incentives as soon as a
funds, value prudence and shun ostentations. They deal is closed. Technical teams and delivery teams
prefer employees who could strategies, dirty their also had outcome based incentives that ensured
hands on coding and shoulder a bit of other roles. innovation pipelines were robust, and
Successful product companies like Srishti and implementation smooth.
Adventnet grew their architectural strength by
grooming individuals with lots of initiative and Principle 21: Power of Governance
problem solving approach, rather than fancy
Successful product companies practiced good
academic degrees.
governance principles. Independent board
Principle 17: Rein in services revenue growth members were brought for both technical or
domain expertise. Weekly, monthly and quarterly
While successful companies sustained through reviews were religiously followed, intermittent