Deal Radar 2010: Krawler

Krawler delivers Deskera, an on-demand enterprise application suite that is designed to offer a full suite of products – customer relationship management (CRM), project management, accounting, human resource management system (HRMS), learning management system; and leave and absence management – on the same platform at a low monthly price suitable for small and medium businesses.

President and CEO Shashank Dixit has been focused on entrepreneurship since he was a student at the Indian Institute of Technology, Kanpur. He was co-founder and executive coordinator of Megabucks. The three other co-founders are Dixit’s former dorm-mates Brajash Sachan, Somesh Misra, and Paritosh Mahana.

It was during the 2002 Global Entrepreneurship Challenge that Dixit realized that there was an opportunity for software as a service (SaaS) to bring down the technology barriers to deploying and managing enterprise applications. He also saw that current SaaS offerings perpetuated two primary problems of traditional enterprise software. First, separately built applications meant that customers still faced integration costs and complexity if they wanted different on-demand applications to work together. Second, the price points were still prohibitively high, especially for small and mid-size companies. In some cases, subscriptions cost as much as $3,000 per user for one application. Dixit began coding the technology platform for what would become the foundation for the Deskera on-demand application suite in 2002. The company was formally launched in 2006.

AMR estimates the enterprise application software market at $61.31 billion in 2009. Assuming only 25% of the market migrates to a SaaS model in the next five years, that still brings the TAM to $15.33 billion. Krawler feels that this is a conservative estimate, since the overall enterprise application market is expected to realize continued growth over the coming years, and the company believes that a driver of growth will include an increase in small and medium businesses that have faced barriers to adopting enterprise applications – either on-premise or hosted – because of the high costs and complexity of integration that are now beginning to disappear with integrated SaaS suites.

The enterprise application SaaS market is dominated by companies such as Saleforce.com, RightNow, SuccessFactors, etc. which offer CRM solutions, and NetSuite, which provides an application suite including CRM and ERP. Although SaaS is a more affordable model than deploying software locally, it has remained cost-prohibitive for many small and mid-size businesses. Further, not all SaaS solutions are 100% on-demand. For example, the NetSuite ERP suite and SuccessFactors HR suite also include downloadable components that have to be deployed and maintained locally within the company, something smaller companies don’t always have the resources to support.

Finally, it can be expensive to integrate SaaS applications with other applications or platforms. One of the most powerful comments came from a technology executive at the PACT 2010 conference on March 25. He said, “I am a certified CRM expert. I have my CRM on one platform; I have my project management on another platform, and I hate it!” Since then, the customer has bought a 20-user Deskera subscription.

Krawler believes that these shortcomings in SaaS solutions have left a large, unfilled gap for small and mid-size companies, including more than 6 million businesses with fewer than 500 employees in the United States alone. Deskera positions itself as an integrated on-demand business suite that includes customer relationship management (CRM), project management, accounting, human resource management systems (HRMS), learning management system, and leave and absence management at a price that is affordable for small businesses: monthly subscriptions for the entire Deskera suite start at $49.95 for five users, which breaks down to $9.99 per user per month.

The founders also designed the Deskera suite with the aim to simplify the user’s experience in another way. Traditional and SaaS enterprise applications continue to use a database-like entry form that hasn’t changed much since the 1990s. Data often has to be entered in a certain order, and each entry in the form has to be submitted before the user can go to the next section, which makes updates take much longer. That experience is why CRM applications have had adoption failure rates up to 75%. Deskera uses a spreadsheet-style interface that lets users enter in all the information they want and then save, as well as easily view as much or as little data as they want. The streamlined process made possible by the spreadsheet interface is one of the most popular aspects of Deskera with customers.

Also, Deskera is truly on-demand: there is nothing to download locally and no need to install and manage hardware or other software to support the application suite. Customers can sign-up online using a credit card and get started the same day. At the same time, the company does offer premium subscriptions for mid-size and larger companies that include customization and support in integrating Deskera with a customer’s existing applications in order to leverage existing IT investments. Where traditional applications, even those delivered as SaaS, may take up to 12 months to realize a return on the investment, Deskera customers typically see an ROI within weeks.

Today, more than 2,000 companies are Deskera customers, including Starbucks, Great Eastern Insurance Company (the largest insurance company in Asia), Sequoia Capital, TransProcure (the leading procurement services company in Asia), Zendition (a global interactive publishing and e-book marketing company), and Blue Pie (a digital music record label and media company). The sweet spot for Deskera is service companies within the small to medium business sector, with companies ranging primarily from 10-250 employees. The applications apply to a broad range of businesses, but the company has found that the inclusion of project management along with the other applications is what drives demand among service companies. While some manufacturing firms have adopted Deskera, they represent a small percentage of the company’s customers.

In 2009, Deskera had $5 million in revenues and was profitable. The company is currently a completely self-funded, early-stage company. It plans to partner with a VC firm in Q2 2010 to secure growth investment funding that will allow it to accelerate business expansion and market penetration. The entrepreneurs are also looking to the investor to offer the management experience and industry connections to help successfully navigate the next stage of growth.

Krawler views North America as the primary market for expanding sales of Deskera. In the first quarter of 2010, North America accounted for 90% of new Deskera sales. There is a high rate of direct sales in this market via online sign-up. However, the company also expects to cultivate its channel program and work with resellers. Krawler will continue to build out the Deskera suite internally rather than acquiring technology because its biggest differentiator is that all its integrated on-demand applications are based on the same platform. Dixit fully plans to take the company public.

This segment is a part in the series : Deal Radar 2010