Outsourcing: Arul Murugan, Founder and CEO of Enrich IT (Part 4)

Arul Murugan: Yes. We are in the early stage, and now that we’ve got three customers, this is an area which I believe will help us to get Enrich IT to the $100 million mark in next three to five years

Sramana Mitra: I think you are absolutely right. Now, what role is Oracle playing in your marketing? How much of the business can you generate through — of course 80% of your business is from your existing customers – but in  the 20% that is your lead generation and doing projects to establish relationships and trust and so forth, how much of the leads come from Oracle?

AM: Quite a few come from Oracle. That’s the one thing I liked in our business model. Since Oracle does not provide procurement and supply chain on a SaaS or cloud model, if the Oracle field sales team is competing with Ariba or Emptoris, which are offering on the cloud, they bring enrich IT in front of the customer. Even though we are busy talking to various leads coming from Oracle on our own. At the same time, many of the prospective customers are skeptical because it’s something new.

There are hundreds of customers who are using Oracle supply chain and advanced procurement, but they are all on premise in their own data centers.  They first want to know how many customers are using this new cloud computing model. That’s where we get into challenges. Even Oracle has a tougher time convincing them. I look at it as an investment. We started this two years back. For the first year, we never had a client, but we went in the wrong direction. We went in a public cloud model. Last year, we got one client, and this year we got two clients. We have one other client that we will be closing in a month or so. Oracle is generating a good amount of leads for our cloud model. Now that we’ve got three customers and the CIOs are  feeling comfortable with private cloud model, the question is how effectively can we convert the new leads? I think next year we will see a pretty good growth. This year is more like stabilizing some of the key clients, proving the model works. Next year is more of scaling it up actually.

SM: At this point, would you say that you have reference accounts to do Oracle supply chain or Oracle  procurement  portions on a private cloud?

AM: Yes, we do.

SM: And who is that reference account?

AM: One reference I could talk about is a fortune 500  industrial and infrastructure company. They are truly global with five business units across 52 countries. Their current IT footprint is more than 50 different ERP systems including JDE, Baan, Oracle 11i and Oracle R12. They have a five-year strategic roadmap to put in one global Oracle R12 ERP system. In this organization, CPO roles into chief supply chain officer, and their supply chain team has a goal to achieve about $100 million of cost reductions in the next three years from their procurement operations. Most of the cost savings are driven through strategic sourcing. They cannot wait for next three to five years until they’ve got a global ERP system. They need a global sourcing and procurement system now. That is where enrich IT comes into play. They liked our private cloud solution and our roadmap to start with e-sourcing and then get into e-procurement, enterprise contract management, supplier management and spending analysis, along with Oracle MDM for products and suppliers, all in the private cloud. We also have another client that is about $1 billion in revenue and a leader in furniture manufacturing and has been using Oracle sourcing on our public cloud for about a year now. So, we have clients now, and they are ready to give us a reference. One aspect that is unique to Enrich IT is we have the advantage of being small and nimble and at the same time we understand how to work with large companies and how to help them to  scale up over time. That’s more of a compelling story for us.

This segment is part 4 in the series : Outsourcing: Arul Murugan, Founder and CEO of Enrich IT
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