The GST law would require India’s massive base of small and medium enterprises (SME) to comply with a new and more complex law by filing returns on a technology platform called GST Network (GSTN). Tally refocused energies on refining the flagship accounting software, Tally ERP.
“It was all hands on deck,” recalls Tejas Goenka, 28, executive director of Tally, who spent the previous two years overhauling its partner ecosystem to speed up reach of products to a growing customer base.
In hindsight, Tally’s timing to revamp sales and distribution (See Outreach Network) couldn’t have been better, as the push for SMEs to buy software came from regulation. “When GST happened, product availability became crucial because of compliance requirement,” says a former senior manager at Tally, who asked not to be identified. The revamp of the partner ecosystem, helmed by Tejas, was to deepen Tally’s hold for the retail opportunity. “It actually made our ability to scale better,” says a manager from its product team, who asked not to be named because he isn’t authorised to speak to the media.
Until 2015, the Tally tale was how software evangelist and social hermit Bharat Goenka built a financial accounting product any Indian business could use. The company was originally known as Peutronics. Incorporated in October 1991, it is one of India’s oldest software product makers.
To build that flagship product in 1986, Goenka had to first get the buy-in of father Shyam Sunder Goenka, who refused to learn technology. “When I buy a car, I want to be the driver — not a mechanic,” he would tell Bharat. The late SS Goenka was pointing to technophobia among SME users. Under him, their core business had been to supply materials to textile mills such as Binny and National Textiles Corporation. “We are not creating a (software) product for ourselves. We are creating it for the market,” he told Bharat Goenka in the late ’80s.
It’s why the philosophy of Tally became about: absorbing the complexity, but delivering simplicity in a software product to open up the SME market, which is not tech savvy. To grow the nascent market, Bharat Goenka built relationships with a sales channel network, which by 2014, spanned 120 master Tally partners (MTPs) and more than 25,000 Tally partners (TPs).
This is the story of how Tejas revamped Tally’s sales network—its partner ecosystem— to make sure the core product and Tally services are available, wherever and whenever needed. It is now a hub-andspoke model. “Walking through the transition was emotional,” he says. “It is not just a business. It was eye-opening to understand the emotional attachment with not just the business—but also the family.”
The old sales channel had been designed to open up, or discover, the market. Several thousands of TPs took the product for installation to offices of small businesses. “We had a long tail of TPs, who were essentially being treated the same way,” Tejas says, referring to erstwhile uniform margin structures and procedures. The reality was: the interest in growing Tally customers varied across sales network.
While TPs created the market by finding new buyers of licensed software, the MTPs’ influence stemmed from much higher volume of sales. If TPs got higher margins than MTPs, it was for finding new buyers yielding lower value.
Almost 70% of MTPs sold only Tally, another 20% ran software training programmes while selling. The rest began as customers with legacy businesses in manufacturing bicycle part or jute, which sold Tally. “The MTPs focused on growing the TP base, and involved them more in selling the Tally value proposition,” Tejas explains. “They also ensured that stock would be available on a regular basis, and that cash was available to us regularly.”
During 2009-15, MTPs came to serve two functions — implementation and awareness. But the danger was that software and services was getting commoditised. “Over time, it became hard to oversee 25,000 partners, categorise or classify the total amount of business they do,” recalls another former manager at Tally.
Aged 25, Tejas’ concept in early 2015 was to structure and tier them like a traditional partner programme. “It was to ensure the partner gets more out of the deal beyond just selling a box (on-premise installed software). Invest in the customer beyond transaction,” the former manager says.
In effect, Tejas Goenka also separated the stock distribution function from the customer engagement function. But first, he pushed the TPs to put more skin in the game by investing in themselves (for training and assessment) and infrastructure (office and sales force). Such partners would get designated ‘certified partners’ (CPs) in the new order. If their sales grew, Tally’s product adoption would rise. There are around 1,800 CPs.
The long tail now comprises ‘associate partners’ (APs), still numbering more than 25,000. Tejas has started a Tally Accelerator programme to ensure CPs and APs grow their competence through certification programmes. “This equips CPs to also provide advisory services, helping a medium-sized business expand branches in new states,” he says.
While CPs focus on customer engagement as well as support and advisory services, a layer of 60 distributors ensures stock availability to CPs and APs. “The more people we have on ground to reach out and sell, the more the business will grow — no matter what product we have. With GST, we required a lot of people to reach out to a lot of businesses,” Tejas says.
It is hard to discern if the increased sales is because of the GST law, or the overhauled network. But customer engagement has seen improvements, says the senior manager. “The level of (after sales) service is now more than the elementary services,” he says. The number of sales folk per TP has risen from 1.5 to four.
Tally’s certification programmes have been developed to identify a better quality of partners to render more complex services. “This will help SME customers to understand Tally beyond the sale, for services like enterprise resource planning software integration,” says the former senior manager. “The more sophisticated SMEs will go back to a suitable partner— the certified partner. This was the fundamental change in the partner ecosystem.”
INDIA’S THUMB RULE
In many ways, while Tally’s reach to 1.5 million customers is unchallenged, its eye on the physical sales and distribution infrastructure seems contrarian in the Digital Age. After all, with cloud-enabled technology services, software companies build a product and serve it remotely. And digital marketing helps in discovery. In this era, Tally Solutions is competing with global companies like Intuit and Zoho. So why focus on the physical outreach?
For long, Tejas’ father has argued that India’s technology industry never solved distribution for domestic market. “Twenty five years ago, the first question was: ‘Is tech useful? If so, what is it useful for?’” recalls the 55-year-old, who continues to focus on product development. “Today, the conversation with a potential consumer is about demonstrating how it is useful. Conversations had to change far more now than before.”
In Tally’s experience, the piracy market for its software is around 5 million, whereas licenced copies sold is close to 1.5 million. Goenka maintains this is because of availability and lack of convenience. SME decision-makers’ never had fluidity in buying software. “The journey that he (Tejas) is on is actually in recognition of the fact that a bulk of the piracy in India is because of absence of access, rather than a moral fabric problem.”
It’s a point Tejas is cognisant with: “People have no problem paying, so long as they know what they are paying for, and for after-sales support.” The problem with cloud-powered software, he says, is a continuity problem. “If India is not yet 100% anytime-anywhere connected, small instances can cause big business problems.”
The company’s DNA, he says, is still to predict and design products right for SMEs—push them 3-5 years ahead.