Surya Sarda, Director, Marketing & business Development, Graebert India talks about the company’s foray into Indian CAD software market and challenges ahead
Tell us more about company background.
Graebert GmbH is a German company, recognized as a true innovator in the CAD industry with more than 30 years of expertise in CAD software development and customization. With a strong R&D culture, Graebert’s DWG-based CAD systems were the first to run on Windows, Mac and Linux. We were the first to launch mobile CAD and cloud CAD. Our CAD engine powers a number of industry leading CAD products including DraftSight from Dassault Systèmes and CorelCAD from Corel Corporation. Millions of users use our ARES CAD technology across 100+ countries around the globe. Graebert set up a subsidiary in India in 2012 with a state-of-the-art India Development Center (IDC). Today this IDC is the largest development center globally for Graebert and is instrumental in developing Graebert’s core CAD technologies. We set up our sales operations in India in 2014. In the last two years, we have grown at 100 percent CAGR. We presently have 45 strong partners across India and our flagship products—ARES Commander and ARES Touch—are distributed by Ingram, the largest distributor of IT products in the world. We have made significant investments in India with representative offices in Noida, Mumbai, Pune, Chennai and Bengaluru—and a full-fledged training center in Noida to impart CAD training to customers, partners and students.
Who are your competitors and what major verticals are you looking to expand in India?
We are a new entrant in the Indian CAD software market having launched our India sales operations only in 2014. So logically every vendor in this market is a competitor to us. But being the most dominant player, Autodesk is the biggest competitor, not only in India but globally. The Indian 2D/3D CAD software market is approximately Rs 200 crore per annum growing at 15 percent CAGR. However, we are growing at 100 percent CAGR which means we are gaining market share from our competitors.
Several large Indian enterprises like ONGC, Hindalco, Airport Authority of India, Fedders Lloyd, Motherson Moulds and Essar Oil are migrating from competing platform to Graebert. Looking at the business momentum, we are confident of garnering 50 percent market share in Indian CAD software market over the next 4 years. Of the Rs 200 crore CAD software market in 2015, the architecture, engineering and construction (AEC) verticals were the largest contributors followed by mechanical and manufacturing verticals and the government and education segments. With flagship projects like land record digitization and smart cities, the government segment promises to be a big growth driver for us in the coming years.
What is your revenue projection for Graebert India?
Being a private limited company, we don’t reveal our revenues. But it suffices to say that India is one of the fastest growing markets for Graebert globally. We expect 100 percent CAGR growth in India over the next 5 years and a market share of 40-50 percent. India is important for Graebert’s future growth, both, in terms of developing new path-breaking products and business opportunities. We have major investment plans to expand the Indian operations. We have already invested $4 million in India and plan to invest similar amount to match our growth.
The company has launched new CAD software, what are the unique features which makes them different from previous versions?
ARES Commander 2016 has several innovative and unique features that increase productivity and efficiency in creating CAD designs. Our customers appreciate the superior features of ARES Commander over competing products. ARES Touch is the first and most complete CAD solution for mobile devices. It supports more than 150 commands. ARES Touch is bundled with ARES Commander. When you buy one, you get the other at no additional cost. Graebert provides the best cross-device CAD experience for CAD users with support for Windows, Linux, Mac, Android and iOS operating systems. It has many unique features which provide productivity gains for users of ARES software.
What are your expectations from Indian market after launch of new CAD software? What will be your key focus areas in 2017?
In India, we expect to sustain 100 percent CAGR growth over the next five years. While, we have set a target of having 30 percent market share in the global CAD market in the next 3 years, in India we are targeting a market share of 40-50 percent. We have a multi-pronged growth strategy for India.
Winning competitors’ customers: Our main competitor has moved from perpetual licensing to software subscription model, which has not augured well with Indian companies as it raises the cost of using the CAD software significantly. As a result, we are seeing a trend where several large customers are migrating from competing platform to our platform.
Expanding sales and distribution network: We already have a set of 45 strong partners. With new opportunities arising out of Smart City, Make in India and Digital India projects we plan to expand partner network to tier-2 and -3 cities.
Launching new products: Besides the newly-launched ARES Commander 2016 edition and ARES Touch, we plan to launch our globally acclaimed products and services including ARES Map—a hybrid solution bringing together the intelligence of GIS contents and a full-featured DWG-based CAD system; our surveying solutions, SiteMaster and surveying services, iSurvey. These new offerings will significantly expand opportunities in the Indian market.
Focus on government projects: With the new offerings soon to be launched, Graebert has set of offerings that are prime for government’s flagship projects—Smart City and Digital India.
ARES Commander, ARES Map, SiteMaster and iSurvey are important to the Digital India Land Record Modernization Program. The total budget outlay for this program at the central government is expected to be Rs 5,000 crore over the next five years. States will have their own outlay. Graebert is part of the Association of Geospatial Industries that is advising Nasscom and DoLR (Department of Land Resources) on selecting the right technology framework for this project.
Further, all our solutions are important for creating digital maps which are integral part of planning and implementation of Smart City projects—intelligent parking, intelligent transportation, smart water management system, intelligent utilities, etc.
According to your company research, your competitor’s policies for consumers are benefiting you in several ways, how so?
Our competitor’s move toward subscription-only model has not augured well with the customers and partners in India. While subscription model offers an advantage of lower initial acquisition cost against the perpetual license, it does cost more over time. Benefits accrue only to the vendor, there is nothing in it for the resellers or the customers.
Indian customers have a software upgrade cycle of 6-8 years; for SMEs the upgrade cycle is even longer. For customers, subscription model turns out to be a pricey affair as the subscription cost substantially exceeds the perpetual license cost over the usual upgrade cycle.
Most importantly, if you fail to renew desktop subscription for any reason, the software will quit working all together, whereas a perpetual license will continue to work. Hence, perpetual licenses are the smarter choice for customers in long term.
In our estimate, with our ‘one license for multiple device’ licensing options, the TCO of our products is significantly less than that of our biggest competitor. Since our competitor began its transition to subscription-only licensing six months back, we have seen many large companies like ONGC, Hindalco, Airport Authority of India, Fedders Lloyd, Motherson Sumi and Essar Oil migrating from competing platform to Graebert. We expect such migrations to gather speed as the deadline for moving to subscription-only model nears.
Will your company also move to subscription policy someday, or will you stick to not moving in subscription mode and having ‘one license many system’ policy is your strategy to add on your market share?
We believe that the customers should have the option to choose what’s best for them. As a result we continue to offer perpetual as well as subscription licensing. Not just that we offer flexible and unique licensing options that help customers reduce the number of licenses and costs. With LicenseToGo feature, the same user can activate one main computer and work from others from time-to-time without deactivating the license from the first one. Users can even use computers under different operating systems. Under our Flex License options, a single license can be shared between concurrent users or PCs on the same network to reduce the number of licenses and costs. Users can also take away the license for a defined period if they need to work outside the network. Finally our mobile CAD ARES Touch is bundled free with ARES Commander. So in short our licensing policy is one license can be used across multiple devices and multiple OS.
Piracy could affect companies’ market share in a way, what are the measures Graebert India is taking to cease or decline the practice?
Software piracy is a major concern in India as almost 80-90 percent of the users are using illegal licenses. Our prices and customer-friendly licensing options are designed so that customers would find value in adopting our licenses.