Why too much choice is hurting India’s digital transformation journey

In the last decade, Software-as-a-Service (SaaS) has revolutionized the way companies utilize technology, making it more scalable, flexible, and affordable. In India, SaaS has been welcomed as a key enabler of digital transformation, particularly of the country's 63 million-strong SME base. As the SaaS market becomes increasingly crowded, a contradiction has arisen: though digital tools have never been more accessible, real adoption and ROI within SMEs are dismayingly low.

This problem is not exclusive to India. In more developed economies like the US and fast-developing ones and the UAE, companies are also facing SaaS overload. However, in India, digital literacy, infrastructure deficits, and cost consciousness, along with other obstacles, will have a significant impact.

Too Many Tools, Too Little Direction

A typical entrepreneur of an SME today is overwhelmed with options: several CRMs, project management software, accounting software, marketing automation solutions, HRMS suites—the list goes on and on. Ironically, far from enabling businesses, this plethora of choices often results in decision fatigue. Without firm advice or industry-standard benchmarking, SMEs are left wondering which tools will drive results.

In India, the issue is compounded by the absence of integration between tools. Most SaaS tools are designed for solo use or particular verticals, creating silos of information and inefficiency. SMEs, who usually have minimal IT support, find themselves grappling with a patchwork of mutually isolated systems. The consequence? Under-utilized software, wasted subscriptions, and a digital strategy that lives more on paper than in reality.

The ROI Conundrum

For most companies, particularly in the developing world, digital investments only make sense when they provide a clear way to ROI. Sadly, the sheer quantity of SaaS solutions has resulted in many SMEs following trends instead of working towards fundamental operational problems. It's not infrequent to find enterprises investing in cutting-edge analytics tools without first having solved simple data hygiene or implemented AI-powered tools when manual processes are yet to be optimized.

In the US, where SaaS has had a longer runway, businesses are now grappling with the issue of "SaaS sprawl." Recent reports say that big companies usually have hundreds of SaaS applications in production, many duplicating functionalities. This not only drives costs up, but it also puts them at risk of security and compliance issues. While the UAE has pursued a more top-down, government-facilitated strategy for digital transformation, with frameworks and public-private partnerships leading adoption—even there, SMEs tend to struggle to select the "right" technology in a crowded marketplace.

The Need for Curation and Context

What the SMEs in India, the US, and the UAE require is not more tools but improved guidance. Curation is increasingly becoming crucial. Rather than selling the latest SaaS innovation, vendors and policymakers should concentrate on enabling businesses to understand what already exists.

There also needs to be contextualization of solutions, which are designed for large Silicon Valley companies, might not fit the bill for a logistics SME in Noida or a retail startup in Sharjah. Localization, support for onboarding, and price points need to take center stage in order to achieve true adoption.

In addition, industry associations and digital accelerators need to move from evangelizing digital technologies to developing digital strategy literacy. SMEs don't require software but frameworks to determine readiness, measure impact, and establish internal digital champions.

From Abundance to Impact

The SaaS explosion has certainly leveled the playing field when it comes to access to technology. Access without alignment, however, results in adoption without influence. India's digital transformation journey comes at a fork in the road: stay on a trajectory of siloed tool adoption, or course-correct towards a more considered, needs-led approach to digital enablement.

To do this correctly, the SaaS ecosystem needs to shift from scale to sense-making, from disruption to direction. Only then will we be able to translate digital passion into tangible results—not only in India, but in every market that wants to catch the next wave of digital opportunity.

Author: Akash Nangia, Co-founder and Director, Techjockey