70% of startups say tech adoption propels hypergrowth: SAP-Zinnov Study

About 37% of the startups plan to increase their spending on enterprise applications by more than 15% in 2023

Approximately 74 per cent of Indian startups report seeing direct benefits from implementing enterprise applications, according to a study conducted by technology firm SAP India and consulting firm Zinnov Digital. The research also found that 37 per cent of these startups plan to boost their spending on enterprise applications by more than 15 per cent in 2023.

The study indicates that by adopting a robust digital core on the cloud, Indian startups are reaping substantial benefits. Over 80 per cent of startups in the enterprise tech, health tech, retail, logistics, and autotech sectors have seen a considerable increase in revenue. This trend underscores the significant positive impact that enterprise applications can have on startup performance and success.

"Today, Indian startups need adequate tech infrastructure to diversify their businesses, scale operations, and acquire and retain the right talent," said Sanket Deodhar, Vice President of Digital Natives and Startups at SAP India. "Cloud-based enterprise resource planning (ERP) systems are powerful tools that provide valuable insights and direction to overcome challenges and achieve their goals, including attracting investors, securing fair valuations, and retaining a competitive edge."

The report, titled 'Driving the Next Phase of Sustainable Growth for Indian Startups in 2023 and Beyond', is based on a study of 115 startups. It suggests that startups will continue to invest in enterprise technology platforms due to their proven ability to deliver business outcomes and return on investment (ROI). Key benefits of enterprise applications include accelerated top-line growth, controlled bottom-line, quick revenue recognition, and the ability to handle complex billing based on contracts and consumption for differentiated service lines.

"In 2022, Indian startups faced significant challenges due to market headwinds and reduced valuations," said Sidhant Rastogi, Managing Partner at Zinnov Management Consulting. "In 2023, we remain optimistic that investing in the right technology and organizational development can help startups navigate the economic slowdown caused by the recession and other macroeconomic factors, thereby ramping up valuations, revenue, and achieving sustained growth."

About 24 per cent of startups believe that a mature business model, driven by robust technological capabilities and scalable operations, plays a crucial role in attracting investors. Around 68 per cent of respondents reported strong revenue growth after adopting enterprise technology solutions, which led to increased valuations.

Ajit Narayanan, Chief Technology and Product Officer at Licious, a foodtech unicorn, noted, "Licious aims to provide the best in-class meat-buying and consumption experience to our consumers through an array of technology-first solutions, systems, and processes. SAP's intelligent suite of innovative cloud solutions, along with built-in industry practices, will help us further strengthen and scale some of these business processes that we need to efficiently operate a complex farm-to-fork supply chain."

The study found that 81 per cent of startups identified automation and standardisation of processes across divisions with faster customisations as the primary benefits derived from hosting enterprise applications on the cloud. Public cloud adoption is set to double, while private cloud is expected to see a 50 per cent increase in adoption, indicating a strong inclination among start-ups to shift their workloads to the cloud.

Despite fluctuating market conditions and a less favourable funding environment, Indian start-ups continue to grow. The study foresees no slowdown in investment for high-performing start-ups in the coming years.

"Startups equipped with cutting-edge technology can scale easily, enhance consumer experiences, improve product quality, automate, and optimise business operations," stated Sonal Saldanha, VP-Investments at 3one4 Capital.

According to the study, over 75 per cent of startups use metrics such as past year's revenue, product and service margins, and market share based on traction to determine valuations. The report also reveals that 81 per cent of startups consider customer sentiment as one of their largest business concerns, highlighting the importance of customer acquisition, experience, and servicing metrics. The study found that about 70 per cent of respondents view partner evaluation and lack of in-house knowledge as the top challenges when implementing enterprise application solutions.