Riding High on The Digital Boom

Canon India sees three main growth drivers: increase in consumption, increase in investments and the increased government stress on improving quality of citizen interface using technology as a strong via media. A report by Team Inclusion

01 January, 2012 Special Reports, Technology
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For a company that entered India only in 1997, Canon India is today eyeing a sales turnover of US$1 billion by the year 2015, riding on the back of an average annual growth rate of 35 per cent. Canon India is a company that is seeking to double its market share every year for the next decade and critical to the company’s goal here is its increased focus on digitally-man­aged printing solutions.

Says Kensaku Konishi, President and CEO of Canon India, “Notwith­standing the problems in supply of certain equipment due to the tsunami and earthquake in Japan in March 20011, our growth rate will improve further, with sales turnover exceeding Rs 17 billion. Canon India has recorded the biggest growth rate among all Canon subsidiaries worldwide and continues to do so, notwithstanding the fact that the turnover from the Indian market forms only 1 per cent of total global Canon turnover. Thus, while Canon recorded sales of US$ 10 billion in the US and of US$ 2 bil­lion in China, sales in India totalled US$270 million.”

“But the focus is changing. While in the earlier days, Canon worldwide was looking more at the growing Chi­nese market for increasing product sales, India has now come into the picture in its own right,” affirms Alok Bharadwaj, Canon India’s Senior Vice-President.

“Today, however, it does not matter if one is from Japan, the US or Korea, the destiny of India is more strongly and more firmly locked with global developments and it would be foolhardy for anyone to ignore India. Also, as the income of an average Indian improves and as technology use gains ground, the digital imaging category is showing robust growth in India,” says Konishi.

Canon India sees three main growth drivers guiding its business in the country. They include increase in consumption, increase in investments and expansion of operations by businesses, and the increased government stress in improving quality of citizen interface using technology as a strong via media. This is even as it concedes that while the current economic slow­down could have its effect on the infor­mation technology (IT) industry, the fundamentals and long-term growth drivers are in place. The objective of both the industry and the government is on a three-dimensional thrust that will integrate IT in most economic activities and make India an attractive manufacturing base for electronic and IT products.

Alok Bharadwaj, Senior Vice-President, Canon India

Today, both the industry and the government have recognised the need to reduce costs and optimise resources so they can build higher competitiveness and offer improved services. They are also realising the need for domain experts to manage processes and activities more effectively. This shift in the government sector, on pro­viding more services to citizens using IT as the major interface is creating new business opportunities.

“While currently only 10 per cent of our business comes from the government, the balance coming from consumers and corporates, we hope to double the share of business from the government in the next two-three years,” says Bharadwaj. For Canon India, the challenge is in ensuring that governments and organisations begin to place greater emphasis on document management.

“Today, it does not matter if one is from Japan, the US or Korea, the destiny of India is more strongly and more firmly locked with global developments and it would be foolhardy for anyone to ignore India”

Alok Bharadwaj

It is in this context that Canon is now seeking to partner with its clients by undertaking large-scale projects involving print health check-ups, designing optimal fleet, deploying and helping clients monitor and manage the entire process of printing more effectively.

Says K Bhaskhar, Director, Office Imaging Solutions Division, “almost 30 per cent of Canon’s printing business comes from managed document solutions, a segment that is growing by 30-40 per cent every year. Canon is now moving to the next orbit of offering Managed Document Service (MDS), where consultants will partner with the enterprise by un­dertaking large-scale projects involving print health check-ups, designing optimal fleet, deploying and helping clients monitor and manage the entire process of printing more effectively.” Adds Bharadwaj, “We have been ad­dressing key industry concerns for quite some time by building intelligence into our offerings. Our MDA is a unique and differentiated one-stop solution in the enterprise space.”

For Canon India, the challenge is in ensuring that governments and organisations begin to place greater emphasis on document management systems

According to Bharadwaj, Canon also sees a huge scope for growth by focusing on new markets, such as Tier-II and Tier-III cities. In 2010, the firm started a massive marketing campaign called ‘Canon on Wheels’ to showcase its products, wherein seven trucks carrying a range of Canon products travelled through 38 mid­size and smaller-size towns and cities. Also, the company plans to open more outlets and service centres in these small towns. In fact, it expects most of its business in the coming days to be generated from the small and medi­um-sized town.

“Today, there is a perceptible shift towards smaller cities and towns, and we decided that we have to look at such towns as a very integral part of our future strategies to achieve the targeted growth. We estimate that in the coming days over 70 per cent of our business will come from these towns.”

Says Bharadwaj, “cameras to­day are technologically rich and are equipped with easy to use features at affordable prices. This has helped popularise digital cameras across age groups, finding ready acceptance amongst first-time buyers penetrat­ing the consumer market beyond the metros.” According to him, there is a huge potential in the Indian market as today household penetration of digi­tal cameras in India is as low as 3 per cent while that in China is 16 per cent and in Europe is 70 per cent.

Last year, the company also made its foray into the retail business, opening up exclusive outlets. Managed by the ‘Brand Retail Business’ division, these outlets sell all Canon products including cameras, camcorders, photo printers, DSLRs and lenses, inkjet printers, entry-level laser printers and accessories. Says Konishi, “The Canon store offers solutions to customers seeking high-end photography and printing solutions, where both click and print products are available.”

Apart from the Canon Image Square exclusive outlets, the company also has around 380 primary channel partners, 13 national retail chain part­ners, seven level-IV Master Service Centres, over 100 authorised service centres, over 4,000 secondary retail points, including 270 national retail chain store partners and 33 Canon Care Centres. As a Fortune Global 500 company, Canon is guided by the Kyosei philosophy that focuses on living and working together for the common good. Canon India today has its pres­ence in 10 product categories, seven customer segments and nine channels of distribution.

And, considering that 60 per cent of its India revenues come from products other than cameras, Canon has opened a business solution lounge in Mumbai, Bangalore and Gurgaon for B2B customers to showcase business applications with seminar rooms for business workshops. “This is in keeping with our promise to enhance the digital experience for our customers. In these lounges, customers can get a touch and feel of Canon products. Entry is by invitation only,” adds Konishi. The lounges provide a comprehensive display of Canon’s vast range of offerings and display over 101 consumer imaging products for consum­ers to simply look, feel and experience without the compulsion of buying.

Kensaku Konishi, President and CEO, Canon India

As a business strategy, Canon India is today also looking at government driven projects. Focusing on the hardware side of the e-government business, Canon India has drawn up a three-pronged approach to tap opportunities.

The company is bullish on its growth opportunities, bulk of which is expected to come from different e-governance projects. It has been aided in this by the increasing realisation by ministries and government departments of the importance of better technology solutions to improve internal processes and reduce costs. Opportunities for Canon here include digitising files, records and archives, cost-effective printing works and certain niche areas like high-end sur­veillance cameras. This year, Canon is targeting about 20-25 per cent of its revenue to come from government projects alone.

“Canon India has recorded the biggest growth rate among all subsidiaries worldwide, notwithstanding the fact that the turnover from India forms only 1 per cent of total Canon turnover”

Kensaku Konishi

Whether it is a land records office or a passport office, the government of­fices are storehouses of data for future references and have been archiving the documents in physical form. “The biggest challenge in an e-government project is to convert legacy documents into electronic form. Looking at the tangible e-governance perspective, we have started working on the hardware element. We are looking at two areas for growth — laser multifunctional devices and e-governance opportuni­ties,” Bhaskhar adds.

Already, the company is involved with many e-governance projects such as AADHAAR for national biometric iden­tity with UIDAI, the biometric identi­ty card initiative for coastal fishermen with BEL as integrator, the passport seva kendras with TCS, and with the ESIC through Wipro. Canon is also a part of the government’s ambitious, Sarva Siksha Abhiyan that assists states for infrastructure development and facilitates ICT-enabled education. The education initiative aims to create a database of the demographic attri­butes, education status, out-of-school children status and many such details of every child. Points out Bhaskhar, “the key here is to build alliances with private companies, who are partner­ing with the government. “

According to Bharadwaj, the company’s strategy is now dependent on inclusive growth. “The government’s efforts to stimulate the economy by leveraging technology in the field of education, healthcare, infrastructure, reforms and mission-mode projects under its e-governance initiatives will be the short-term growth drivers even for Canon India.”

Such inclusive growth, Canon believes extends even to human rela­tions, both within the company and that with its channel partners, service centres and distributors. The primary aim, in keeping with the Kyosei philosophy, here is to build the desire in all associates to grow beyond the ordinance of expectations and possibilities. Thus, apart from providing sales team of channel partners with tools and product training, Canon has in place various schemes that seek to enhance their soft-skills as well. It is perhaps because of this, says Shamim Anwar Quadri, Head, Market Engineering, that Canon India can boast of one of the largest service networks in its sector in the country.

More importantly, such schemes are part of Canon’s national channel strategy to showcase commitment in building competencies with channel partners to enable them to climb the value chain.

The scheme, Gurukul, enables as­sociates to learn and share emerging trends in technology, and includes training sessions, interactive modules and discussions on trends and technol­ogies. Aimed at providing improved customer service support among channel partners, Bhaskhar says the scheme is an aggressive training programme for its channel partners. “As Canon aims to acquire a large market share and gain leadership, we need to educate our partners to deliver on the same lines by maintaining a direct in­teraction with the sales personnel and this scheme enables to do just that.”

Earlier in 2010, Canon India had launched another scheme that sought to promote greater interaction between its customers, staff and products. Under the Image Express scheme, a ‘truck showroom’ travels from city to city, giving customers the chance to touch and feel the entire range of Canon products. Says Koni­shi, “the idea is to not only advertise, but also grow the brand in the minds of all channel partners as well as our customers.”

Shamim Anwar Quadri, Head, Market Engineering, Canon India

Such care extends even to the company’s own staff as is evident from the comparatively low rate of employee turnover that Canon India has seen. One reason for this low turnover, company officials say, is that senior and middle management positions are rarely filled from outside. The ab­sence of any kind of ceiling with the company to career growth inspires new recruits to work hard and follow in the footsteps of their seniors. “Canon will grow only if its people grow,” says Konishi, explaining the company’s philosophy.

In fact, as Bharadwaj points out, in 2011, Canon India was ranked as one of the top ‘25 Best Employers in India’ by Aon Hewitt following an extensive study conducted across 200 compa­nies. The study covered information on business performance, organisation structure and HR strategy, employee survey of random population, CEO interviews and onsite audit to validate accuracy of information provided. It also included interaction with HR teams, group discussions with employees and managers, discussion with the CEO, and facility tour of the organisation.

“Canon believes good human relations practices, both within the company and with its channel partners, service centres and distributors, are essential growth drivers for any organisation”

Shamim Anwar Quadri,

Similarly, in 2009, Canon was ranked amongst top 10 employers in India in a country-wide survey on ‘Best Companies to Work for in India’. This ranking was given on the basis of a process that involved an under­standing of the HR systems of compa­nies, a survey of their employees, and a survey of their external stakeholders such as B-schools, placement firms, and alumni. The survey was under­taken by the global firm, Mercer Hu­man Resource Consulting.

K Bhaskhar, Director, Office Imaging Solutions Division, Canon India

Bharadwaj feels that people enjoy working at Canon because of the “high degree of freedom to apply new ideas. Canon’s work culture and the dynamic nature of its business permit this. There are various platforms for people to speak, sound out ideas, and contribute towards policies.” One such platform is an online forum called Ex­cellence One. Every new policy/pro­posal is posted here and employees are invited to provide their feedback. This is very crucial for the company in formulating business plans and strategies.”

Canon not only brings quality products to the market but also con­tributes to minimising environmental burden through effective application of new technologies. Canon focuses on the development of resource conserv­ing products that are smaller, lighter and easy to recycle. Says Konishi, in keeping with our corporate philosophy, Canon understands that society requires to urgently address environmental issues such as global climate change, resource utilisation of end-of-life products, and proactive prevention of pollution due to disposal of these products. In this context, Canon strives to make products that are environment and people-friendly throughout the entire product lifecycle. Under its Indian operations, Canon has set up a collection mechanism to channelise and dispose waste. As Canon India completes over two decades of operations in India, the company is firmly geared to achieving a US$1 billion turnover by the year 2015. Says Konishi, the high-margin managed printing services and strong demand for the cheaper digital compact cameras will help boost overall growth in sales. Also, our strategy of focusing on Tier-I and Tier-II cities is now paying off.

“The biggest challenge in any e-government project, is to convert legacy documents into the digital format”

K Bhaskhar

A new revenue segment that the company now hopes to introduce in its Indian subsidiary is medical equipment, an area where Canon has registered impressive sales globally.

This includes equipment such as eye-checking machines, X-ray and scanning machines. Such equipment will initially not be manufactured in India but instead be exported by the company’s Singapore unit, Konishi avers.

Canon India believes that a good future lies ahead only if it is based on the innovations of today. From a quiet beginning in 1997, Canon India has successfully positioned its brand, becoming a leading player in nearly all segments of the digital imaging market. Its position is especially strong in the printers, scanners, cameras, copiers and multimedia devices segments.

Concludes Bharadwaj, “Our proposition to customers have to evolve constantly regardless of business and economic environment. To align with our corporate ‘green commitment’ and the need for cost reduction in printing by businesses, our products must cater to emerging sectors like education, power, healthcare, telecom and e-governance.”

Document Management & e-Governance

A major shift is taking place in the government sector, which is increasingly realising that to provide services to citizens, it will have to go digital. While it is putting in place the necessary infrastructure, a more important challenge before it is to create the necessary content that is accessible across-the-board in a standardised format. Thus, while there is an opportunity in e-governance, there is also a challenge. The challenge is to transform the process of governance to good governance, using e-governance, says Alok Bharadwaj, Senior Vice-President, Canon India. According to him, most government organisations have now started using electronic workflow processes. But the challenge here is to make paper a part of this process. Today, all knowledge resides in two domains – the human mind and in documents. Here, one must remember that governments are the biggest users of paper. In fact, today paper forms an integral part of the interaction between governments and citizens, between governments and governments and between governments and business services. Any governmental activity triggers the use of paper. But, with the world increasingly going digital, it is time that governments too start going digital.

The Canon document management solution allows one to manage documents more efficiently, reduce manual processing and allow instant secure retrieval from anywhere. It allows one to use document-based information more efficiently, enable quick and accurate searches of information, without even a single sheet of paper moving. It is increasingly being realised that document management is an essential part of any IT infrastructure, bringing in improved efficiency and productivity. The problem here is in doing away with the mindset that sees office automation, of which document management is an essential component, as only an add-on to the IT infrastructure of an organisation. “Today, things like document are seen only as facilitators rather than as a necessary component of any IT initiative in the e-governance space. This must change.”

It is the government’s priority to promote ‘social, financial and digital inclusion’. But, any digital inclusion strategy should be supported by a secure architecture where every single document is traceable, easily accessible and for which an audit trail exists. Technology is useful only when it facilitates smoother access to government services in a cost-effective and timely manner.

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