K J Somaiya Institute of Management

CONSULTANCY@SIMSR

Presents

CASE-INNOVA 2022
A National Level Case Study Competition
OVERVIEW
“We need to do something about it, or someone else will do that for us. We have a product and the reputation,
but we are not able to reach our prospects to make them customers.”

The industry was flooded with new products from veteran and new players alike, but a common problem
still existed – they never reached the customer. It wasn’t easy for Rajesh, co-founder of Consultium, a start-
up in 2012 to follow in the footsteps of a pioneer but he realized that the sales performance over the next
few years would be key to success. Now the question remained – in house sales force or reselling?

Consultium was founded in 2007 imbibing its mission of becoming a medicine to businesses. The idea to
cater to a growing healthcare market using a software solution was born when two of the co-founder Vinod
and Sanjeet moved out of the Apollo Healthcare division. Their expertise in diagnostic equipment, CIS,
Six Sigma, and healthcare IT solution delivery coupled with Rajesh’s business process strategy creating
skills honed at the renowned global consulting firm enabled them to boast a wide set of professional
experience.

Six years of service later, the company realized the dire need to have a clear strategy to gain a good share
of the Indian market. Rajesh in charge of business development and growth strategy, was overloaded
running the daily operations and was unable to draw out a five-year strategy to grow the company.

As tempting and daunting was the task, Rajesh knew that he had to chalk out this plan and present it to the
co-founders and investors of Consultium. When they started off, they had a clear vision for themselves –
become the market leaders in health management information systems in India.

Consultium dealt with a slew of requirements and suggestions from prospective clients like-

A new software is redundant for my business

A paperless solution is preferable, but they don’t wish to pay hefty sums for it

My IT Department can streamline the process

My aim with this solution is to hear fewer problem from the IT department

Rajesh began compiling all the information and worked on a strategy to ensure the company aligns with its
goals.

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The Company and The Product offering

Consultium was in the business of developing software solutions for managing end-to-end processes of a
hospital or a healthcare facility from patient admission to discharge and all the internal workings.

Leveraging on their knowledge and experience in the areas of healthcare and consulting, the three partners
developed and tested a composite solution, keeping in mind the workflows in typical Indian hospitals. The
product was named Tanmatra after the five senses of the human body as defined in ancient Indian art and
science of Ayurveda.

The Consultium offering enabled hospitals, healthcare centres and clinics to set up an enterprise resource
planning (ERP) system. The client had the choice of setting up an entire end-to-end system covering aspects
such as billing at the basic level to electronic record management (ERM) at the highest level. Refer to
Exhibits 1a and 1b for more details on the specific offerings.

In fewer than six years, Consultium had gained 171 customers who had contributed varying levels of
business. The average business per customer was around INR 1 million. The major source of revenue came
from the license fee payable when purchasing the product.

Target Market and Pricing

In India, health care was delivered through both the public and the private sector. The public healthcare
system consisted of healthcare facilities run by the central and state governments, which provided services
free of cost or at subsidized rates to low-income groups in rural and urban areas. The private sector
comprised hospitals run by charitable organizations and corporate houses. Healthcare facilities run by
charitable organizations also provided services free or at a low price depending on the income of the patient
or patient’s family. Private organizations, on the other hand, had a clear profit focus while adhering to
certain guidelines laid down by the government. Several corporate organizations were embarking on either
horizontal or vertical expansion to become integrated healthcare providers.

India was seeing steady growth in the healthcare industry in 2012 with an overall sector growth rate of
more than 14 per cent and a healthcare spending increase of 15 per cent year over year. Healthcare IT
spending was also expected to increase. The HMIS market size in India was estimated at INR 4.6 billion
and was expected to reach INR 9.8 billion by 2015. The growth rate of the industry was estimated at 22 per
cent since even existing hospitals and healthcare centres were adopting HMIS.2

Consultium was offering the basic system of billing required by most organizations for approximately INR
200,000. Any other add-ons requested by the client increased the price from that base level.

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The price range for the client offerings varied from INR 200,000 to INR 5 million. However, as per its
client profiles, there were very few clients who had taken the complete offering at the highest end.
According to Rajesh, clients were unwilling to commit to large investments upfront and typically ended up
taking the lower product, apparently to evaluate the robustness of the system and the quality of service
provided by the company. This was thus a necessary precursor to any larger deals that might be struck with
the client.

The company did not follow a standard pricing model. Pricing decisions were made centrally based on a
combination of the factors mentioned above. An overall price for the software and implementation was
arrived at first for a project, and then this figure was divided by the number of estimated users to determine
a per license fee.

Like any software solution, HMIS was also only as good or as bad as the underlying processes. The team
at Consultium found themselves acting as consultants on processes to some hospitals so the experience of
the founders in consulting helped immensely.

The management of the hospital also required the assurance that the installation was of strategic importance.
For the management, the robustness and scalability of the product was essential, along with ease of use.
Other key evaluation parameters were the return on investment and the credibility of the vendor. License-
based pricing was found to be the most appropriate for these segments.

Customer Need and Buying Behavior

Customers needed to streamline the workflow, completely automate their system, reduce pilferage, achieve
greater efficiency in terms of patient care and acquire cost benefits.

Hospital decisions were generally made by a committee, which consisted of not just the hospital
administrators but also the doctors. Experience suggested that the job was more than halfway done if the
salesperson had the buy-in of the top stakeholder, who could either be the medical director (MD) or the
chief executive officer (CEO) of the hospital. Convincing the IT or administrative staff after this was easier
than taking a bottom-up approach.

In any hospital, the top management usually evaluated proposals based on the total expenditure, the benefits
of the process optimization and whether there would be significant improvements in the quality of care
offered to the patient. Other parts of the hospital such as the labs, pharmacy, and specialized departments
(e.g., orthopaedics, gynaecology, paediatrics, etc.) would evaluate the utility of the product in their day-to-
day lives and its ease of use. The administration staff and the internal IT team would evaluate the product
with regard to the specification and quality of integration of the system with existing hospital processes.

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Most of the hospitals bought IT-related products and services through references due to limited time and
knowledge. In some cases, they appointed independent consultants to guide them in the buying process in
terms of charting out the requirements, vendor search and evaluation, budgeting, and justification for the
top management to choose a particular product. Some of these consultants also formed relationships with
vendors and helped them navigate the internal bureaucracies of the hospitals. Only a few of the hospitals
had started putting in the effort of rolling out a formal request for proposal (RFP) process where all the
vendors would compete on the same platform.

Selling Features and Benefits

Due to the nature of the purchase and the characteristics of the buyer, Consultium had to develop a selling
methodology that did not simply focus on its product but rather on the process. Process selling involved
advising the hospitals on how the discharge time of the patients could be reduced by having an integrated
billing procedure that would ensure that the bill would get generated at the source. This also helped in
ensuring that no charges were lost while trying to incorporate the various divisions’ inputs on the final day
of discharge.

It also helped the hospital management to keep a check on the credit history of its patients and accordingly
decide to provide further services and/or demand for payment to reduce bad debts. Tanmatra also had a
module to drive employee accountability through a check listing procedure wherein every user would have
a separate Inbox/Task List facility to keep track of the tasks assigned to the user along with the time stamp.
This also provided invaluable data to track bottlenecks in the process.

Tanmatra also helped track the profit and costs for each department separately, allowing hospitals to focus
on profitability of departments. It also helped in vendor management, inventory management and reducing
pilferage by maintaining appropriate access rights to purchase orders.

Consultium in the Market

In 2012, what differentiated Consultium from other software giants, such as Wipro, TCS and Infosys who
were competitors in the same space, was its capability to offer standardized developed software that would
need only minor customization. The three big software giants followed the waterfall3 model and hence took
anywhere between six to twelve months to understand the customer’s requirements and then hand the
product over to the development team for software development. Also, for these large players, the
healthcare sector was still a very niche vertical and was subsumed in the category of “others.” There was
very little focus on this vertical.

There were at least 14 instances where Consultium was successful in replacing the solutions of bigger
players and acquired customers who had been loyal to these players for as long as 10 to 15 years.
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 Consultium made attempts to sell the entire value proposition whereby it would commit to provide quality,
support, good pricing, strong implementation and project management and return on investment for the
clients. What usually tipped the balance in its favour was when the team managed to showcase the total
cost of ownership over a two-year period and compare it with either existing solutions or competitor
products.

Another important advantage of Consultium was that due to the web-based system architecture, no software
had to be loaded onto the computer of the end user, the person who actually would be using the system. A
web-based browser system involves installing the system on a central server (which could simply be a
computer) of the client location and providing a URL that would enable the users in the client organization
to start using the system. Having to install the system on the central server, rather than having to install the
full software on each user’s computer, drastically reduced capital expenditure and generated upfront
savings to the tune of INR 10,000 to INR 15,000 per machine. Even if one were to consider a bare minimum
of 10 to 15 computers in a hospital, the cost savings aggregated to nearly INR 100,000 to INR 225,000.
The number of concurrent users would be limited by the number of licenses purchased by the client. User
identification could be created by an administrator belonging to the client organization. Installation was
thus quite simple. As Rajesh claimed, “Installation can be done within two weeks if required; sometimes
just 10 days is what it takes to install the product, especially the base product, in some of the hospitals.”

The major advantage this conferred on Consultium was that it made servicing clients very easy. There was
no need for a technician to travel physically to a client’s site to check for any issues. A technician could
log on to the system using a good Internet connection and an administrative password and solve most
problems that may have risen. According to Rajesh, “90 per cent of the cases have been solved in this
manner.”

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The waterfall model is a sequential design process, often used in software development processes, in
which progress is seen as flowing steadily downwards (like a waterfall) through the phases of conception,
initiation, analysis, design, construction, testing, production/Implementation and maintenance.

However, clients often preferred the reassuring physical presence of service personnel. Time and again,
clients expressed their apprehensions regarding any problem solving from a remote location. Allaying this
fear was one of Consultium’s major challenges.

Another area where Consultium gained an edge was with respect to its upgrade policy. Co believed in
passing on the latest upgrades of the system free of cost to all its customers. These were the new features
demanded as customization requests by certain other customers, which would then go into the creation of
the upgraded product. Most software companies charged for these upgrades.

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Sales Model

While Tanmatra was the main offering, Consultium offered other services to help develop business
opportunities. These included management consulting where they studied the client’s business environment
and helped them better understand their needs and identify problem areas.

Due to cost considerations, Consultium had been wary of setting up a huge in-house sales force to sell
Tanmatra. Instead, the company had entered into selling agreements with 20 resellers across metros and
Tier-2 cities. In some cities, these resellers were small software companies that had been formed during the
technology and Internet boom but had since fallen by the wayside. A large portion of their revenues were
earned by acting as resellers for other large companies.

From a product perspective, Consultium could claim never to have lost a deal based on technical
considerations. Deals that were lost could always be attributed to price.

EXHIBIT 3: THE TYPICAL SALES PROCESS FOR TANMATRA

The standard sales cycle for Tanmatra was over two months. This ideally required constant follow-up by a
highly motivated and knowledgeable sales team. However, as mentioned, the founders could never afford
to build in-house capabilities in sales.

Rajesh and his co-founders decided on a model whereby they would be able to increase the sales reach of
their product by putting in place a distribution system involving resellers at the local level. These resellers,
mentioned above, were not in a position to address complicated queries on the product. They would, at
best, have a working knowledge of the software and would be able to recount the basic features

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Metros refers to large metropolitan cities such as Mumbai, Delhi, Kolkata, Chennai, Hyderabad and
Bengaluru — cities that have large populations (in excess of 10 million) and are commercial hubs. Tier-2
cities refer to upcoming smaller cities with populations between 1 million to 10 million.

of the software and the company to the client. Once the client was classified as interested and a warm lead,
Consultium would get involved. Though the dealer was expected to close the deal by himself, the company
was usually called upon to support the sale with site visits. In many such cases, a senior manager from
Consultium would travel to the location and make a full presentation to the company in order to close the
deal. One in 10 such warm leads usually translated into business.

The challenge for Rajesh and his co-founders was to build a model that could be scaled up. In six years,
they had managed to build a reseller network of 20 supported by six company salespersons. Now, in 2012,
they were in a bind. They felt the need to increase the company’s reach so that the base product could be
sold to as many hospitals as possible. This would enable the company to recover its investment in the
development of the product and generate cash to fund further development of the product.

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In the software services world (like in most other businesses), it was well-understood that without
constantly improving the product, no company would be able to stay at the top of the market. Thus,
increasing sales (which meant the number of deals) to generate more revenue for development was
identified as top priority.

The management was considering two options to increase sales. It could either increase its own sales force
or continue to scale up its reseller channel. Increasing its own sales force was the more expensive option
and likely to stretch the company’s meagre resources.

The Way Forward

The bigger questions remained: What did the future hold for Consultium, and how was it was going to
meet its volume requirement by increasing sales in a sustainable manner?

Keeping the business profitable involved ensuring that its output in sales would be commensurate with the
effort. Thus, there would be greater pressure to sell more modules to a single contact. But in order to do
that, a very high level of selling effort would be required. Past experience had shown that clients usually
bought the basic module to test the system. A good accounts management program could help in growing
these opportunities further. There was, however, the chance that existing customers would drive a harder
bargain with Consultium, thus reducing margins by nearly 10 per cent, according to Rajesh’s estimates.

In December 2012, though the company catered to customers across India, its sales force was based only
in Bengaluru. The challenge was in reaching customer locations. Any sales lead generated required a
member of the sales team to travel to that location and take the deal to closure. It could be one trip or several
depending on the size of the deal. This resulted in reduced customer face time that otherwise could have
improved the productivity from a single sales contact. Rajesh knew that the best sales organizations always
managed to make the most of every single customer contact.

Rajesh felt that he had enough information to go to his co-founders with a recommendation.

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 EXHIBIT 1A: PRODUCT PORTFOLIO

Consultium offers the following:

1. Management Consulting

Offered as a diagnostic study/strategy to build the team’s credibility. It is used to give insights
into the customer’s requirements and helps to build partnerships.

2. Made to order consultancy

Offered complementarily with Tanmatra to ensure completeness, while enriching Tanmatra

modules. It is critical to ensure a “one-stop-solution” for customer and for Tanmatra to evolve.

3. Healthcare IT Products

Flagship product of the organization, which encompasses the Hospital Information Systems,
Lab Information Systems, Clinical Information Systems and reporting modules.

4. Implementation and life cycle management

Offered as an end-to-end solution developing interfaces to ensure successful usage. It is a key

offering needed to gain customer acceptance and higher satisfaction.

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 EXHIBIT 1B: DETAILS OF TANMATRA, THE FLAGSHIP PRODUCT OF CONSULTIUM
CONSULTING:

Tanmatra includes more than 200 modules some of which are listed below:

Registration

Admission

Discharge

Event based Billing

Room Management

Appointment Management

Material Management

Pharmacy management

Whiteboard

Asset Management

History and Physical Documentation

Progress Notes

Nursing Notes

Surgery and Anaesthesia Notes

Patient Visit Summary

Lab Information System (LIS)

Computer Provider Order Entry (CPOE)

Doctor Pay-out

Queue Management

Blood Bank

Radiology Information System

HR and Payroll Administration
 Training and Development

Finance Accounting and Accounting Integration

Ward Management

Central Sterile Services Department (CSSD)

Dietary Management

Medical Records Management

Maintenance

Inquiry, Reporting and Management Information Systems (MIS)

· Account management Modules

Patient Relationship Management Modules

· Scheduling Modules

·Ancillary Administrative Modules

Source: Company records.

 EXHIBIT 2A: MARKET SEGMENTATION

Segment Characteristics

Day care centres, nursing Homes and Tight budgets, generic basic requirements
charity hospitals (<100 beds)

Charity hospitals (100+) Good process framework, enterprise level selling, complex
decision-making units

Single and multi-specialty hospitals Enterprise level selling, complex decision-making units

Corporate chain of hospitals Holistic approach to product implementation, complex

decision-making units

Single specialty hospitals Demand of just one specific module and hence depth of
knowledge about the product is required
 EXHIBIT 2B: SEGMENTATION DATA

Market Data

Number of Single Multi- Nursing Charity Corporate Day Care

beds\Type of Specialty specialty Homes Hospitals Chains Centres
Hospital

30 to 100 614 245 1155 95 19 2235

100 to 300 345 271 415 178 9 275

More than 300+ 50 75 25 25 5 45

Company estimates of number of entities where

Consultium can offer its products
 Number of Customers (company data)

No. of Single Multi- Nursing Charity Corporate Day Care

beds\Type of Specialty specialty Homes Hospitals Chains Centres
Hospital

30 to 100 25 2 25 8 3 32

100 to 300 14 0 12 3 1 21

More than 300 8 1 5 2 0 9

 Average Deal Size in INR (Company Data)

Number of Single Multi- Nursing Charity Corporate Day Care

beds\ Specialty specialty Homes Hospitals Chains Centres
Type of
Hospital

500,000 1,000,000 200,000 1,000,000 2,000,000 200,000

30 to 100

2,000,000 3,000,000 700,000 2,000,000 3,000,000 500,000

100 to 300

3,000,000 5,000,000 1,000,000 3,000,000 5,000,000 1,000,000

More than 300
 QUESTIONS

1. Is the existing pricing model efficient according to you or should there be any changes in it?

2. How do they solve the problem of sales force limited in one city? Should they expand? or should they look
at some other strategy. Should the In-house sales force be set up to sell Tanmatra?

3. "Past experience had shown that clients usually bought the basic module to test the system." How can
Consultium overcome this dilemma and convince the clients to buy or upgrade to advanced modules?

4. How will you segment the healthcare information systems market in India and which segments would you
recommend to Consultium?

5. What did the future hold for Consultium, and how was it was going to meet its volume requirement by
increasing sales in a sustainable manner?
 GUIDELINES

1. The solution has to be submitted in the form of a PowerPoint Presentation format. The PPT should
not exceed 5 slides (excluding the title and thank you slides).

2. The presentation will be evaluated on its level of quality, creativity and feasibility. The teams will be
shortlisted on the basis of the same.

3. Team leaders should email their presentations to consultancy.simsr@somaiya.edu within the

deadline.
Submission Deadline: 12th December, 11:59 PM

4. Team composition cannot be changed after the first round.

5. The naming convention is “TeamName_Case-Innova 2022_InstitutionName”. Participants are not

permitted to add their College Name/ College Logo in their PPT (Failing to abide by this rule will
lead to immediate disqualification of the team)

6. Participants are allowed to make use of any tools for analysis and submit the analytics in an excel
format along with the PPT. However, the final presentation needs to be presented on PowerPoint
along with the analytics, if any, to be practically displayed on Excel.

7. Participants can make use of outside resources within a limit, and the references for the same should
be added as a footnote in the same slide of the PPT. Plagiarism shall be penalized.

8. Teams will be asked to justify every assumption made.