Gradatim: ISV Moves Microfinance Platform to the Cloud, Shortens Deployments by 84 Percent


“Mainstream financial entities are looking to expand their microfinance units. With Windows Azure, we can combine our expertise with the agility needed to seize this massive business opportunity.”

CV Prakash, Founder and Chief Executive Officer, Gradatim

Gradatim, an independent software vendor (ISV) that develops niche solutions for financial institutions, was looking to capitalize on growing demand for its insurance policy and loan management applications. The company chose to migrate its solutions to Windows Azure to simplify service configuration and gain cost-efficient, global scalability. Now, Gradatim can complete customer deployments 84 percent faster, and it estimates savings of US$2 million.

Business Needs
Gradatim specializes in building technology solutions for businesses that offer microfinance products and services. Microfinance generally refers to the market for financial instruments, such as loans and insurance policies, with small principal and transaction amounts.

In this market environment, agility is the key to success. Service providers need to be able to rapidly develop low-cost, highly customized products that consumers can access anywhere, including on mobile devices. To help insurance companies track the distribution of policies in micro- and rural insurance scenarios, Gradatim developed a product called MFInsure. This solution delivers a full set of tools for handling all aspects of policy administration across multiple channels.

Gradatim originally hosted MFInsure in its own data center and charged customers a flat fee to license the technology. This model limited the company’s ability to quickly scale infrastructure capacity. “The insurance providers we serve typically have up to 1,000 agents in the field, who are constantly signing up customers, making changes to policies, and recording financial transactions,” says CV Prakash, Founder and Chief Executive Officer of Gradatim. “As the number of customers grew, it became increasingly challenging for us to handle all of this data—and still keep our operating costs sufficiently low.”

Because Gradatim could not predict its monthly data center and infrastructure costs, it was not able to offer flexible pricing plans to its customers. This limited the company’s ability to capture new business and plan for future growth. The company also needed a faster way to enroll new customers, regardless of the size of the organization or its specific data security requirements. As Gradatim executives saw the market for the company’s offerings expanding, they started to look at alternative hosting models that offered greater affordability and flexibility.

In early 2010, Gradatim evaluated a number of shared services platforms, including IBM SmartCloud. In June 2010, executives ultimately chose to adopt Windows Azure, the Microsoft cloud services development, hosting, and management environment. “We wanted a platform-as-a-service solution, not just cloud infrastructure,” says Prakash. “We concluded that Windows Azure offered the best long-term value and the most reliable cloud platform for transforming our business.”

Executives were eager to use the technology to host MFInsure for one of the Gradatim’s existing customers, a US$50 billion insurance company with operations throughout Asia and Africa. By early September 2010, Gradatim was able to provide its customer with access to MFInsure in the cloud. The insurance provider has reported that MFInsure running on Windows Azure processes transactions 20 percent faster than the standard web application.

Gradatim also moved its microfinance solution, MFResolve, to Windows Azure and now offers both applications as part of a consolidated platform solution. In tandem with the shift to cloud-based delivery of its core products, Gradatim implemented fundamental changes to its pricing model. Before, customers purchased a perpetual license to access the software. Now, they can choose to pay a nominal subscription fee, along with either a percentage of the value of each transaction or a fixed fee for each loan or insurance policy that they manage using Gradatim technology. “We’ve been able to restructure our pricing to better align with the way customers across the industry consume our services,” says Prakash.

Executives also appreciate the deployment flexibility and dynamic scalability of the Windows Azure platform. Gradatim can now use Microsoft SQL Azure to deliver a single-tenant environment when customers require it without investing in more physical servers. “We can create database configurations to meet our customers’ specialized security requirements and scale capacity in minutes based on the transaction volume that each customer needs to support,” says Prakash.

By using Windows Azure to host its core product offerings, Gradatim has experienced the following benefits:

Stronger support for geographic expansion. Gradatim gains cost-efficient, global scalability through Windows Azure and the presence of Microsoft data centers worldwide. Based on its success in deploying a cloud-ready version of its MFInsure solution to a multinational insurance company, Gradatim is well positioned for international growth. “Mainstream financial entities are looking to expand their microfinance units,” says Prakash. “With Windows Azure, we can combine our expertise with the agility needed to seize this massive business opportunity.” Prakash estimates that the global opportunity for technology and services in the microfinance industry is $1 billion.

Estimated cost savings of $2 million. By eliminating the need to locate and set up data centers and purchase and maintain server hardware to deliver its solutions, Gradatim substantially reduces its operating expenses. Executives estimate that, by lowering its costs for technology infrastructure and licensing, facility acquisition and maintenance, and energy consumption, the company will save approximately $2 million over the next 18 months.

Shortened customer deployment cycles from three months to two weeks. Because Gradatim now has access to on-demand resource availability and scalability at a moment’s notice, the company spends less time planning customer deployments. In addition, by adopting Windows Azure, Gradatim is more flexible and can address customer data protection in a more agile way. The company previously needed three months on average to fully deploy its solutions to customers. Now, Gradatim can complete the same work in two weeks, which represents an efficiency gain of 84 percent. “Faster deployments mean that we start generating revenue from each project faster, so we have more flexibility in the investment decisions that we make to grow our business,” says Prakash.

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