ERP adoption among Indian SMEs has picked up momentum recently due to increased awareness of ERP solutions and their availability at price points appropriate for SMEs. SAP holds 27% of the Indian SME ERP market share according to research firm IDC. While ERP was once considered too expensive for SMEs, companies like Roca India are now deploying full ERP solutions from SAP to automate business processes across various departments. Growing global competition is driving more SMEs to adopt IT solutions like ERP to scale operations and remain competitive.

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POISED FOR
ERP
TAKE OFF
ERP adoption
among the SME
segment has picked
up momentum with
increased awareness
and availability
of appropriate
solutions. /26
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2. COVER STORY ERP
ERP POISED FOR
TAKE OFFERP adoption among the SME segment has picked up
momentum with increased awareness and availability of
appropriate solutions.
BY SANJAY MOHAPATRA
sanjay@smechannels.com
T
he ERP market in India is fairly among the SME sector in India,” says Sukumar R,
mature, comprising approximately Vice President, Ramco OnDemand ERP.
35% of the enterprise application The SME segment has come to the forefront in
revenue. Although other enter- the last few years in India due to several reasons:
prise applications have started government’s thrust to the segment, increasing
becoming popular in India, ERP continues to business opportunities in a robust economy,
comprise a third of the enterprise applications domestic demand, opportunities through glo-
market. This growth, in large part, is being sus- balization, rise of tier-two and –three towns and
tained and abated by the increasing adoption of cities, and the momentum evident in entrepre-
ERP amongst the small and medium segment. neurial ventures.
The micro, small and medium segment in According to Associated Chambers of Com-
India plays a crucial role in the Indian economy. merce and Industry of India (ASSOCHAM),
According to the Economic Survey of India 2009- the SME sector is growing at a rate of 35% per
10, the segment contributes to about 8% of India’s annum, and 60% of SMBs are moving towards a
GDP, 45% to India’s manufacturing output and technology-based infrastructure to increase their
about 40% of India’s exports. In terms of employ- productivity and reduce input cost. Yet accessing
ment generation also, this segment accounts for technology and maintaining competitiveness
nearly 50-60% in all developing and emerging continues to be a challenge among SMEs.
nations, according to the United Nations Indus- Technology spend in this segment has largely
trial Development Organization. been restricted to investments in hardware with
“India has the second largest number of SMEs little or nominal investment in software. Applica-
in the world, but the segment spends only 30% tion adoption has been restricted to accounting
of the total IT spending. Global competition is software and payroll with hardly any demand
driving increased IT adoption by SMEs, and this for human resources management. Moreover
provides a huge potential for increase in IT spend these applications are mostly point solutions or
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3. ERP COVER STORY
“ACCORDING TO
RESEARCH FIRM IDC,
SAP HOLDS 27%
MARKET SHARE IN THE
SME SEGMENT.”
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4. COVER STORY ERP
to facilitate rapid expansion, agility and scalability.
“WE WILL ALSO ADD MORE Also businesses have become seamless with the
PARTNERS IN THE FUTURE rapid maturing of Internet-based technologies,
enabling start-ups and small businesses to run
TO INCREASE OUR REACH viable businesses, even from remote locations.
AND CATER TO THE GROW- Asheesh Pandia, Brand Management and
ING DEMAND SPECIFICALLY Corproate Communications Consultant, says,
“Lots of small medium companies are either con-
IN SME SEGMENT.” sidering or already implementing ERP and that
SUKUMAR R, VICE PRESIDENT, RAMCO has opened up great new dimensions and phe-
ONDEMAND ERP nomenal opportunities for consulting companies
as well to reach out for SMEs and provide their
solutions.”
stand alone applications, making it difficult for was considered an expensive proposition. But
comprehensive automation of enterprise systems. increasingly companies are adopting full fledged The Market
Application penetration has been minimal for a ERP solutions. Roca India, the sanitary ware and The ERP market has traditionally been dominated
variety of reasons such as lack of awareness and tiles manufacturer, deployed SAP’s ERP ECC by SAP, Oracle and Microsoft. However, there are
understanding about the benefits of deployment, 6.0.enhancing internal processes across plan- a number of other players in the market such as
and also the fragmented nature of the segment. ning and demand management, sales manage- Ramco, Infosys, Sage, Tally, ESS and Busy as well
SMEs are now using technology as a growth ment, finance management, procurement and as pure play cloud-based ERP service providers
driver, allowing IT to focus on strategic growth of production management and plant maintenance such as Netsuite. All players have varying pen-
their businesses. solutions. etration in the SME segment, with some vendors
There is increasing awareness and understand- The rapidly changing external environment such as Microsoft and SAP chiselling their SME
ing about technology adoption, and the benefits it with increased globalization, which provides forays with exclusive partnerships and marketing
can bring to business operations. The increasing relatively more opportunities for growth, has programmes. These activities have helped build
competitiveness in the external business envi- contributed hugely to market momentum. This market awareness and understanding about tech-
ronment, as well as enhanced vendor activities requires robust technology systems and processes nology in general and ERP in particular.
related to market building has contributed to the Microsoft Dynamics has various offerings
momentum in the market. that are specially designed for the SME segment.
In the recent past, SMEs have realized that Microsoft Dynamics NAV is an integrated busi-
comprehensive technology adoption is important ness management solution designed for tech
for their businesses. For example, Nagpur-based savvy SMEs. The solutions are uniquely designed
Facor Steels is a carbon, alloy, stainless, and spe- to be flexible with vertical functionalities, specifi-
cialist steel manufacturer. To meet the challenges cally for the small- and mid-market companies.
of an expanding production plant and product Microsoft has been working closely with solu-
range, the company needed an integrated ERP tion partners, targeting specific verticals and geo
system. In April 2009, the company engaged clusters. The aim is to ensure that the solutions
Oracle Partner Sonata Software Technology to help SMEs become self-reliant in managing and
implement Oracle E-Business Suite Release 12 maintaining ERP deployments through simple
Oracle Financials, Oracle Process Manufacturing, and easy tools.
Oracle Order Management, and Oracle Purchas- SAP has two sets of offerings specifically
ing. It helped the company to track inventory designed for the SME segment: SAP Business One
and reduced the time taken to record and inte- and Business ByDesign, an on-demand offering.
grate information from weeks to just seven days, “THROUGH OUR While the former solution has been around for
increasing staff productivity and efficiency. a while, Business ByDesign has been a relatively
As the business and industry has steadily SOLUTION WE HAVE recent addition. SAP Business One is offered as
grown, so has competitiveness, which has BROUGHT A TAILORED an on-premise or hosted business management
necessitated increasing use of information tech- EXPERIENCE TO SMES, solution that is easy-to-use, flexible and afford-
nologies to drive a business, manage and operate able for SME subsidiaries. SAP has tied up with
operations, enhance competitiveness and achieve WHICH HELP ORGANI- key solution partners such as Wipro, TCS, ITC
higher efficiency. Therefore, SMEs have started ZATIONS TO INITIATE Infotech to take both these offerings to the SME
implementing integrated business management EFFECTIVE CHANGE market in India.
solutions to make their organizations dynamic SAP has more than 3,500 SME customers,
and responsive to the ever changing business and MANAGEMENT.” which account for over 77 % of the total customer
economic environment. SUBHOMOY SENGUPTA, GROUP base in India. Globally, more than 75% of SAP’s
Today’s small businesses are increasingly using DIRECTOR OF MICROSOFT DYNAMICS total customer base is SME companies. Accord-
technology for business advantage and competi- INDIA. ing to research firm IDC, SAP holds 27% market
tiveness. It was not so in the distant past that ERP share in the SME segment.
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5. ERP COVER STORY
about the ripe time and migration rate. Newer
“CREATION OF A TALENTED mid-market entrants are embracing cloud com-
POOL OF CONSUL TANTS puting but cloud still seems a little challenging
and immature for the SMEs. Connectivity in
WHO CAN DO SUCCESSFUL remote locations is still not enterprise grade, and
IMPLEMENTATION IS ONE OF hence, still a huge roadblock. For SMEs battling
THE KEY CHALLENGES.” connectivity issues, it may be a good idea to wait
until that gets resolved first. In the process, these
ASHEESH PANDIA, BRAND MANAGE-
companies are likely to benefit from more robust
MENT AND CORPROATE COMMUNICATIONS
and mature adoption practices.
CONSULTANT
The finding is as Asheesh Pandia, Brand Man-
agement and Corproate Communications Con-
sultant, says, “Opportunities are great for those
the software but pay for it as a service, our model improving at a phenomenal rate. “Our product who can provide expertise in ERP implementa-
of SaaS covers it; we provide him Tally on rental is offered on premise and on cloud. Therefore tion especially if they are competent enough to
as well as on premise,” says Tally’s Shoaib of Tally. companies located in low connectivity areas can do quick deployment and keep the total cost of
Microsoft believes that the scope for cloud adopt the on-premise version. Given the phe- ownership very low. Creation of a talented pool of
based ERP solutions is large. From an economic nomenal growth in connectivity, they can also consultants who can do successful implementa-
point of view, small and mid-sized companies gradually shift to a mix of on-premise and cloud tion is one of the key challenges that the industry
benefit from cloud based services as they do not or even shift entirely as and when the connectiv- needs to address at the moment. Implementation
have to invest heavily in IT infrastructure. Cloud- ity improves in their location,” says Subhomoy as well as operational efficiency is where the focus
based service ensures that the company uses its Sengupta. should be currently.”
resources more towards core activities and the ERP in SMEs is here to stay, in all forms. There
provider focuses on centralized services reduc- is an increasing trend among SMEs to move Finally…
ing operating costs and providing competitive towards cloud-based ERP as it addresses the There is a huge scope in the SME for the ERP
advantage. infrastructure issue. implementation as they are the major drivers of
Viability depends on individual requirements The future is definitely cloud for most enter- economy in India and they have to be very busi-
and deployment scenarios. Connectivity is prise applications, including ERP. Only it is more ness competitive to sustain their growth.
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