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Dell Laser Printers to Manage Business Costs of SMBs /18

indias first IT magazine for sme business

VOLUME 02 | ISSUE 11 | JANUARY 2012 | RS. 20/-

SME TREND

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IBM: Giving Power Edge to SMEs

SME BIZ

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TREND SETTER

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Axis: Video Surveillance Enhances Business Efficiency

VIA Gung Ho on Indian Tablet Market Growthr

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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T AKE OFF
ERP adoption among the SME segment has picked up momentum with increased awareness and availability of appropriate solutions.
BY SANJAY MOHAPATRA
sanjay@smechannels.com

ERP
T
he ERP market in India is fairly mature, comprising approximately 35% of the enterprise application revenue. Although other enterprise applications have started becoming popular in India, ERP continues to comprise a third of the enterprise applications market. This growth, in large part, is being sustained and abated by the increasing adoption of ERP amongst the small and medium segment. The micro, small and medium segment in India plays a crucial role in the Indian economy. According to the Economic Survey of India 200910, the segment contributes to about 8% of Indias GDP, 45% to Indias manufacturing output and about 40% of Indias exports. In terms of employment generation also, this segment accounts for nearly 50-60% in all developing and emerging nations, according to the United Nations Industrial Development Organization. India has the second largest number of SMEs in the world, but the segment spends only 30% of the total IT spending. Global competition is driving increased IT adoption by SMEs, and this provides a huge potential for increase in IT spend

POISED FOR

among the SME sector in India, says Sukumar R, Vice President, Ramco OnDemand ERP. The SME segment has come to the forefront in the last few years in India due to several reasons: governments thrust to the segment, increasing business opportunities in a robust economy, domestic demand, opportunities through globalization, rise of tier-two and three towns and cities, and the momentum evident in entrepreneurial ventures. According to Associated Chambers of Commerce and Industry of India (ASSOCHAM), the SME sector is growing at a rate of 35% per annum, and 60% of SMBs are moving towards a technology-based infrastructure to increase their productivity and reduce input cost. Yet accessing technology and maintaining competitiveness continues to be a challenge among SMEs. Technology spend in this segment has largely been restricted to investments in hardware with little or nominal investment in software. Application adoption has been restricted to accounting software and payroll with hardly any demand for human resources management. Moreover these applications are mostly point solutions or

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ACCORDING TO RESEARCH FIRM IDC, SAP HOLDS 27% MARKET SHARE IN THE SME SEGMENT.

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WE WILL ALSO ADD MORE PARTNERS IN THE FUTURE TO INCREASE OUR REACH AND CATER TO THE GROWING DEMAND SPECIFICALL Y IN SME SEGMENT.
SUKUMAR R, VICE PRESIDENT, RAMCO ONDEMAND ERP

to facilitate rapid expansion, agility and scalability. Also businesses have become seamless with the rapid maturing of Internet-based technologies, enabling start-ups and small businesses to run viable businesses, even from remote locations. Asheesh Pandia, Brand Management and Corproate Communications Consultant, says, Lots of small medium companies are either considering or already implementing ERP and that has opened up great new dimensions and phenomenal opportunities for consulting companies as well to reach out for SMEs and provide their solutions.

stand alone applications, making it difficult for comprehensive automation of enterprise systems. Application penetration has been minimal for a variety of reasons such as lack of awareness and understanding about the benefits of deployment, and also the fragmented nature of the segment. SMEs are now using technology as a growth driver, allowing IT to focus on strategic growth of their businesses. There is increasing awareness and understanding about technology adoption, and the benefits it can bring to business operations. The increasing competitiveness in the external business environment, as well as enhanced vendor activities related to market building has contributed to the momentum in the market. In the recent past, SMEs have realized that comprehensive technology adoption is important for their businesses. For example, Nagpur-based Facor Steels is a carbon, alloy, stainless, and specialist steel manufacturer. To meet the challenges of an expanding production plant and product range, the company needed an integrated ERP system. In April 2009, the company engaged Oracle Partner Sonata Software Technology to implement Oracle E-Business Suite Release 12 Oracle Financials, Oracle Process Manufacturing, Oracle Order Management, and Oracle Purchasing. It helped the company to track inventory and reduced the time taken to record and integrate information from weeks to just seven days, increasing staff productivity and efficiency. As the business and industry has steadily grown, so has competitiveness, which has necessitated increasing use of information technologies to drive a business, manage and operate operations, enhance competitiveness and achieve higher efficiency. Therefore, SMEs have started implementing integrated business management solutions to make their organizations dynamic and responsive to the ever changing business and economic environment. Todays small businesses are increasingly using technology for business advantage and competitiveness. It was not so in the distant past that ERP

was considered an expensive proposition. But increasingly companies are adopting full fledged ERP solutions. Roca India, the sanitary ware and tiles manufacturer, deployed SAPs ERP ECC 6.0.enhancing internal processes across planning and demand management, sales management, finance management, procurement and production management and plant maintenance solutions. The rapidly changing external environment with increased globalization, which provides relatively more opportunities for growth, has contributed hugely to market momentum. This requires robust technology systems and processes

The Market
The ERP market has traditionally been dominated by SAP, Oracle and Microsoft. However, there are a number of other players in the market such as Ramco, Infosys, Sage, Tally, ESS and Busy as well as pure play cloud-based ERP service providers such as Netsuite. All players have varying penetration in the SME segment, with some vendors such as Microsoft and SAP chiselling their SME forays with exclusive partnerships and marketing programmes. These activities have helped build market awareness and understanding about technology in general and ERP in particular. Microsoft Dynamics has various offerings that are specially designed for the SME segment. Microsoft Dynamics NAV is an integrated business management solution designed for tech savvy SMEs. The solutions are uniquely designed to be flexible with vertical functionalities, specifically for the small- and mid-market companies. Microsoft has been working closely with solution partners, targeting specific verticals and geo clusters. The aim is to ensure that the solutions help SMEs become self-reliant in managing and maintaining ERP deployments through simple and easy tools. SAP has two sets of offerings specifically designed for the SME segment: SAP Business One and Business ByDesign, an on-demand offering. While the former solution has been around for a while, Business ByDesign has been a relatively recent addition. SAP Business One is offered as an on-premise or hosted business management solution that is easy-to-use, flexible and affordable for SME subsidiaries. SAP has tied up with key solution partners such as Wipro, TCS, ITC Infotech to take both these offerings to the SME market in India. SAP has more than 3,500 SME customers, which account for over 77 % of the total customer base in India. Globally, more than 75% of SAPs total customer base is SME companies. According to research firm IDC, SAP holds 27% market share in the SME segment.

THROUGH OUR SOLUTION WE HAVE BROUGHT A TAILORED EXPERIENCE TO SMES, WHICH HELP ORGANIZATIONS TO INITIATE EFFECTIVE CHANGE MANAGEMENT.
SUBHOMOY SENGUPTA, GROUP DIRECTOR OF MICROSOFT DYNAMICS INDIA.

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CREATION OF A TALENTED POOL OF CONSUL TANTS WHO CAN DO SUCCESSFUL IMPLEMENTATION IS ONE OF THE KEY CHALLENGES.
ASHEESH PANDIA, BRAND MANAGEMENT AND CORPROATE COMMUNICATIONS CONSULTANT

the software but pay for it as a service, our model of SaaS covers it; we provide him Tally on rental as well as on premise, says Tallys Shoaib of Tally. Microsoft believes that the scope for cloud based ERP solutions is large. From an economic point of view, small and mid-sized companies benefit from cloud based services as they do not have to invest heavily in IT infrastructure. Cloudbased service ensures that the company uses its resources more towards core activities and the provider focuses on centralized services reducing operating costs and providing competitive advantage. Viability depends on individual requirements and deployment scenarios. Connectivity is

improving at a phenomenal rate. Our product is offered on premise and on cloud. Therefore companies located in low connectivity areas can adopt the on-premise version. Given the phenomenal growth in connectivity, they can also gradually shift to a mix of on-premise and cloud or even shift entirely as and when the connectivity improves in their location, says Subhomoy Sengupta. ERP in SMEs is here to stay, in all forms. There is an increasing trend among SMEs to move towards cloud-based ERP as it addresses the infrastructure issue. The future is definitely cloud for most enterprise applications, including ERP. Only it is more

about the ripe time and migration rate. Newer mid-market entrants are embracing cloud computing but cloud still seems a little challenging and immature for the SMEs. Connectivity in remote locations is still not enterprise grade, and hence, still a huge roadblock. For SMEs battling connectivity issues, it may be a good idea to wait until that gets resolved first. In the process, these companies are likely to benefit from more robust and mature adoption practices. The finding is as Asheesh Pandia, Brand Management and Corproate Communications Consultant, says, Opportunities are great for those who can provide expertise in ERP implementation especially if they are competent enough to do quick deployment and keep the total cost of ownership very low. Creation of a talented pool of consultants who can do successful implementation is one of the key challenges that the industry needs to address at the moment. Implementation as well as operational efficiency is where the focus should be currently.

Finally
There is a huge scope in the SME for the ERP implementation as they are the major drivers of economy in India and they have to be very business competitive to sustain their growth.

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