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RESEARCH ON USE OF INFORMATION SYSTEMS BY SMALL AND MEDIUM ENTERPRISES
Under the guidance of Mr.G.V.SRIDHAR Project Manager TECHTREE IT Dr. Om Kumar Krishnan Designation IMT, Ghaziabad
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The following Summer Project Report titled” Research on use of Information Systems by SMEs" is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate Diploma in Management for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Project Report only for the purpose it is submitted. Summer Project Report Examination Committee for evaluation of Summer Project Report Name Signature
1. Faculty Examiner
2. PG Summer Project Co-coordinator _______________________
Certificate from Summer Project Guides
This is to certify that Mr. Mudit Arora, a student of the Post-Graduate Diploma in Management, has worked under our guidance and supervision. This Summer Project Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other summer project, monograph, report or book.
Faculty Guide Designation IMT, Ghaziabad Date
Organizational Guide Designation Organization Address Date
2 Why it is suited for SMEs? 2.1.2 Defining SMEs 1.1Objectives of the Survey .3.Table of Contents Page Acknowledgement Abstract Table of Contents List of Figures List of Tables List of Appendices List of Abbreviations I 1.1 II Understanding about BMS software solutions 2.1 How can an SME benefit from the implementation of SAP B1? III Getting Market Insight: Market Intelligence IVQuestionnaire Design: Defining the objective and the sample group 3.1 Introduction 1.3 SMEs in India 1. 3.1 What is SAP B1? 2.2 Sampling Group 5 .
4 Analysis of the potential customers 4.1 Methodology of Survey 4.2.3 Analysis of the requirements 4.2 Survey Analysis 126.96.36.199 Writing the Questionnaire IV Meeting SMEs already having BMS/IS Solutions in Bangalore 4.1 Analysis of the major problems in day to day operations 4.3.2 Analysis of major problems in the existing Information System 4.3 Conclusion Based on Analysis V Recommendations 6 .2.
1 Description Page 7 .List of Figures Figure No.
Description Page 8 .List of Tables Table No.
List of Appendices Table No. Description Page 9 .
BMS. AMC.Business Management System 2.Annual Maintenance Charge 10 .Abbreviations 1.
They need to improve on many business processes and the manner in which they are conducted. 2.) The information system they are using and what are the lacunas and the drawbacks in that Information System. A survey was conducted in the SMES in the Bangalore region mostly in the PIA. Most of the companies under the study were manufacturing companies because as recommended by most SAP B1 partners SAP B1 is a product most suited for manufacturing companies. Understanding the various BMS systems namely SAP B1 and Microsoft Dynamics Navision 3. on-time delivery of orders.) The products in the product line 3.But many of the SMEs need to improve the way they function. lead time. maintenance of financial records. Therefore there is a need to cater to needs of SMEs by providing them solutions that are suitable for their businesses and at the same time cost effective solutions.) The problems faced during day to day operations related to stock outs. trend analysis and exploring the companies that can be a potential customer for the company. Information Technology has played a vital role in the growth of many large enterprises and few of the SMEs.) The main business of the companies 2. Survey Methodology In this study most of the people contacted were the decision makers or the honchos of the companies. inventory control. Objectives of study The study was conducted in five phases with the objective of: 1. 11 . 5.Abstract RESEARCH ON USE OF INFORMATION TECHNOLOGY BY SMALL AND MEDIUM ENTERPRISES By Mudit Arora SMEs have been a sector which contributes immensely to the GDP of India . reorder point. Most of the data was collected from Peenya Industrial Estate. Market insight about the existing competitors of BMS systems. 4. Understanfing of various sectors of SMEs and the potential for growth. working capital management. The aspects that were surveyed are: 1. 4. Making recommendations to the company (internship).This is a sector which has shown promise for growth in exports .
6.Four of the 26 companies I visited have shown willingness to have an ERP system implemented.001 to 0. FOCUS or any customized software. Most of the SMEs are using Information Systems like TALLY. CRM. 3.5. Most of the companies under study were auto components companies or manufacturing companies because most of the new BMS systems are designed according to their needs.) What do they expect from such an implementation. 4. how will it improve the business processes and also efficiency.e. partners or CEOs of various SMEs for a total period of 22 days. Observations The major findings of this report are 1. All the records have been maintained manually .They spend around Rupees 10000 -40000 on software solutions i. 0.004 percent of their yearly turnover. Major data sources were in-depth interviews of some 26 directors.) The companies ready to implement a BMS and how much is the willingness to spend. Most of these companies face problems regarding stock maintenance and inventory records. Sales it can to lead to a lot of cost cutting and laying off employees who have very zero or negative or very low work output. Thus most of companies have tried to automate their work process mostly related to financial management 2. 12 . Most of companies I have visited have shown a willingness to have a BMS system in place in near future .They believe if the inventory records can be automated and all this data can be integrated with all the other business functions such as HR. Most of the SMEs have very minimal amount of IT spending . Most of the hardware costs being a one time investment. Finances.
Mudit Arora PGDM-IT 07IT-029 13 . Anurag Gurani for guiding me in this project and building my concepts in the field. G. Lastly. Mr Girish Nuli (Business Manager. Biplove Belwal. People Tree). Techtreeit) and Mr. Sanjay Ahuja (COO. I am also indebted to Mr. I am also thankful to fellow colleagues for their continuous help and support. Om Kumar Krishnan who not only served as my supervisor but also encouraged and challenged me throughout my project. Mr. Sridhar (Project Manager.Acknowledgement I am grateful to Mr. TECHTREEIT) for his invaluable support throughout the internship.V. this internship could not have been possible without Dr.
CHAPTER 1 Understanding of SMEs in different sectors 14 .
etc. and most of the companies in the SME segment are in the Tier II or below. have redefined the life of fashion trends from the earlier five to six months to around two months. a buyer-driven network. the small scale operations of Indian SME apparel manufacturers gives them the flexibility to service 15 . Few of the suppliers to OEMs are medium scale enterprises.1Auto Components Auto component SMEs are one of the fastest growing within the SME category of industries. driven by demand from global auto manufacturers. The contribution of SMEs has been remarkable in the industrial development of the country. 35% of the total manufactured exports of the country are directly accounted for by this sector.2Textile Industry The global textile industry. Nevertheless.3. the definition of small and medium enterprises in India was very recently ratified. retailers like Zara. This definition has finally put the segment within a legal framework 1. Small and Medium Enterprises Bill. these companies mostly are part of the unorganized sector. regional dispersal of industries and as a seedbed for Entrepreneurship.3. which came into effect in October 2006.1Introduction SMEs sector has remained high on the agenda of all political parties. H&M. 2006. is dominated by retailers. intelligentsia and policy makers since Independence. 1. As part of a highly fragmented industry.1.3 SMEs in India 1. The SMEs are riding a boom phase. These units are key contributors to the total production of auto components and also have a significant share in the exports of the industry. and medium enterprises with an investment of over Rs 50 million but less than Rs 100 million in plant and machinery. In this scenario of such short shelf-life. this sector is next only to agriculture employing approximately 14 million people. The Micro. define the segment on the basis of investments in plant and machinery. The industry is undergoing a major restructuring and many existing companies are expected to move up in the value chain to a higher tier. In terms of employment generated. sustenance and survival still remains an issue of concern for these companies as they will have to absorb global best practices in this competitive environment.2 Defining SMEs A well-debated issue. 50 million in plant and machinery. 1. In the newly defined business environment for textiles. It has a share of 40% in the industrial production. marketers and manufacturers. The special thrust to this sector has been with the multiple objectives of employment generation. Small enterprises are those with an investment of not more than Rs. They operate in a tier framework.
Arvind Mills and Madura Garments. hosiery suppliers of Ludhiana and suppliers of home textiles from Tamil Nadu.custom-made orders at low cost. Apart from the big Indian textile manufacturers like Raymonds. Poor infrastructure facilities 1. At the same time. and big opportunities for SMEs are forthcoming. like 1.5 Risks involved 16 . some noteworthy textile clusters include: 1. customer orientation. have been accepted as high quality and cost effective apparel suppliers in international markets. responsible for 80% of the country’s hosiery exports 3. availability of raw material or private initiatives.4 Problems faced by SMEs in India Cost competitiveness. Limited geographical diversity of markets 6. these companies face the limitations of being SMEs. Inadequate exposure to international environment 5. Panipat. Tirupur. Kerala and Punjab. Lack of awareness of business opportunities 4. several small and medium sized apparel manufacturers have also become significant contributors to the total apparel exports of the country. accounting for 75% of the total blankets produced in the country 2. It is likely that India will become a preferred destination for global manufacturers and retailers as well. Limited generation of surplus funds for re-investment due to tight working capital cycle 3. Based on a UNIDO study conducted on SME clusters in India. Welspun India. Ludhiana. The textile industry of India operates largely in the form of clusters with roughly 70 textile clusters producing 80% of the country’s total textiles. These regions are also SME dominated textile clusters that have emerged either due to market access. which accounts for 95% of the country’s woolen knitwear produced 1. are some key factors the SMEs will have to imbibe to survive in the new global set-up. Cotton knitwear suppliers of Tirupur. Low capital base 2. among others. Obsolete Technology 7. lead time.
The key risks that the SMEs face include: 1.Despite these limitations.to have a better Customer Relationship Management (CRM) so that the traders and the agents need not access overseas markets or to keep abreast with product substitutes due to fast changing technology they should have some BMS system in place. Fluctuations in the cost of production. 3. polymers. aluminum. Since the BMS system like SAP B1 can be customized to implement WEB based CRM and E-commerce it further enhances the need for having a BMS implemented. 4. especially raw materials like steel. Product substitutes due to fast-changing technology. 17 . 2. 5. the SMEs have managed to significantly contribute towards development of India’s industrial base. which in turn limits their pricing power. Poor negotiation powers due to fragmented nature of industry. Addressing these challenges and risks will be crucial to promoting SMEs in the industry. Dependence on traders and agents to access overseas markets which threatens their competitiveness. To over come the problems in fluctuation of prices especially of those of raw materials . Fluctuations in the value of the Indian Rupee against the dollar.
CHAPTER II Getting Market Insight: Market Intelligence 18 .
2.0 SP1 or higher 19 .1.2.Since the company relatively new to this concept of venturing into BMS market we got a lot of information while going through the market intelligence phase.These are the hardware requirements for option 1. He can choose either of the options.1Option1 We can have our own server connecting in one place connecting various offices all over the country .2 FP5 Express Edition Software • Microsoft Internet Explorer 6.5 GB/Data partition 2 GB • IBM DB2 Universal Database Express Edition – System partition 0. (The details of the strategies used cannot be revealed but can be explained orally during the presentation.2. These details are as follows 2. Introduction This part of the report contains certain details which have been obtained through Market Intelligence. Minimum Hardware and Software Requirements for SAP Business One These hardware details provide with the options that we can provide to our customer and opening varied opportunities for him.) MI has been conducted only for SAP B1.5 GB/Data partition 2 GB DVD-ROM Drive 24x or higher Display 640 x 480 with 256 colors or higher Database • Microsoft SQL Server 2000 SP4 Standard or Enterprise Edition • Microsoft SQL Server 2005 Standard or Enterprise Edition (only on Windows 2003 Server operating system) • IBM DB2 Universal Database 8.2. • Option 1 is beneficial to those organizations who already have a good IT infrastructure consisting of servers or those who are ready to make an initial investment on servers. • Option 2 is beneficial to those organizations who don’t have pre requisite IT infrastructure consisting of servers or those who are not ready to make an initial investment on hardware 2. SERVER Operating System • Microsoft Windows Small Business Server 2003 SP1 • Microsoft Windows Server 2003 SP1 Standard / Enterprise 32 Bit CPU • MS SQL Server – 1x Intel Pentium III • IBM DB2 Universal Database Express Edition – 1x Intel Pentium IV RAM • MS SQL Server – 1 GB • IBM DB2 Universal Database Express Edition – 1 GB HD Free Space • MS SQL Server – System partition 0.
2.• Microsoft Data Access Components 2.0 SP1 • MDAC 2.6 (MDAC) or higher • For IBM DB2 UDB only – Microsoft .6 or higher 2. HD Free Space 500 MB CD-ROM Drive 24x or higher Display 800 x 600 with 24 bit colors or higher Software • Microsoft IE 6.NET SDK WORKSTATION Operating System Microsoft Windows XP Professional SP2 32 Bit CPU 1x Intel Pentium RAM 128 MB + 60–80 MB per additional add-on running on the workstation. LOC 1 LOC 2 GO GLOBAL ERP Database LOC 3 S E R V E R Server SME LOC 4 LOC 5 20 .2OPTION 2 Connectivity using Go Global Server .
software languages. computing architectures. audit. updates and patch deployment — regardless of the diversity of the access devices. and networks that are involved Maximize server resources by connecting users to those servers with the least load Maintain open work items when network connectivity is lost Simplify business continuity by automatically connecting users to the best server group that is available Deploy an intuitive user experience that looks and feels as interactive and rich as a full-featured desktop with the option of a fully mobile environment Prevent build-up of application-specific server silos by safely installing and reliably running multiple application versions and incompatible applications on the same server Reduce the number of required servers and cost-effectively provide room to grow by supporting more simultaneous users on a single server Observe. No Benefits Features Description 1 Rapid application deployment Application publishing 2 Always available Load balancing Session reliability Zone preference and fail over Simplify deployment of new applications. monitor. measure.Benefits of Go-Global Server S. and report on application availability and system performance from a single console 3 Consistent User Experience Centralized computing 4 Increased system performance Application isolation environments High userdensity 5 IT visibility and accountability Unified Management Console and Report Center 21 .
We need to make a very good first impression over the customer therefore we need to have a methodology planned out to make the discussion interesting. The implementation is divided into five project phases: Phase 1: Project Preparation During this phase. the Business Blueprint is created. the SAP B1 system is ready to be used as a productive environment. Upon successful completion of this phase. In order to document the results gathered during the workshops. and optimizing overall system performance. scope. 22 . In addition. Other key focal areas of this phase are conducting integration tests and drawing up end user documentation.3 Implementation Methodology In this section explains how a company should go about the implementation. pre-production environment to live production operation. system management and cutover activities) to finalize go-live readiness. The most important elements include setting up production support. and schedule. Phase 4: Final Preparation The purpose of this phase is to complete final preparation (including user and administrator training.2. Phase 2: Business Blueprint During this phase. This methodology was very important from the company point of view because it contains the various phases implementation is to be done. Phase 5: Go-Live and Support The purpose of this phase is to move from a project-oriented.This would be very helpful when the company’s representatives meet its first potential customer. monitoring system transactions. a requirements workshop is conducted with various key stakeholders to define project objectives. the team prepares and conducts a project kick-off meeting and goes through initial planning and preparation for the SAP B1 implementation. Phase 3: Project Realization The purpose of this phase is to implement all business process requirements based on the Business Blueprint. the relevant business process scenarios are defined.
Product Training 2. Analysis & Monitoring A C T I V I T I E S Figure Implementation Process 23 . SBO product & Add Ons 2. Solution Documenta tion Operations & Continuous Improvement Solution Management 1.Go Liv e Implementation Analysis & Design 1. User & System Requirements 2. Go live check 2. 2. Service Level Agreement Installation 1. Support Automation Tools Training 1. System Backup 3. Data Transfer 3. Support Infrastructure Handover 1. Upgrade and patches. System Operation 3.
Evaluation Cycle Evaluation Delta Requirements Pre-Project Activities Project Preparation Implementation Cycle Realization Final Preparation Go-Live & Support Present solution/ implementa tio n approach Validate customer fit Set expectation s with customer Create Proposal Document Present prototype system Assess data complexity Identify Delta requirements Design Delta solution Get customer to sign off blueprint with Delta Finalize Statement of START Customer Qualified Project Kick -Off Review and Review data requiremen ts and data cleansing plan Train project team Prepare Organizatio nal Change manageme nt Set up project team environmen t Decide system landscape and Install hardware Order from SAP Plan project Build project Charter Set up Implementa tio n standards and procedures Execute kickoff System setup (DEV&QA ) Production hardware installation Validate organizatio nal configurati on Validate business processes Realize delta requiremen ts Conduct organizatio nal change manageme nt Planning for production support and cutover Run Integration & acceptance test Plan enduser training Refine cutover plans Establish long term support plan Train end users Create & staff help desk System manageme nt Execute cutover Quality check: Final preparation Start of production Monitor live environmen t Close open issues Start longterm support plan Quality check: Go-live project Go-live Figure Implementation Methodology 24 .
2.1-1]=73961.Thus the second pricing proposal is more appealing who want to make less initial investment.80.00. AMC will be low. Not only this the high Initial cost will be a turn off for many customers.per license) @ 17% Pricing 2. AMC = 4640[(1. The option 2 is preferable to those who want to pay less recurring costs though both the costs are almost similar ten years down the line.per license) @ 26% Pricing 1.But the recurring benefit will be high i. 65160. AMC will be high.e.The AMC of option 2 is Rs. Here we have two options: Option 1 In this option we charge a high per license fee and low AMC as a result total initial cost will be high .e.But the recurring benefit will i.000 42160 E-learning modules Free 690160 Instruction lead training Free Grand Total Option 2 In this option we charge a low per license fee and high AMC as a result total initial cost will be low .000 4. But a high recurring may sometimes prove unattractive Deliverables License fees Implementation charge +Training AMC Quantity 04(45000/.48.000 46800 E-learning modules Free 625000 Instruction lead training Free Grand Total Considering the PV of money the grand total for option 2 is less by Rs.1) ^10 -1]/[1. Deliverables License fees Implementation charge +Training AMC Quantity 04(62000/.e. This low initial cost is able to attract more customers.4640 more.4 Pricing for 4 licenses In this section we get the know how the product is actually being priced and how can we bring out variations in pricing so as to provide value for money to the customers and at the same time generate more customers. Assuming an opportunity cost of 10 % we calculate the PV of the increased AMC i.000 4.00. 25 .
CHAPTER 3 Study about BMS software solutions SAP B1 and Microsoft Dynamics Navision 26 .
customers. Streamline the entire business in a single integrated system: Seamlessly integrate the entire business across financials. SAP Business One is a single business management solution that streamlines the entire business across sales. easy to use and simple to maintain. enabling you to quickly respond to changing business needs. eliminating duplicate entries and errors. 27 .What is SAP B1? Designed specifically for small businesses. 3. records and history so you can anticipate and respond to their needs faster and better than competition. SAP Business One can adapt to the unique and fast-changing needs of small businesses. SAP Business One can be flexibly tailored to match your evolving business needs for today and tomorrow. as your business grows. 4. SAP Business One offers the following unique value propositions to small businesses: 1. sales. Adapt to changing business needs: Combined with additional industry-specific capabilities. . upto-date information. Act on instant and complete information: Rely on a single source to instantly drill down complete. With additional capabilities specifically tailored for a widerange of industries. Build stronger customer relationships: Track and instantly access all customer contacts. Designed exclusively for small business: SAP Business One is an affordable small business management solution that is quick to install. operations and financials. 2. customers and operations in one system. 5.
Thus a company with a requirement of 3-4 licenses can implement an ERP solution with just an investment of 4 to 5 lakhs. No more than five SSP solutions running on their SAP Business One implementation (may vary depending on the complexity and breadth of the specific solution) Though our market intelligence we have got the knowledge that the product costs around rupees 60000 per license per user. Some IT support required depending upon individual requirements 6. SAP Business One serves companies in many industries.Why is its best suited for SMEs? While SAP Business One has many satisfied larger customers.1 lakh to Rs. basic manufacturing (discrete and process). According to SAP B1 experts SAP Business One implementations are significantly more successful when we target prospects that fit the profile SAP B1 used while designing the product. but fits best for companies in retail.25 lakhs per man month and 17% Annual Maintenance Charge (AMC).10–100 employees1. added to that is the implementation charge Rs. approximately half of them using SAP Business One concurrently 2. SAP Business One is optimized for performance with up to 50 concurrent users. 28 . wholesale. as follows: 1. Annual revenues of up to 100M 3. it is ideally suited for companies with 10 to100 employees.1. Moderate customization requirements 5. and professional services. Up to five inventory-holding warehouse locations 4.
SNAPSHOT OF SAP B1 29 .
sales management and customer tracking applications. customer relationship management. Along with its affordability and easy implementation. 30 . material resource planning. SAP has customized SAP Business One for quick implementation (within weeks) and minimal learning curve (which means lower investments for training). this makes the solutions value proposition very compelling to SMEs . yet it is still simple to use and easy to implement . including: • • • • • • • • • • • • Accounting Bank Transactions Business Partner Management Sales and Distribution Sales Opportunity Management Material Requirements Planning Purchasing Warehouse Management Production Management Service Management Outlook Integration Reporting SAP has made 28000 SAP B1 implementations till June 2007 all over the world together with its partners. and reporting and analysis. Instead of silos of financial. SAP Business One is an answer to this salient call by SMEs.It is ideal for those companies that require less complex functionality from their IT solutions. That solution must also not involve high financial or manpower investment. inventory. purchasing and selling.How can an SME benefit from the implementation of SAP B1? SAP Business One covers all the core operations necessary to run a business. including accounting and banking. vendor management. Many companies have cut down on their expenses as far 13% and increased revenues by 5% after one year of implementation of this software. SMEs are looking for an integrated yet easy-to-use and affordable solution designed to provide the visibility and control. This solution integrates all the business processes and through an integrated system and helps improve efficiency.SAP Business One is a comprehensive solution that covers all the core operations necessary to run business successfully.
inventory. and look for trends and relationships. Directs access to real time. locations or companies. and gaining tighter control over costs. fixed assets. manage single. bills of material. and execute a world-class manufacturing operation.or multi-site warehouses. payables. Business Intelligence and Reporting Brings strategic insight into their business processes with sophisticated reporting. SMEs can efficiently manage their general ledger. Microsoft Dynamics NAV accounting and finance solutions help track and analyze business information. receivables. Makes service operations more profitable by organizing service resources for optimum efficiency. Improve inventory management. Manufacturing Microsoft Dynamics NAV provides an integrated suite of manufacturing applications that give companies the tools to plan. With endto-end integration. enabling them to be effective and their business to be competitive. create and consolidate reports.What is Microsoft Dynamics Navision? Microsoft Dynamics NAV Value Proposition. analysis. Microsoft Dynamics NAV is a business management solution for small and mid-sized organizations that helps simplify and streamline highly specialized business processes by rapidly adapting to the unique way SMEs do their business. and improve your profitability by working more efficiently with partners. and track customer activity. manage. purchasing. Financial Management As the backbone of business management solution. and pick/pack/ship cycle. 3. Accessible from Microsoft Office 31 . and cash flow as well as perform bank reconciliations and collections. Salient features of NAV 1. and budgeting solutions that help them improve and propel critical decisionmaking throughout the organization. SMEs can tailor workflow processes to meet specific needs and keep pace with competitive markets and low margins. proactively managing contracts and service agreements. and handle order processing and demand planning. With Microsoft Dynamics NAV. Help increase customer loyalty with better responsiveness. analytical accounting. They can also manage their financial processes across multiple currencies. rapidly pursue new market opportunities. including production orders. Supply Chain Management Streamline sales. 4. create and launch marketing campaigns. 2. business-critical information and a wide range of analytical and reporting tools can help them manage budgets. They can boost operational efficiency and effectively manage production. histories. forecasting and tracking parts consumption.
Microsoft Dynamics NAV helps sales team work without limits. SNAPSHOT COMPARISON BETWEEN SAP B1 AND MICROSOFT DYANMICS NAVISION Proof Points 32 .Outlook and Employee Portal. Workspace Collaboration Help people across businesses collaborate effectively by expanding access to business applications. information. and processes. they can use Microsoft Windows Share Point Services to help create workgroups and teams to generate discussion and exchange information related to specific interests and projects. In addition. 5.
Thus u can implement an ERP in 3. Position value and ROI (Return on Investment) vs. It’s an insignia of trust. It can be a expensive proposition to scale up SAP B1 to my sap -all -in –one because both have entirely architectures MICROSOFT DYNAMICS NAVISION Microsoft NAV is relatively new into the market and thus requires more marketing.12 lakhs for any such SMEs having 30 -1000 employees the migration path from Business One to mySAP All-in-One is difficult and expensive as these two solutions have entirely different architectures and any potential migrations or integrations may add cost.PARAMETERS SAP B1 ERP is synonymous with SAP and therefore it sells like hot cakes.Cost structure Whereas as to implement Microsoft navision it may require from 5 lakhs to 20 lakhs to make an implementation for such company Microsoft Dynamics NAV offers scalability without the need to migrate to a new solution. As the no of users increase SAP B1 looses out because it is a fit for organizations having 100 users.Functionality and ROI Microsoft Dynamics NAV delivers more functionality Across core financials. 33 . Many SMEs do get interested in having an ERP implemented only because they think they are getting SAP product at very less cost. A normal SME with 30-100 employees may require at max 10 licenses and minimum 2 licenses. distribution and manufacturing and can scale to 250 plus users.Customizibility and scalability 4. 1. cost of acquisition.Degree of marketing required 2. 3.
2. SAP or Microsoft. BMS Solution Provider (SAP) Distributor (KLG Systel. Wipro) BMS Solution Partner 34 . All these companies provide a certificate and your certification level increases according to the number of implementations you have made.e. Thus before entering this market analysis is necessary to gauge the level of competition and potential for growth for a company who wishes to become a BMS solution partner. Not only have these SMEs had a potential and an ambition to grow they are always in search of cost effective products that will help them improve their business processes.Why should TechTreeIT venture into the BMS market? Reasons why the company should venture into this business are as follows: 1. Competitiors To sell a standard BMS product you have to become a partner of the respective company i. Constant Demand Since SMEs are such that they grow very fast in the time of economic boom but may get wiped out in days of recession thus there is and will be a constant demand for software products that help them improve their business processes.
4.25 lakhs per man month and 17% Annual Maintenance Charge (AMC).5 years in this market and thus do not pose a threat.1. Since the product is also relatively new concept and there are only few installations (nearly about 100 -125 according to our resources) thus market is totally unsaturated and thus provides a growth opportunities to partner companies. Most of the companies that are using customized solutions do not have all the modules in the applications for all the core business processes. 3. Pricing & Positioning Since the price of the product is very low and since it carries the brand name of SAP it will sell like hot cakes. Thus a company with a requirement of 3-4 licenses can implement an ERP solution with just an investment of 4 to 5 lakhs. there are 20 SAP B1 partners in south. In Pune.Advantage over customized solutions The problem with most of the customized solutions is that they are bugged with errors and exhibit unusual problems and error messages unlike the standard product.Small and medium enterprise Customer Figure How a BMS solution reaches end customer With reference to list of SAP B1 partners (Appendix A) it can be found that there are six SAP B1 partners in Bangalore and fourteen in southern region excluding Bangalore i.e. added to that is the implementation charge Rs.1 lakh to Rs. Bombay region there are 16 SAP B1 partners. They also say that they cannot get all the modules incorporated in the customized solution because then the solution becomes too costly 35 . The product costs around rupees 60000 per license per user. Many of these competitors have an experience of 1 to 1. Since the proposition is value for money for SMEs will definitely go for this product rather than any cheap customized BMS solutions that do no satisfy its needs completely. In rest of India there are 23 other SAP B1 partners. Most of the companies I surveyed say that only 50% of their core processes are satisfied by these cutomised solutions.
14. PUNE (MAHARASTRA) SOUTHERN REGION EXCLUDING BANGALORE REST OF INDIA 36 .PUNE(MAHARAST RA). 23. 6. 24% BANGLORE MUMBAI. 39% MUMBAI . 16.ANALYSIS OF SAP B1 PARTNERS BANGLORE. 10% REST OF INDIA. 27% SOUTHERN REGION EXCLUDING BANGALORE.
Chapter IV Questionnaire Design I: Defining the objective and the sample group 3.1 Introduction The steps for the questionnaire design are as follows: 1. Defining the Objectives of the survey 38 .
3.) No.1 Objectives of the Survey The objectives of the survey was 1.1. 3 and 4 are residential settlements of the workers working in these factories.1. There are several small scale industries and workshops spread across this place. of Small scale units 2. While phase 1 houses major industrial units of Bangalore. To understand the problems in the existing BMS/IS solution. Bureau of Indian Standards and Central Engineering Company.1.2 Sampling Group The sampling groups consisted of 26 companies mostly from the Peenya region with the exception of few companies. has its mixed bag of success and failure. Determining the Sampling Group Writing the Questionnaire Administering the Questionnaire Interpretation of the Results 3. Most of the companies interviewed were manufacturing companies since these solutions were suitable for manufacturing companies. 3.2. 4. of Medium Enterprises 3.) Exports per annum : about 4000 : about 25 : about Rs. Baharat Fertz. The vast area has been divided into 4 phases. Some of the major industries set up here are Bata. Peenya is an industrial area in Bangalore with a dozen of industrial units spread across the town. Kar Mobiles.60000 million Peenya Industries Association.) No. Reasons for choosing Peenya Industrial Estate Some of the salient features of this industrial estate that make it an ideal choice for survey : 1. How a BMS solution can help to resolve these problems? 3. Krishna Fabrication. phase 2.) Annual turnover 4. To understand the problems faced by SMEs in day to day operations 2. 3.150000 million : about Rs.3 Writing the Questionnaire 39 . one of the largest industrial estates in the country employing three lakh people. Mysore Breweries. 4. To gauge the market potential for this product. 5.
Questions 19-23 helped me to gauge whether he was a potential customer or not and what all he expected from a BMS solution. Questions 1-5 were designed with the objective of gathering information about the company.The questionnaire was designed in a logical sequence so that I could get the required information mentioned in the objective. Questions 7-14 discussed about he specific problems that are faced by the manufacturing units. 4. 2. 1.These questions were also used to gauge the level of satisfaction from such applications. (This information was collected from various sites and books). 40 . its history and its products so as to engross the concerned person in the discussion and to make the discussion interesting and lively. 3. 5. Question 6 was incorporated to get to know about the problems that companies face in day to day operations which would have remained untouched by the following specific questions. Questions 15-18 discussed about the IS/BMS solution they were already having .
DETAILS (Before proceeding further you are required to fill the following DETAILS.) NAME OF THE ORGANISATION NAME AGE PHONE NO.) Please tell us something about your organization. DESIGNATION YEARS OF EXPERIENCE : : : : : : Please tick mark the appropriate boxes. Choose the option that represents your choice most suitably. 1. ______________________________________________________________________________ ______________________________________________________________________________ 41 .
)Country wide c.) Do you think you need to maintain financial records and customer records more efficiently so as to have a real-time updation of data and provide quick and immediate delivery to the customer orders and requests? a.) Government agencies 4.)Yes b.) What problems does your company faces in day to day operations? ______________________________________________________________________________ ______________________________________________________________________________ ______________ 7.)No 8.)Global c.)Yes b.) distributors b.) End consumers d.) In which cities of India do you have your manufacturing/distributing/retail outlets? ______________________________________________________________________________ __ 6.)Yes b.)Yes b.)No Specify the reasons for efficiency/inefficiency ______________________________________________________________________________ _ 11.)Do you think you need to reduce losses resulting from such stock outs(losses arising from loss of loyal customers)? a.) What is the scope of your business? a.) Does the organization face problems with on .______________________________________________________________________________ _____________________ 2.)No Please specify the reasons for your opinion ______________________________________________________________________________ ____ 42 .)No Please specify the reasons ______________________________________________________________________________ 10.)No Please specify a reason for your opinion ______________________________________________________________________ 9.)Local b.)Yes b.) Resellers 5.) Are you able to manage the financial records (accounts) efficiently? a.) Who are your customers? a.) What are the various products in your product line? ______________________________________________________________________________ ___ 3.time delivery of orders? a.) Do you ever face a problem of stock out (having less number of items in the stock than required)? a.
12. A low DSO number means that it takes a company fewer days 43 .) Do you already have an existing Business Management System (BMS) to tackle the above mentioned problems? a.)5-10 lacs c.What is the information system (applications) that is being used in your organization? _____________ 18.)Yes b.) What is the yearly turnover of the company? -------------------------------------Thank YOU!!---------------------------------------------NOTE: 1.)No 21.) What is your current Days Payable Outstanding (average no.).)Yes b. of days an enterprise takes to pay back its creditors)? _____________ 14.) If you don’t have a Business Management System in place or if you think the existing information system is inefficient would you like to have BMS implemented in your organization? a)Yes b.) If you don’t have a BMS.)Yes b.)No 17).) above 15 lacs 22.) What is your current Days Sale Outstanding (average no. do you have an existing information system? a.) 1-5 lacs _____________ 23.)No 16.How would you rate your existing information system on the ladder scale? 1 2 3 4 5 6 7 (7= excellent. of days an enterprise takes to collect revenues after sale has been made)? _____________ 13.)10 -15 lacs d. 1=poorest) _____________ 19.) What was your expenditure on information technology last year? _____________ 20. DSO: measure of the average number of days that a company takes to collect revenue after a sale has been made.)No Please specify the reason _____________________________________________________ 15.) How much are you willing to invest to have a Business Management System implemented in your organization? a.) Do you feel that there is a need for better working capital management (reduce the DSO and maintain DPO to an optimum level)? a.) What rate of return due you expect from your investment? ___________________________________________________________________ b.
A/P turnover falling) the firm is facing a financial difficulty.. 3. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money. Low days payable or high turnover rate might imply suppliers unwilling to offer credit (i. WORKING CAPITAL =CURRENT ASSETS – CURRENT LIABLITIES 44 .e.e. 2.DPO : If the days payable outstanding is rising (i.to collect its accounts receivable. insist on cash payment).
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