Sunday, 14 October 2012

ERP EVOLUTION IN SME SECTOR

Earlier ERP solutions were considered only for the larger companies as they only had the resources required to deploy the ERP solutions. But in recent years ERP solutions have become effective business solutions for SME’s as well. Due to the increasing tough nature of modern day business competition, small & medium-sized businesses are continuously in search of better ways to improve their processes and achieve competitive advantage in their domain. With the advent of Enterprise Resource Planning (ERP) system, they have turned to this integrated information system as a means of acquiring this competitive advantage in the industry.


The three main drivers which led to the Evolution of ERP in SME Sector are:-

Since most large companies have already implemented ERP solutions, software companies have had to look to smaller organisations to continue their revenue growth.
The increased number of niche and industry specific vendors is causing lower software prices and thus making it affordable for smaller companies to go for this change.
As many smaller companies embark on aggressive growth strategies, they are finding that ERP solutions provide them with a strong business process and technology infrastructure to support growth.


Enterprise Resource Planning Software’s are no longer viewed as extremely complicated and expensive Business Software that is difficult to understand and Implement in a SME. Most SME Owners and Management are becoming more aware of the benefits of ERP. They are more willing to adopt an ERP for not only running the Business Operations, but also to reap benefits in terms of Cost Cutting and increased Operational Efficiencies. The Enterprise Applications like, Business Intelligence, CRM, Payroll, HRMS, Customer Service Software, Accounting Packages, SCM Software, Warehouse Solutions, Office Collaboration, and Project Management Software etc. have evolved over the past few years from just being transactional software.


The cost of implementing ERP has been reduced to a great extent past few years. ERP Vendors have started licensing Products at much lower rates, which can cater to the requirements of the SMEs. Also Industry and localization specific features in the ERP packages have reduced the cost of customizations. Better and fast implementation techniques developed by the partners of these Vendors has also lead to reduction in the costs for investments. ERP uptake for a company is no longer a decision that is perceived as a ‘High Risk-Low Return’ investments.


POSSIBLE BENEFITS OF ERP IMPLEMENTATION IN SME SECTOR :-

Reduction in cost of operations
Greater visibility of financial and operational processes
Reduced errors
Improved efficiencies
Better management of customer relationships
Improved reporting to support managing the business

Increase in Product awareness among the SMEs of the developed countries have lead to increase in Market Size for ERP in such countries. Success in developed countries have inspired the ERP Vendors like Microsoft, Oracle, Sage and Infor to position the benefits of their products for the SME sector in Developing countries like India. With the help of a well-spun partner network these companies have launched aggressive marketing campaigns to educate the SMEs and create awareness about the benefits of ERP.












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