ERP GOES SECULAR

Be it a manufacturing, healthcare or hospitality, Enterprise Resource Planning (ERP) trends reflect a positive scenario in India. The availability of need-based applications has widenedS the scope as there has been an apparent shift in adoption. Now ERP implementation is no more confined to large enterprises, but small and medium businesses are eyeing it for the facilitation of operational needs. With the increasing awareness in the Indian companies at par with the global standards, ERP deployement is bound to grow, and according to one source, nearly 20,000 SMBs could adopt it. According to a research firm, Frost & Sullivan, the ERP market in India is estimated to grow at a CAGR of 19.2 percent and is expected to reach around $185 million by 2013. The vendors are exploring new opportunities and are working on the sub-vertical level to acquire more traction in the market. Some of the major vendors include SAP, Microsoft, Oracle, Tally, Sage, Patni, IBM, Ramco, NetSuite and Epicor.

Price pain point is one of the major challenges for the deployment of full-fledged ERP solution among SMBs. Thanks to 'open' initiatives! with the onset of cloud computing technologies and open-source applications, the customized ERP offering is expected to boom. However, the organizational challenge for ERP implementation remains around the ability to deliver enhanced business process functionality and improve productivity and operational efficiency. Ramco has recently unvieled on-demand ERP 2.0, which is a comprehensive ERP platform on the cloud that covers cost planning and control, asset and finanace management, process and discrete production, human capital and supply chain management, and customer relationship and MIS reports. The company said that its cloud initiative supports various new industry segments that include services, power, leather, food processing and dairy.

Trends

As the businesses in India are increasingly dependent upon software technologies to accelerate operational processes and achieve clarity, the ERP marketplace is poised for a significant growth. Debdeep Sengupta, VP-SME and Channels, SAP Indian Subcontinent said that, organizations are now looking at IT solutions to drive clarity in their businesses across their business networks. This in turn seeks to build trust among stakeholders and adhere to increasing marketplace regulations.

"Increased pressure to deliver additional business value with limited budgets, the total cost of ownership is a critical driver for IT investment decisions. Hence, enterprises are enforcing on shorter solutions that offer quick implementations, lower risk and ultimately a faster return on investment. SAP holds a 57.2 percent market share in the ERP space as per Gartner's 2009 report," Debdeep said. SAP has apparently become the only software provider in India that has specifically designed a wide set of solutions for the Indian SME as we understand that one size does not fit all. It offers more than 22 readymade templates for micro-verticals, including automobile, sugar, media, rice mills, cement, tea, and gems and jewellery.

The trends are overwhelming, believes Subhomoy Sengupta, Group Director-Microsoft Business Solutions, Microsoft India, which he said are largely due to vendors' renewed efforts in product innovation to streamline business processes, including reduced time to automate tasks such as order to cash. "The large ERP applications vendors have gained shares, and have been able to retain customers because of their domain expertise, channel partnership, and familiarity with business processes at the vertical and sub vertical levels," he said. According to Sengupta, the future of ERP market consolidations will revolve around the small to medium-sized business market segment and certain verticals such as manufacturing, retail and wholesale and distribution that are more susceptible to structural changes, including user willingness to replace legacy systems to boost competitiveness in an age of globalization.

Thomas Abraham, Managing Director, Sage India said that the level of seriousness in engagements has increased evidently. "One of the major challenges in the deployment of ERP include the readiness of organizations in terms of their requirement for a business process perspective and having internal resources to make and manage that change, “Abraham said.

Sunil Kumar Tuli, Head-Consulting and Systems Integration, CSC India said that ERP is a strong technology enabler to assist industries in developing a collective view of the enterprise, and harmonize the business process across multiple business units and regions, at an optimal price point. CSC India offers expertise on implementation and integration, primarily on the major ERP packages brought from SAP and Oracle. "Considering the adaptability of ERP products to be global, industries are able to bring about one-view of the organization and report at the top level. Technology tools such as Business Intelligence enable the top management to view the progress and score-card of performance (varied by factors) and are hence enabled to make faster decisions to improve business," he said.

According to Tuli, the latest ERP software programs offers need-based applications. "Firms are given the liberty to purchase and install software programs pertaining to a particular function. Earlier, ERP used to be a very costly. Now, intrusion of Internet and open-source applications has helped SMEs to enter the market of prospective buyers. This has not only widened the horizon of SMEs but also increased the usage among large firms. Now, ERP applications are less complex to install and train. Also, the open-source, Web-enabled and wireless technologies are the key drivers for ERP," he said.

"Bring vendors and customers into the main stream as part of supply chain (CRM, SRM). Focus on BI analytics and extended reach of ERP to handle devices are some of the trends in ERP space. There are options available today like Open Source, Web enabled and Wireless ERP. Wireless ERP also enables sharing enterprise information through devices like internet and other devices for users on the move," said Shoaib Ahmed, President, Tally Solutions. According to Ahmed, there is a segment which is moving towards Software as a Service (SaaS) which helps them to minimize the capital IT costs.

Challenges

Highlightling the business challenges, Debdeep said that, with globalization being a primary factor for companies, there is a special emphasis on governance risk and compliance as more and more data gets exposed to potential risk. "Adding business insights to process innovation through business intelligence amplifies a company's ability to increase its competitiveness. Companies are heavily trusting on an application which helps them in analyze, forecast and plan ahead in their business plans,” he said. "With a focused approach, we then engage with each customer differently, addressing their challenges and take care of the entire value chain for them. Our specialized partners as well as consultancy team helps customers in every stage of a project, and we make the entire journey for any customer smooth and hassle-free," added Debdeep.

Sengupta said that, ERP vendors will find themselves struggling for new business amid price erosion by resorting to measures to lower customers' total cost of ownership and fixed-fee implementation to make the outcome of ERP projects much more predictable. "It is not about just buying an ERP package, the challenge lies in the process itself. It is more about working closely as a team with the implementation partner to ensure that the solution is well delivered. All parties have to be committed to make this a success," said Abraham.

According to Tuli, while ERP is apt for business growth, the cost and cycle time in implementing and deploying ERP products is still large. "The current stakeholders are keen to implement the business processes quickly for quicker ROI, but the technology enablement requires longer time and budget. Also, implementations require revising/adapting business processes which can be time consuming and also could pose cultural and organizational challenges that need to be managed with clear direction from the executive team. Customizing ERP is of course an option; but a careful decision should be made on the extent of customization required. To help with the above challenges business process management tools play a big role. They enable business users to map a process to the ERPs quickly without any intervention of the technical consultants/product specialists," he said.

"Non-involvement from the top management and un-realistic expectations in terms of results can make or break an ERP implementation. Resistance to using a new system, insufficient training to users or attrition of trained employees can seriously impact the implementation process. Sometimes it might just be the fear of loosing control over operations as an ERP brings transparency," added Ahmed.

Growing organizations often find it difficult to retain business efficiency, employee productivity, and responsiveness to customer needs. Businesses are hindered by business systems that simply cannot keep up. "Legacy systems lack the functionality to support the daily business operation scenario; the systems not being integrated also makes it difficult to obtain complete visibility into business operations. Responsiveness and timely decision making can be hampered by systems that cannot scale, to handle the increasing number of transactions generated by a growing customer base. With these systems, communications with geographically dispersed suppliers and partners can become more difficult," said R Sukumar, General Manager — Sales, Ramco OnDemand ERP. "Faced with this common set of challenges, a company looking to progress requires a powerful end-to-end ERP as part of the IT set up," he added.

Partner Opportunities

SAP follows a worldwide strategy in successfully implementing a multi-channel/multi-solution model to effectively address the very diverse needs of small and midsize companies. "We leverage our direct sales and delivery teams, as well as inside sales team which provide wider reach than direct sales teams, and most importantly our channels teams works closely with partners to address the requirements for every local and regional market. Our award winning Partner Edge program facilitate the Indian partners for their enablement, delivery and engagement capability build, empowers value-added resellers (VAR) and other partners to successfully sell, build and implement solutions to meet the unique needs of the SME marketplace," said Debdeep. SAP has built out a strong channel organization to reach out and scale the SME business. SAP currently has 5,400 partners (VARs and resellers)-2,700 are partners and 2,700 extended business partners. The partner channel already accounts for 85 percent of SME deals.

Microsoft has a partner-based model and Microsoft and its partner together strive to bring cutting edge technology along with local and vertical specific business knowledge. "We provide our partners adequate technology, product, people and training support which in terms help then in delivering implementation and support services to its customers. Additionally, we authorize our partners to develop their own IP by using ERP and CRM as it's development platform. These vertical solutions or add-ons enable partner to enhance some of already available features of the product to address some of the very specific need of a micro vertical or a cluster. We also provide platform to the partners to promote their solutions," said Sengupta.

Sage India offers an array of business opportunities for its channel and operates with more than 15 implementation partners who sell and implement SageAccpac ERP. "We focus on the key areas with our partners that include certification training, pre-sales and post-sales support to our partners. In addition, we also have a development partner program which enables them to build add-on modules of relevance and also handle complex customizations. Sage also runs lead generation programs that enables partners work with multiple prospects," added Abraham.

“We strategically work with select partners who focus on solution sales and implementation. Partners form an integral part of our business provide presales, sales, implementation and support services. Our partner model gives the flexibility and comfort to prospective partners to choose the type of partnership they are comfortable with. Currently Ramco have an active partner eco-system which gives us visibility and reach in to metro and tier II cities, both in the enterprise and SMB space," said Sukumar.

"Many VARs are our current TIs (depending on their capability and interest) and we strive to create continuous opportunities for the our channel artners and also to enable them," added Ahmed.

Mutazir Abbas
mutazira@cybermedia.co.in