SMBs Going The SaaS Way For ERP Deployments

Traditionally businesses have ERP deployments on-premise licensing model

setting up their own infras­tructure to support their business applications and

expansion plans. But that's changing, at least for SMBs.

Today most small business prefers an integrated business application such as

an ERP in a hosted model rather than setting up own infrastructure, which is a

CAPEX intensive exercise. Reason being simple-one, they want off the self

products that can help them go-live in shortest possible time (to avoid

custo­mization costs), they do not have expertise and talent to manage their IT

infrastructure in-house, and most importantly they don't have to do a CAPEX for

setting up the infrastructure.

These are three basic elements driving SMBs to go for standard integrated

business appli­cation (ERP) in a hosted model. Now translate this business

(hosted model for ERP) proposi­tion to the numerous SMBs in India and suddenly

it becomes a huge market for the IT vendors.

The requirements for mid-size companies are no less complicated in terms of

function­alities required when compared with large Enterprises. These

enterprises are looking at applications with functions including sales,

production, financials and inventory. Even though SMBs need for an integrated

platform to manage business process such as payroll, accounting, inventory etc,

why are they shying away from ERP?

“For most of the mid-market organizations, the complexity of managing an ERP

system is a constraint, as the smaller the organization, the bigger is the

constraint. Their outlook is to have a system that helps them in doing business

without bothering much about what is happening at the back-end,” said Sushant

Dwivedi, Director, Microsoft India Business Solutions.

According to Sunderaraj, Sr VP, Indian operations, Ramco India, discipline

and rigidity associated with ERP acts as irritant to SMB managers as they always

desire for flexibility. “In majority of the SMB businesses, demand and supply

are highly unpredictable. These factors have their own impact in production and

downstream operations. ERP implemen­tation needs skillful handling to give the

desired results, and requires standard business pro­cesses to be in place

already,” said Suderaraj.

He further noted that since legacy systems have the flexibility to keep

modifying their existing application any time based on ad hoc user requirements,

using them is more of convenience than trust. Some SMBs have developed their own

applications using their in house/EDP department. They are either stand alone

applications or have limited integration with other functional areas.

Hosted ERP is changing the game for SMBs



ERP on a hosted/ SaaS platform with its varied benefits seems to be the

right choice for small businesses. Seasoned vendors in the ERP segment are

focusing on SaaS platform to target the SMBs in India.

Small businesses, micro verticals or clusters, and the companies with stand

alone systems are some of the examples that would go for this model due to cost,

OPEX model immedia­tely. Since the application is delivered on a subscription

model, they need not invest in OS, database, hardware, IT staff and the ongoing

overhead.

“Lots of innovation will happen around SaaS model and the partner eco-system

will evolve around this,” pointed Suderaraj. He further said that SMBs expect an

integrated ERP solution and also a quick deployment since they do not have the

resources to sustain long implemen­tation. Enterprises with on-premises model

will shift to the SaaS delivery model for non core areas. Also some enterprises

will look at a hybrid model where non-core applications will be on SaaS and the

core applications like production, financial, order management will still be on

Premises model.

Samik Roy, Head—Growth Applications Business, Oracle India, added “Mid-size

enterprises are poised to drive the next wave of economic growth for the

country. This segment is striving to bring in efficiencies and improve their

business processes through various IT initiatives.” According to him there would

be a gradual uptake for Software-as-a-Service, across industries like telecom,

manufacturing, retail and insurance.

Hosted model serves the purpose of small businesses, as it doesn't give them

the headache of worrying about huge investments, maintenance, hiring

professional etc. In short, with this platform, organizations can stick to their

focuses on the core business rather than dealing with the back-end applications.

Another advantage that comes with it is the quick deployment and running of the

system.

“Readiness of the system is critically important, and makes a lot of

difference in customers as they will be able to use the system in a much better

way. A manufacturing company can provide a package and ready inventory

management solution, which can be easily deployed and is ready to use from the

day one,” said Dwivedi. According to him, today any roll-out has to be more of

packaged than customized.

V Sudhakshina



Source: CIOL