The vibrant and diverse business community of over 50 million small and medium businesses (SMBs) has emerged as the most dynamic engine of India’s growth story. Being a major source of industrialization, innovation, and employment generation, these SMBs contribute around 6.11 per cent of the manufacturing GDP and 24.63 per cent of the Service sector GDP of the country at present and hence, are considered a key driver of the Indian economy as well.
Despite limited access to credit and IT expertise, the sector is evolving fast with the availability of affordable and hassle-free SaaS tools. One such tool is the Enterprise Resource Planning (ERP) solution which is largely used by enterprises for their business needs, but have become popular with SMBs also in recent years. ERP integrates and manages a company’s financials, procurement, supply chain, operations, human resource into a single system, thus removes the information silos between departments to give everyone a single pane of glass view.
Small businesses, usually manage business functions separately which often causes data errors, duplication of functions or records. An ERP solution may seem unnecessary at the initial stage of their journey, but as the businesses grow, manual business processes become much more tedious, time-consuming and difficult to manage. The basic and freemium products also make it difficult for them to scale further.
Sajith Simon, Head-General Business, SAP Indian Subcontinent said, “SMBs often stay away from investing in technology due to the fear of change and high investments but what most of them do not foresee is how technology will set them apart. SMBs need to invest in ERP to benefit from built-in analytics, rapid deployment, and best practices for different business processes, including financials, production, HR, procurement, and supply chain management. As the SMBs evolve and grow, an ERP system will also help them manage a growing pool of people and processes, simplify and standardize processes across departments, business units, and even new geographic locations.”
OPTING FOR THE CLOUD
On-premise ERP systems usually require a fairly large initial investment including licensing cost, infrastructure and maintenance. ERP on the cloud is a better alternative due to the flexibility, scalability and ease of deployment it offers to the business. Besides this, no matter what the industry or business size is, real-time ERP software can also help connect people, devices, and networks, and create a digital core for implementing new technologies.
The affordable ‘pay-as-you-go’ pricing structure is also an attractive option to SMBs for whom an upfront capital expenditure is a challenge. Thiru Vengadam, regional vice president, Epicor Software, India said, “While many firms recognize that an ERP system could streamline their business processes and improve operational efficiencies, high initial costs, complex implementation, and difficulties in getting users up to speed, have been barriers to entry. Cloud ERP is knocking those barriers down.”
According to Infor, SMBs play a critical role in the country’s fast-paced development. However, in the highly competitive and digitized economy, they need to stay highly agile to sustain the fast-paced growth. To achieve this, SMBs need to focus on their core business competencies and leverage the power of cloud ERP to achieve business management functionality like quality and production, supply chain management, inventory management, and product development.
Sudhir Singh, Managing Director, Marg ERP said, “Almost all the companies who have opted the cloud-based system have definitely benefited out of it and have also been able to address the cost and management concern of the SMBs. Companies have saved a lot with cloud computing as the cost associated with on-premise servers vanishes, the life of your computer gets extended, and as everything is hosted online in the cloud-based system the company will have no need to hire an IT staff. You can definitely expect 100 per cent increased productivity and can also proactively monitor, maintain your programs thereby minimizing downtime.”
Pradeep Aggarwal, Senior Director Cloud, Oracle, said, “Legacy ERP often requires expensive and lengthy reimplementation to upgrade, meaning that the organization enjoys the benefit of upgraded software only every two to five years (or more). The world is moving much too fast for upgrades to happen every two to five years. Think about how many new regulations (federal, state, and local) come online every year. ERP Cloud eliminates all that with a)Frequent updates driven by the vendor on a 90-day cycle, b)3.2x higher ROI and 52 per cent lower running costs.”
SOLVING BUSINESS PROBLEMS
ERP application uses an overall integrated database, which helps to reduce response times and increase operational efficiency.
“Getting streamlined data was never easy as it involved consulting a number of departments and system for specific data which but with cloud-based technology there is no more need to spend time for searching data in different files and software. You can simply access your system and access required data as cloud-based ERP solution has efficiently connected all of the software systems used by different departments. Moreover, these data are centralized and can be utilized by any department. Coming to Performance Analytics and Business Insights whether a large, medium or small business, all it needs is effective reporting. Therefore if an organization is lacking in effective reporting it is for sure they cannot make the right decision and here comes cloud-based technology which can help you in making effective and strategic decisions -a prerequisite for development and growth of any business,” explained Sudhir Singh of Marg ERP.
“A cloud-based ERP implementation allows a higher degree of mobility and remote access than traditional on-premises systems. This can be of enormous value in manufacturing, where shop floor and logistics staff might wish to access ERP data via smartphones and handsets rather than office-based workstations. ERP in the cloud is also the fastest way to tie together remote facilities and mobile employees, streamlining organization-wide collaboration and access,” said Thiru Vengadam of Epicor.
“A cloud ERP with built-in ML capabilities not only remove the labour from labour-intensive tasks, they continuously run in the background to find new ways to improve efficiency. At the same time, they feed rapid-fire responses to ‘what-if’ questions posed through chatbots, rich-context dashboards, and other tools at your fingertips,” said Pradeep Aggarwal of Oracle.
An ERP solution may seem unnecessary at the initial stage of their journey, but as the businesses grow, manual business processes become much more tedious, time-consuming and difficult to manage. The basic and freemium products also make it difficult for them to scale further.
PICKING THE RIGHT SOLUTION
Sajith Simon of SAP said, “Five simple points will help any and every SMB business pick the right ERP- Employee size, Industry, Deployment Option, Business Complexity and Expected Employee Growth. Picking the right ERP depends on various elements of the business including management outlook, business challenges and company culture. The other significant element of the process includes collaborating with the right Partner. It is imperative to have a partner that understands the SMBs needs and is equipped with the technology and process expertise to help deliver the best foundation for their digital business.”
He shared some pointers which they need to consider before choosing an appropriate ERP:
Get a software that covers all business functions and provides industry best practices – When a software provides industry best practices and complete coordination among the various functions of the business, it provides the management with the ability to quickly deploy the platform, get real-time analytics and business intelligence for complete visibility.
Should be available anytime, anywhere – In current times, when work flexibility and accessibility is of utmost necessity, it becomes equally important that the ERP software you use to cater to this need.
Ensure it can grow with you – It is extremely important that the suite you use is a completely scalable solution leveraging the benefits of a SaaS ERP. If you add a new subsidiary or acquired new entities, the suite should let you easily add new entities to include a subsidiary company or integrate office and warehouses across the globe.
Look for experienced partners – The ERP solutions should be supported by a mature partner ecosystem that can help SMBs identify, buy, build, implement, service, support and run the solutions that best fits the organization’s unique needs.
Pradeep Aggarwal of Oracle, shared some parameters which SMBs should follow before deciding on implementing an ERP solution:
Data Conversion – Prior to implementation, SMBs should take the time to really clean up their data and simplify their processes. This is really the only time they will get to clean up their chart of accounts and make sure the data is exactly the way they would like it to be. Obviously, the new software is going to have much more capabilities than the previous one. So, they should take advantage of it to get the most out of the investment.
System Integration – Being a midsize business doesn’t necessarily mean a lack of complexity. They may have systems, both SaaS and on-premise, which handle customer-facing processes such as ensuring that customer orders are properly processed, fulfilled, invoiced and accounted for. You may have procurement systems that need to reconcile purchase orders with vendor invoices in accounts payable. Combined, these systems form the backbone of any business and connect the SMBs to customers, suppliers and other trading partners. They need to be carefully considered in the implementation plan.
User Adoption and Training – Often overlooked but critical to realizing the fast time to value is ensuring your users are trained properly to take full advantage of the system’s capabilities. Modern SaaS ERP systems accelerate time to value through their intuitive, easy-to-use user interfaces which helps your people become productive quickly.
And last, but not least, ERP solution being the operational backbone of an organization, security must be a primary consideration for any ERP deployment. Security controls aren’t always built into ERP software. Be aware of how to manage and determine different access and authorization roles in the system. Make sure passwords are strong and data is encrypted. Vendors entrusted with business information in ERP systems need to maintain highly secure datacentres which are protected 24 hours a day, 365 days a year. Also, ask the vendor what security measures have been taken for integrating third-party products.