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ERP and SMEs in India

In the Indian context the most innovative and likely growth areas for ERP solutions is certainly the growing SMEs and SMBs.SMEs or Small and Medium Enterprises have always contributed significantly in the development of Indian economy since Indian independence. Both the Governments and the Planners have assigned special roles for the small scale units and industries. After the liberelisation in 1991, Indian SMEs have been passing through a transitional stage and getting more competitive with efficiency and quality of production and operations. They have become more aligned towards modern and disruptive technologies with implementation of IT in various fields helping them to get international outlook and withstand marketing, operations and financial challenges. SMEs in the most promising industrial sectors are: • Food Processing • Chemicals and Pharmaceuticals • Textiles and Garments • Leather and leather goods • Engineering and Electricals • Auto ancillaries • Meat Products The total Market Potential for ERP in India stands at $470 million and the SMEs share out of the pie stands at 45% i.e $212 million. With a CAGR of 9% it sounds quite promising. But in most cases apprehension about quick ROI, integration with existing systems implementation time and change management are the critical drivers behind selecting a ERP vendor or going for an ERP even. Here the key operational drivers for various ERP vendors are to increase operational efficiencies through optimal integration with key stake holders like Customers, Distributors and Suppliers. Since there are quite a few ERP vendors along with big players like SAP, PeopleSoft, Oracle and Microsoft, the Indian SME segment has lots to choose from at very competitive prices. Adding to these, open source ERP vendors like Compiere, OpenPro and xTuple would intensify the competition to greater heights. Also new pricing and deployment models such as Software as a Service (SaaS) and Enterprise licensing are starting to gain acceptance. It is expected that most of the ERP vendors will begin offering on-demand in addition to on-premises option in the near future. Hence to penetrate into the SME segment in India a vendor like xTuple needs to differentiate through: • Minimal implementation time with clear ROI; • Focused consultancy approach to identify key pain points of clients; • A properly crafted package of modules to support multisite planning and control; • Supporting both On-Premise and On-Demand service; • Flexibility in terms of Customisation and Upgrades; and last but not the least • An attractive and flexible pricing structure.

… just one note. OpenPro is not open source; that is to say, while it’s built with PHP, there is no free version. It’s marketed in the US by a former xTuple partner with whom we had multiple legal problems.