STUDY OF ERP IMPLEMENTATION IN SME

INTRODUCTION & OBJECTIVE

INTRODUCTION:
ERP system has emerged as a common and important platform among small and medium
scale enterprises it is not only to remain competitive in the global business scenario but
also to streamline their own internal processes to collaborate with their foreign partners in
their supply chain. ERP is normally viewed as important infrastructure and is also a
strategic weapon in automating business processes while providing visibility to those
processes throughout the enterprise. Investment in enterprise information systems remains
the top priority for information technology (IT) organizations.
Small and Medium Scale Enterprises (SMEs) are increasingly brought into focus on
account of their huge growth potential and vary in magnitude, age, sector, and knowledge
base with innovative capacity. The SME sector in India contributes almost half of Indias
GDP and is home to slew of business opportunities. SME form the large majority of
industrial and service units across the world and also it is a source of employment. Indias
SME sector is a vibrant, dynamic, flexible and productive entity.

OBJECTIVE:
The Implementation of latest and new technologies and manufacturing philosophies in
industrial sector with good success rates is crucial in a nations economic growth and
prosperity. ERP is one such system for which a lot of resistance is offered in organizations
for implementation due to higher investments and more failures associated with it. The
objective behind this is to identified and validates the critical success factors for ensuring
successful implementation of ERP.

LITERATURE REVIEW
ERP system implementation issues have been subjected to ample research under various
theoretical perspectives dealing with aspects like: attribute, adoption and implementation
process, project design or accomplishment, predicting the probability of success.
For partly developed and developing countries like India ERP system is in its early stage.
It has been found that reasons like limit of capital, non-availability of resources, poor
management base, and dearth of IT expertise are seriously affecting the implementation
and adaptation of enterprise system in India and other similar developing countries
compared to the developed countries. SMEs either do not have sufficient resources or are
not willing to commit significant portion of resources to complex ERP implementation
process, SMEs are more fragile than large companies and the adoption of ERP is no longer
limited to large scale enterprises.
SME niche definitely require specific research and analysis other than previous
investigations primarily targeting larger enterprises. In this section some similar
developing countries like India are selected to understand the characteristics of ERP in
those countries and to investigate the issues that are affecting the implementation of ERP
system.
ERP implementations usually involve broad organizational transformation processes, with
significant implications on the organizations management model, structure, management
style and culture, and particularly, on people.
From the literature review it is evident that the success and failure factors for ERP
implementation in companies is studied extensively and other implementation issues like
the quality issues are not explored much and there is a vast scope for study in this area.
Though the market for ERP seems to be growing, there are several issues and challenges
one has to contend with when implementing an ERP system in the SME segment. Some of
these are:

 Awareness
Perception
Earlier Implementations
Approach to implementation
Cost
Change management

RESEARCH METHODOLOGY

While many new SMEs start each year, nearly 50% cease to exist in the first 3 years of
business itself. Though it is assumed that all SMEs desire growth, only 40% survive
beyond 10 years. Majority of the firms do not think of long-term business strategy but
focus only on survival. They think of change only when the business begins to fail as a
result of not keeping track of the changing market scenario. The firms who survive and
grow are the ones who have the ability to take risks and respond to the changing
circumstances. Over the next five years, the ERP market in India is expected to reach Rs.
1,550 crore ($341 million), according to International Data Corporation (IDC), a market
research and analysis firm. Of this, the SME potential in India for the enterprise class is
projected to be Rs. 728 crore ($160 million) 47% of the overall market. An ERP system
would allow SMEs to integrate their business functions. SMEs would be able to increase
their efficiency and productivity by implementing a suitable ERP system. ERP vendors
like SAP, Oracle, Microsoft, QAD etc. are all trying to increase their customer base in the
SME segment and have products specifically designed to cater to the needs of SMEs.
Though SMEs are risk averse, they are keen on adopting ERP systems for several reasons.

Pressure from larger counterparts: Due to globalization, SMEs today operate in a

wider arena. Majority of them have MNCs as their clients. These MNCs require
SMEs to implement the same ERP system as them to allow for tighter integration
in their supply chain, which permits them to design and plan the production and
delivery so as to reduce the turnaround time.

Peer pressure: Several SMEs are adopting ERP systems as their peers have done so.

To gain competitive advantage and respond quickly to the dynamic market

scenario.

E-commerce benefits: This benefit will accrue from the close integration between
large enterprises and SMEs.

Cheaper and faster Internet: Easier access to Internet reduces the costs further.

Cheaper hardware and software: With the advances in technology, the costs of both
hardware in the form of servers, cables, switches etc. and software like databases
have come down.

Data sources:
Research is based on Primary and Secondary data both. Secondary data which has been
collected through various journals and websites. primary data has been collected by
interacting with various people.
Sampling:
o Sampling procedure:
The data has been analyzed by using mathematical/Statistical tool.
o Sample size:
The sample size of my project is limited to 50 people only.
o Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.
o Limitation:
Some of the persons were not so responsive.
Possibility of error in data collection because many people may have not given
actual answers of the questions.
Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.

BIBLIOGRAPHY / REFERENCES

Class A ERP Implementation: Integrating Lean and Six Sigma by Donald

H. Sheldon

Modern ERP: Select, Implement & Use Today's Advanced Business

Systems by Marianne Bradford

Maximizing Your ERP System: A Practical Guide for Managers by Scott

Hamilton

Enterprise Resource Planning by Bret Wagner

www.wikipedia.org

www.sap.com

www.oracle.com

www.nasscom.com

www.google.com