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