MUMBAI, INDIA: Once a buzzword, Enterprise Resource Planning (ERP) has changed the way businesses operate in India today, helping them in their resource planning and enforcing better control over operations.

According to a Gartner study, the Indian ERP market is the third largest in the Asia Pacific region and is expected to grow at an annual rate of about 15 percent through 2012. As Indian companies mesh with their international peers, they need to ensure that their systems are scaled to match those of MNC companies.

This is especially true of verticals like automotive, metal manufacturing, pharmaceuticals, telecommunications, financial services and utilities, who believe that having an efficient ERP system in place can improve their competitive advantage and help them gain long-term benefits by making them more agile.

Amongst Indian enterprises, large and small, ERP has as good as become a standard, where they are now trying to work out building better business intelligence into it, which presents great opportunities for solution providers who can customize these applications.

The small and medium business (SMB) customers are still trying to see if their packaged financial accounting packages will suffice. So ERP is evolving across the different customer verticals, differently.

"Companies having their financial or HR applications on ERP are now looking at an integrated environment where all the functions ride on it," said Sushant Dwivedi, director, Microsoft India Business Solutions.

"This cuts across all organizations from process manufacturing to textiles and supplies to telecom companies—they are looking at having a solid integrated ERP package in place to scale their business."

Shoaib Ahmed part of the Central Leadership Team at Tally Software however feels that while ERP has been around for a long time one can't say that it has reached its complete maturity unless a significant percentage of companies have adopted it.

"If few large companies adopted it, there still is a lot left to be done. For that to happen, innovation needs to take place," he added.

Zooming in on SMB

So what stops a small to medium manufacturing company, that has a requirement that its accounting, inventory, payroll, job costing, etc to be merged in a single interface from using ERP? One reason could be that so far ERP vendors were focusing on the crème de la crème of the business community.

ERP did not find favour with the smaller companies not merely because the ERP project would be expensive but also because it was too complex. The complexity often becomes more of a challenge for these companies because they do not have an IT team to plan, deploy and manage the ERP system and attune it to its existing and future processes.

The complexity often becomes more of a challenge for these companies because they do not have an IT team to plan, deploy and manage the ERP system and attune it to its existing and future processes.

What most SMB customers need is an ERP platform that can be implemented quicker and is adaptable over the years. For doing this there is a need to innovate in a way that it allows the user to keep enhancing the utilization of software as well as the hardware systems on which it runs.

Times, as they say, are now changing. With enterprises now withholding their IT budgets, most ERP vendors are turning their gaze towards the SMB segment.

According to Tom Kindermans, Senior VP—SME, Asia Pacific Japan, SAP, SMBs are increasingly depending on an effective business solution to streamline operations, ensure speed, flexibility, and responsiveness, improve operational efficiency, and bring in innovation.

"Automation enables them to redirect resources away from administrative tasks to focus on activities that can differentiate their products or services in the marketplace," he added.