Previous Articles >> Manufacturing IT Success

Read more articles on: ERP Applications ERP in Indian Enterprise

ERP, a basic block of the enterprise system, may not be the buzzword but continues to be the hot topic, nevertheless. In fact, there have been three key factors driving the investment in ERP. First the firms revisiting their ERP in order to move to a common architecture; and second, the emergence of ERP from a workflow perspective in sectors such as education and government. Last but not the least, there are also the first time ERP implementations in some of the green verticals.

With the large enterprise market for ERP more or less mature, the incremental growth is now expected to come from the SMBs and niche verticals such as jewellery, logistics, shipping, and textile. However, the more pertinent question now is: how to get more out of the ERP and what key insights the applications can provide to meet the new age challenges of globalization? And while this is driving the enterprises to open up to a plethora of applications beyond the ERP (including the usual suspects like SCM, BI, ebiz apps), integration happens to be the buzzword taking up the CIO's mindshare.

Next Level Applications
According to Rajesh Uppal, chief general manager at the Information Technology division of Maruti Udyog, the next generation enterprise applications will focus on collaborative decision-making, strong information analysis tools and the ability to deliver information on varied devices while encompassing more domains of business. As a result, enterprise security, decision-making and strong analytics will be some of the drivers for the future.

Overall, there are few common trends, which are quite visible in the domestic as well as international market. These include supply chain planning (SCP), CRM, dealer relationship management (DRM), product lifecycle management (PLM), enterprise assets management (EAM), sales force automation (SFA), knowledge management, data warehousing, business intelligence, and eProcurement among others. In India, with overall improvement of infrastructure, enterprises are not far behind integrating with the outside community including their business partners.

Among the enterprise applications, the emphasis this year has been more on security, identity management system, primarily driven by regulatory pressures and business practice certifications. The coming years would see more spends/installations on SFA (including hosting solutions), and HR. In India, the emphasis is also on BI applications as firms that have already established ERP are looking to make sense of the data. While large enterprises have started adopting BI and SCM, there is very low traction in the SMB sector, which is either initiating or is mid-way through the ERP journey.

According to Dr TR Madan Mohan, director, ICT Practice, Frost & Sullivan, the factors driving the next level of applications are primarily emanating from business environments. Therefore, supply chain, BI and corporate scorecard applications are the traditional next blocks that enterprises pursue post-ERP, and one can see the same trend in most deployments. Following this, the next level of application deployment would be based on interoperability and platform independence. “Many of the previous installations were based on the efficiency of point solutions without looking at total cost of compatibility. Today that is becoming a requirement,” says Mohan.

e-biz: New Horizons
The e-biz applications stand out among the next generation of enterprise applications in terms of the excitement and anticipation factors. Though still at a nascent stage, the e-biz status looks positive. “Firms are pushing intra-industry and dealer network applications more vigorously. The e-biz applications are being targeted in terms of integrating with tier 1 and tier 2 partners. In the case of suppliers, customers, third-party manufacturers, authorized service providers, and freight forwarders, the enterprises are moving information sharing to the online domain with the aim of enabling faster decision-making.

However, the growth of e-biz application will depend on the capability of integrating the e-biz applications with the traditional enterprise applications and infrastructure like the ERP, SCM or the CRM applications. According to Pillai, this is great challenge for the CIOs to handle and also the success of this challenge will depend on the network bandwidth, computing power and storage capacity. Interpretability of the e-biz application is the other challenge, which is being addressed by the developers. This will determine the pace of e-biz adoption in Indian enterprise.

Rajesh Uppal, CGM-IT, Maruti Udyog		Dr TR Madan Mohan, director-ICT Practice, Frost & Sullivan India

In terms of the key drivers for the adoption of e-biz applications, Mohan points out that all e-biz applications that are going to provide communication, brokerage and integration benefits will be pursued. Communication amongst suppliers and dealers reduces the time-windows for decision-making, and increases the speed. Brokerage is the cost of connecting multiple players. Integration benefits come from seamless flow of material, and financial information. Hence more emphasis is being laid on mobile-device applications, portals, and dashboards.

ERP: Still Going Strong
Among the applications, ERP-including legacy MRP and rudimentary planning systems-continue to be the mainstay. ERP is yet to fizzle out with three lines of trends continuing to drive this market.

There is still a large potential yet to be tapped from the ERP market perspective in the SMB segment. Overall, with growth becoming steady in large enterprises for ERP rollouts in the next 1-2 years, the industry focus is shifting towards the SMB, which will drive the incremental growth for the ERP vendors in the coming years. However, large enterprises that are in the process of stabilizing their ERP systems have shifted their focus beyond ERP. They are concentrating on reaping the results of ERP implementation by focusing on techniques like data warehousing and business intelligence. Apart from this, they are extending ERP to reach tier 1 and tier 2 partners.

According to Daya Prakash, manager-IT Systems, LG India, in the past, the focus was more on tight integration of organizational best business practices to the tier 1 and tier 2 business partner integration, whereas if one looks at the current trends, the clear focus of each organization today is on “ERRC” which is eliminate (loss, overheads elimination), reduce (losses), raise (sales, profitability) and create (value in terms of market or customer). “By just implementing ERP and not concentrating on efforts on data warehousing and business intelligence, the organizations will not be able to reap this value,” he says. 

SOA: The Tech Mantra
One can expect more enterprises adopting packaged enterprise applications in select areas. G Radhakrishna Pillai, head-IT at SRL Ranbaxy points out that in some niche enterprises, customized solutions can fetch that extra mileage compared to the standard packages. However, he adds that “this trend will be overridden by market perception and a CIO will have the advantage of getting a readymade packaged solution because of the features available and industry specific standard practice tailored in the packaged solutions.” 

From the vendor perspective, enterprise applications have also started specializing their expertise and focusing on the business verticals. At present, almost 50% of market adoption is covered by BFSI, retail and manufacturing. The major adoptors of enterprise applications in the current phase are verticals such as logistics, healthcare, retail segments, and oil and gas. In India, the current trend in malls and big retail outlets will boost the retail segment IT spending not only in the traditional ERP systems but also the CRM, and knowledge management applications.

From a horizontal perspective, Uppal points out that finance, non-specialised purchases and a few other transactional areas have matured in terms of adoption of enterprise applications, with areas like retail sales and ordering related systems beginning to move in this direction.

Another trend is the growing emphasis on the integration and standardization issues as the number of applications adopted within an enterprise grows.  This is clearly moving towards the service oriented architecture (SOA). According to Prakash, it would add to the ease with which the integration would happen in the future. SOA, wherein enterprises may pursue componentized architecture (some owned/managed for business reasons and others in public space) for anytime use is the touted route to go. Overall the drivers for future enterprises would be applications with open and flexible architectures.

Shipra Arora
shipraa@cybermedia.co.in