'Corporate Growth' compels management to adopt ERP, IDC

According to a recent study on ERP carried out by IDC

India, 'Corporate Growth' has been indicated as the most compelling driver for adoption of

ERP amongst senior management respondents.

'Improved customer service', 'Efficient distribution

system', and 'Reduced operational expenses' are other important business imperatives

driving top management to implement ERP solutions.

Around two-third of the 50 CEOs/senior managers contacted

have conceded that ERP is an important tool to achieve competitive advantage.

CEOs and other top management personnel have realized that

if the organization has to survive and grow then ERP is an effective tool that can

integrate the organization, provide faster information for decision making and cut costs

to increase efficiency.

ERP usage is the highest amongst organizations with

turnover greater than or equal to Rs 350 crores. Next come the organisations with turnover

between Rs 101 crores and Rs. 349 crores.

Organizations turnover less than or equal to Rs 100 Crores

have the lowest ERP penetration. This points to a direct relationship between the size of

the organisations with the percentage of organisations having already implemented an ERP

solution, indicating that the penetration of ERP application is greatest among large

organizations.

A significant percentage of organizations currently

implementing an ERP application as well as plans to implement one within the next one year

also lie in Large and Medium organizations.

With respect to vertical segments, sectors such as consumer

goods, auto and auto ancillary, pharmaceuticals, iron steel and metals, and electronics

have significantly higher percentage of organisations already using an ERP application

than other sectors.

Within the next two years, a significantly higher

percentage of organizations in industry sectors such as chemicals, auto, oil and gas, and

pharmaceuticals have plans to opt for an ERP solution.

'Finance and accounting', 'sales and distribution' and

'materials management/purchasing' are the most popular ERP modules currently implemented.

IDC had asked current users/ implementers and future

adopters of ERP to indicate their preference of ERP module.

Implementation by 'Function' is the most preferred approach

for ERP implementation by most of the organizations. Implementation by 'Location' or site

is second most preferred implementation approach.

Cost and budget are the primary inhibitors for ERP

implementation. Amongst the CEOs/ Senior Management with no intention of implementing

ERP,

a significant percentage does not perceive strategic importance and benefit of ERP to

their organization.

IDC believes that this group of organization needs to be

educated about ERP solutions.