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Enterprise Resource Planning (ERP) system is a business management software, which is used to integrate and manage business functions within an organization. This article highlights the growth of ERP industry in India with significant market share coming from Small and Medium Enterprises (SMEs). It explains the ERP deployment issues in SMEs, the growth drivers of ERP and the cost benefits of implementing ERP.

 
 
 

Enterprise Resource Planning (ERP) consists of Human Resource (HR), finance, material management, sales, production planning and control. Many vendors in the market are providing such softwares. For instance, SAP-AG in Germany is the market leader with a market share of around 35%. Other vendors include Oracle, (including People soft and JD Edwards) and a few local players.

ERP is moving beyond the boundaries of the enterprise to form Extended ERP (EERP). The concept of ERP has been popular since the last decade; as a result, 70 to 80% of the large firms are already on the ERP system. Now, many of the multinational firms are restricting their business to partners who have the same ERP. For example, a firm in Small and Medium Enterprises (SMEs) sector, with an annual turnover of Rs. 120 mn and was planning to implement an ERP system, where they had to spend Rs. 12.5 mn, i.e., more than 10% of the annual turnover. The reason being one of the partners had the ERP package and was asking the other to implement the same.

Now, with the bigger firms in their net, the future growth of ERP vendors will depend on the SMEs. In any country, SMEs are the largest contributors to the economy. This year, if we see in India, the SMEs have made a huge contribution to the IT industry. The Business Process Outsourcing (BPO) industry is a classic example of the success of SMEs.

 
 
 
 

E-Business Magazine, Small and Medium Enterprises, SMEs, Enterprise Resource Planning, ERP, Organization Functions, Human Resource, Material Management, Multinational Firms, Business Process Outsourcing, BPO, Central Sales Tax , CST, Value Added Tax, VAT, Business Environment, Business Process Reengineering, BPR, Information Systems, Supply Chain Management.