The three important resources of any manufacturing organization, irrespective of its size, are men, material, and machines. Managing these resources is very important for the development and survival of the organization. An efficient information flow is a unique tool that will help the management to coordinate and utilize these resources effectively. Automation of information management becomes mandatory due to overwhelming magnitude of information generated in organizations. A number of such information management tools have been developed over the years throughout the world. Enterprise Resource Planning (ERP) is one such tool, which is developed and supplied by more than 100 vendors. Initially, the developers focused on the large-scale industries, which resulted in a product of very high cost that cannot be afforded by small and medium enterprises (SMEs). But as outsourcing is the order of the day, large industries need to be fully integrated with outsourcing units, which are generally small and medium enterprises. Hence, only automation of information and decision-making activities of only large enterprises cannot serve the requirement of these information systems. Supply chain management, which is gaining popularity throughout the world, demands complete integration of all the players along the supply chain. These issues, along with the tangible and intangible benefits of information systems, have forced the SMEs to opt for some or the other form of information system. But due to the exorbitant cost of the present full-fledged ERP systems, the trimmed versions of these packages are appearing as an alternative solution for SMEs. However, these trimmed versions may be cost-compatible but offer incomplete/partial solutions to SMEs. Hence, there is a need for finding a better alternative to provide full-fledged information solutions without sacrificing facilities, at suitable costs. This paper proposes and discusses collaborative ERP on the idea of sharable ERP package for group of SMEs.

Industry is the lifeline for the economic growth of both the developed and developing countries. Eventhough there is no clear distinction between the various segments of industries, these are generally classified into micro, small, medium, and heavy industries. In developing countries, the micro, small, and medium enterprises are the sources of employment, poverty alleviation, and broad-based economic growth. The growth and development of Small and Medium Enterprises (SMEs) in developing countries can increase poor people's opportunities, security, and empowerment (Radha Seshagiri, 2006). SMEs, both in size and shape, are not uniform across the globe. Their definition varies from one country to another, depending on economic development and government policies. According to a World Bank study, there are more than 60 definitions of small and medium industries in 75 countries surveyed. The most commonly used definitions relate to either the size of employment and/or quantum of capital investment/fixed assets.

It can be observed from the literature that so far medium enterprises have not been defined clearly. According to Yerram Raju (2001), “What is neither small nor large is being loosely defined as medium. Further, enterprise encompasses businesses, services and industries. In the broadband of ‘small’, the discussion extends to medium as well. Another possible connotation for the SMEs is the small manufacturing enterprises”. In case of India, SMEs are consistently contributing to the GDP growth (6.4 percent), which is about one-fourth of the contribution of the total industry. The growth rate of SMEs at 6.08 percent per year is ahead of the total industry’s growth rate of 2.7 percent. Also, every year about 130,000 new businesses are introduced in the SME sector, creating about 660,000 new jobs. Table 1 indicates the differentiation of micro, small and medium sectors in India based on capital investment/fixed assets (SIDO, 2002). Table 2 highlights some facts about SMEs in India.

Management Research Journal, Small and Medium Enterprises, SMEs, Enterprise Resource Planning, ERP, Information Management, decision-Making Process, Supply Chain Management, Information Systems, Gross Domestic Products, GDP, Customer Relationship Management, Modern Management.