Business marketing strategy for ERP solutions in the small and medium enterprises

Abstract

As Indian SMEs continue to grow they need to learn innovative ways for fighting competition and survive threats from larger rivals. Increasing global competition and pricing pressures have provoked SMEs to adopt newer techniques for sustaining their adaptability, speed of execution and maintaining operation efficiencies. The improvement in Information Technology and drastic reduction in computer prices have made it possible for smaller companies to look at IT and strategic tools like ERP to help them sustain this growth. On the other side, ERP Vendors having proven their worth in large enterprises are now looking at the new emerging market in the SME sector and particularly India as a big opportunity. As an industry segment, the ERP market has reached a high level of maturity with License revenues declining and large implementations becoming rare. As a result most ERP vendors, MNC and Indian, are wooing the small and medium enterprise segment with variety of options. The primary objective of this project is to sense the current ERP market in the Indian SME sector, understand the strategies adopted by the key players in this market, discover SMEs requirements and expectations from ERP solutions and propose a Business Marketing Strategy to be successful. A combination of secondary and primary research has been used as a methodology for this project. On one hand we interviewed Product Vendors and their Business partners to understand their marketing strategy, on the other we interviewed key personnel from various SMEs in different verticals to get the customer's perspective. Some of the key findings from this research suggest: SMEs requirement from ERP system are considerably different from larger enterprises. They don't want ERP to address all of their business processes. We figured out that each industry has its own critical success factor and an SME completely focuses on this for their growth and survival and expects the ERP system should enable them to leverage this. SMEs have some key characteristics like small IT Budgets, limited resources, potential to grow very fast, short-term focus and need for quick tangible benefits, which cannot be ignored while selling ERP to them. Product Vendors as well as Service Integrators need to be cognizant about these characteristics and have a strategy accordingly. Refer to Figure 14, which summarize show Product Vendors and Service Integrators should strategies to address each of these characteristics to successfully market ERP solutions to SMEs. As a part of this research we also came up with a proposed Business Marketing Strategy for ERP Vendors as mentioned in Section 8.2.3 which recommends ERP Vendors to focus on providing fixed price, industry specific solutions, which could be rapidly implemented with minimum customizations to meet SMEs requirements and enable them in leveraging their critical success factor. Even though the Indian SME market offers huge potential to ERP Vendors, to change SME sperception of ERP as too big and complex, which is too expensive and takes too many resources to implement- an overkill for a small/mid sized enterprise, both Product Vendors and Solution Integrators need to have a Marketing strategy which is cognizant about SMEs characteristics and provide a solution which is safe, predictable and affordable.