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Enterprise Resource Planning or ERP is software that integrates all functionalities of an organization in a single database. It streamlines all the business processes and gives desired result at the click of a button. The biggest advantage of ERP software is the integration of all the business solutions is integration of all business solution in a single platform, which reduces paper work, unnecessary documentation, repeated entry, cycle time, etc.
SMEs do not have the financial muscle and skilled resources to invest in the traditional ERP offerings. They are traditionally into manufacturing business. The SMEs look for solutions that require minimal capital and infrastructure investments, low total cost of ownership (TCO) including the costs of upgrades in future. As the SME segment is showing a compounded annual growth rate (CAGR) of 15 to 20 per cent. ERP vendors are tailoring products specific to their requirements.
SMEs are seriously looking at ERP solutions to provide that extra edge in the competitive business environment. They can increase their profitability using the power of modern technologies and best business practices that the ERP software provide. The other benefits that accrue are that of a wired organization with easy access to latest information, ability to integrate with existing legacy systems, cost control, better profitability and customer service. For the manufacturing organizations, where implementing an ERP really scores, is by improving operational control and increasing productivity through inventory optimization and management reporting.
It is estimated that ERP solutions for SMEs are available from Rs. 3 Lakhs to Rs. 25 Lakhs. Marquee brands like SAP, Microsoft and Oracle have got bespoke solutions for the SMEs at significantly lower price points with similar functionalities. There is a category of ERP vendors who have built their solutions scratch-up specifically for the mid-size organizations. Some of these are Great Plains Software, Eastern Software Systems (ESS), Ramco Systems and SSA Global.
Organization size is an important factor because some ERP solutions in the market are simply too large and complex for a SME. If your organization size is not big then there is no need to take big integrated software. If you will take big software, only 20% - 25% of its features can be utilized.
OpenERP comparison with other major ERPs.
ERP can also be implemented in stages, allowing the SMEs to spread internal and external costs over a longer period of time. Initially the core modules like Manufacturing and Finance get implemented, then the Production and Sales modules to complete the cycle. Later they look at integrating the Human Resource (HR) modules and Reporting systems. Some tech-savvy SMEs are also looking at Open source ERP. Open Source applications are software programs that can be copied and reproduced without even paying the license fees.
There are so many Open Source ERP products available in the market for SME segment. The software should be flexible, secure, state-of-the-art platform that can easily integrate with the present business applications. Open ERP software incorporates a large amount of industry specific business functionalities which will ensure less customization or sometime no customization (except reports) to make the package suitable to your business operations. With Open ERP, small companies can manage to use and serve their purpose at a very economical way.
While selecting an ERP solution for your organization, you should select carefully and comprehensively. There are vertical wise or sector wise software available in the market. Before taking any ERP software you should keep in mind some basic things like total cost of software, hardware cost, Annual Maintenance Cost, Implementation cost, customization charges, etc. Implementation process should be carefully planned and much time is required for business modeling. It will reduce the implementation time and money too. There are some potential Open Source ERP applications where its licenses are available for free and you need to pay only for its customization and support.
You will get the whole source code if you use any Free and Open Source ERP which will give you ultimate freedom of using and integrating your application with any third party applications. It also allows easy scalability and more stable since it’s tested by users throughout the world.
Open source ERPs are also available on a "Pay per use" model where in a customer can subscribe to ERP with very low cost paid on a monthly basis as simple as they pay for their broad band service provider. Such model is popularly known as Software as a Service (SAAS) and it makes expensive software like ERP available with no upfront investment which is affordable for SMEs
Technical and Functional consultancy support was a major issue with the Open Source applications in the early years especially for enterprise applications like ERPs. But now there are many IT service providers choosing the Open Source business model due to its high scalability, low cost and total freedom factors. This has given the courage to many governments in the world to frame IT policies clearly stating for the promotion of Free and Open Source software including our state. SMEs worldwide are keenly looking into Open Source software like OpenERP as an alternative to expensive business applications and it has been achieving a tremendous growth in the market during toughest times of the industry.