ERP cloud solutions are facing an uphill battle with India SMBs: AMI

by CXOtoday Staff    May 04, 2011

ERP solutionsSMBs in India are planning to spend more than $2 million on ICT in 2011 and there is an anticipated growth of nearly five times this spending by 2014, according to a research by New York-based Access Markets International (AMI) Partners.

Only 8 percent of medium businesses currently use cloud-based ERP (Enterprise Resource Planning) solutions, while small business use of this type of application (SBs, companies with 99 employees or less) is nearly nonexistent. There are several reasons for this relatively sluggish adoption. “India SMBs are uncomfortable with data being housed on servers of remote third-party locations,” says Ashima Sharma, research associate, AMI Bangalore. “Additional concerns are platform lock-in, worries about reliability/performance, data governance, integration and management.” Due to these concerns, widespread desire to implement these types of technology is lacking.

Of the few SMBs using an ERP solution, manufacturing SMBs are the forerunners. Cloud vendors need to have an aggressive sales strategy to convince these SMBs to adopt these solutions. Additionally, even though vendors are pushing the on-demand option, it has been noted that India channel partners seem traditionally less receptive to change and are therefore sluggish in promoting the cloud option. If ERP solutions are to gain a strong foothold, not only must India SMBs be willing to embrace the technology but also channel partners.

There is reason to believe that this change in attitude is forthcoming. According to a recent AMI survey there is considerable anticipated growth. “With credit tightening and revenues falling, India SMBs are looking to reduce their infrastructure costs, while investing in areas that directly impact revenue, efficiency, and productivity,” says Sharma. “A cloud ERP solution is attractive to these SMBs because it is easier to implement, deploy and maintain, reducing time and cost expenditures.” In the next twelve months, 13 percent of India SMBs stated that they plan to adopt some type of on-demand ERP solution.

Cloud computing has taken ERP solutions to a new level and has the potential to change the way India SMBs operate. Since IT infrastructure among most India SMBs is minimal, they are prime candidates to move this entire phase of their business to a cloud solution. Widespread acceptance of an ERP cloud solution will happen in stages for India SMBs after the resolution of the issues associated with the deployment. The new innovating trend in cloud ERP will insure maturity and dependability in the technology and this will bring better governance, reliability, seamless functionality and security.