A decade or so ago, enterprise resource planning (ERP) was a pompous expression with expensive software to match. It put managers in big companies in command of data and workflows that enabled them to do their jobs more efficiently, boost sales and cut costs.
ERP refers to a business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing. It also covers activities like inventory control, order tracking, customer service, finance and human resources.
For example, an ERP software can automatically instruct a factory to produce more of a product when it notices that stocks have gone down in a sales depot. It can help a company deal with suppliers easily, or aid a finance manager clear travel bills faster.
Now, just as large computers made way for personal and home computers, ERP software, once a privilege for the global multinational, is now available for smaller players as well — at much cheaper rates. SaaS — or Software as a Service — refers to renting of software over the Internet, much like Web-based e-mail. SaaS is also contributing to software becoming cheaper and easier to use. Industry officials say the emergence of SaaS and cheaper ERP software has dramatically lowered the barrier for users.
Top ERP solution providers are now targeting just about every company, size no bar. Consider the case of SAP, the global leader in ERP software, which once was associated largely with multinational giants.
On November 21, SAP India announced record-breaking quarterly growth for the third quarter of 2007 with the addition of more than 714 new customers till September 2007, translating to more than two new customers per work day in 2007.
"A growing SMB (small and medium business) market, opportunistic investors, and middleware technologies converge to make the SMB market for ERP applications one of the most competitive environments for market growth and product innovation within enterprise applications," says Gopakumar Sivanandan of SAP India.
A spokeswoman for rival Oracle India agrees. "Mid-sized companies are driving India's GDP growth today," she says.
Microsoft recently launched Microsoft Dynamics NAV designed specifically for medium sized companies. According to Sushant Dwivedy from Microsoft India, "Dynamics NAV delivers integrated functionality to support solutions for financial management, supply chain management, CRM and E-Business." And all this is specifically for small and medium enterprises.
Besides growth, expansion and integration, perhaps the biggest catalyst that's driving the ERP demand is the cost factor. Something that earlier required Rs 10 to 15 lakh can now be done at a fraction of the price, though it must be said that renting out software involves a recurring cost every month. However, experts say even the one-time cost of an ERP package needs recurring costs in training and support and to that extent, renting the ERP software over the Web could be a lot better.
Consider Microsoft's ERP Solution styled on the SaaS model. It is available for three users at Rs 25,000 a month, for five users at Rs 35,000 a month and 10 users at Rs 60,000 a month. No hardware, no personnel, no software cost is required in addition to this. Oracle and SAP have attractive pricing that make affordability a huge attraction. Oracle starts at as low as Rs 2,800 per user licence, though it calls for implementation and support cost.
Much cheaper versions are also available from the Open Source movement, which uses operating systems based on free, modifiable platforms like Linux. TinyERP.com, Compiere.com and WebERP.com are among the sites that offer such ERP solutions.
(The author is an independent writer and columnist who covers technology issues)