An ERP for Bharat

Economic turnaround in the time of tech-led disruption can't occur without the participation of SMEs that contribute 40% to India's GDP

Some sections of corporate India are moving at a rapid pace, riding the wave of the fourth industrial revolution. From large global and domestic companies in India to the clever start-ups providing new ideas and solutions to those who can afford it. 

There is, however, a large section of India’s industry that is facing the risk of being left behind. “Forget the fourth industrial revolution, most small enterprises are still in the middle of the second industrial revolution,” an entrepreneur who has SME suppliers says. 

Most SMEs in India are yet to transition to adopt enterprise software for managing their businesses. As a result, they are rapidly becoming uncompetitive. Since they are unable to integrate their systems with their buyers, they become a liability as vendors for large companies. 

For years, the SMEs complained that the enterprise software being offered has two large problems. Firstly it was made for large companies and therefore difficult to adapt by small units. And secondly the pricing was unaffordable. Brought up on a diet of tax incentives, many SMEs were loathe to invest in enterprise software. 

Policy makers and technology providers have now realised the importance of creating enterprise software tailor-made for SMEs. Economic turnaround in the time of tech-led disruption can’t occur without the participation of SMEs that contribute 40 per cent to India’s GDP. 

The situation is changing for the better now with SMEs being offered relevant and affordable solutions. 

In an exemplary effort, the Ministry of MSME and German technology giant SAP launched a project to offer enterprise software for SMEs. The idea was to encourage, train and offer affordable enterprise software for SMEs. SAP and Ministry of MSME have set a goal to digitally enable 30,000 units over the next three years. Since its launch last year, trainers in five centres have been coached to offer enterprise learning courses for SMEs. The SMEs nominate their team members for being trained by the trainers for fees ranging from Rs 10,000 to Rs 25,000. Over 250 students and professionals have been trained over the past year. An enterprise resource planning (ERP) solution only for SMEs has been created and priced between Rs 0.5 million  and Rs 2.5 million depending on the number of users. 

Apart from SAP, technology players like Zoho and Salesforce are creating solutions targeted for SMEs. While one dimension is bringing SMEs up to speed on enterprise management, the other is to help them become e-commerce-ready. SMEs are now learning order management, logistics and complaints handling in partnerships with e-commerce companies. Amazon’s Global Selling Program is working with Indian SMEs to help them use technology for accessing global markets. 

A study by KPMG and Google India estimates that adoption of new technology and digital platforms can increase the share of SMEs in India’s GDP to almost 48 per cent by 2020. 

The positive news is that the second generation SMEs entrepreneurs are far more driven by technology-based change. SMEs are now experimenting with AI-based solutions while many are selling 3D printed jewellery and consumer products. Though numbers are hard to come by, the chairman of an engineering company says that younger owners of SMEs are investing in robotics and enterprise software and are not driven by a subsidy-seeking mindset. His company is selling automation solutions to a clutch of light engineering companies. 

The fundamental shift now is the creation of ERP and tech platforms for SMEs. Helping SMEs with enterprise software meant for the digitally deprived sections of industry is essential for deep and sustained revival of India’s industrial economy.