The Hindu Business Line : Promising play

THE Indian SME (small and medium enterprise) market seems to be emerging a promising hunting ground for global ERP (enterprise resource planning) software vendors. Faced with almost a saturating enterprise market in the country, ERP solution vendors are looking at aggressively targeting the SMB or small and medium business market, which holds a lot of promise.

Vendors such as SAP, Oracle, Navision and AccPac, a subsidiary of Computer Associates, which recently set up its Indian marketing outfit, are actively targeting the SMB market. According to various estimates, the Indian SMB market for ERP solutions is estimated to be between Rs 800 crore and Rs 900 crore and is said to be growing at a healthy rate.

Growing the market pie

Vendors feel that the market size estimates are conservative as the awareness level is said to be low. A significant portion of the Indian SMB market still needs to be educated on the advantages of implementing IT solutions like ERP, say vendors.

As a result, almost all of them are earmarking a major chunk of their sales and marketing expenditure towards educating the prospective customers. "Not only do we want to grow our market share, but we also believe in growing the size of the market pie by educating the customer," says Alan Sedghi, President and Managing Director of SAP India.

Conducting seminars, roadshows and product demos are some of the steps to create awareness. "We are also trying to showcase some of our customers who have already implemented ERP solutions and are being benefited by them," says Rajesh Ghosh, Managing Director of AccPac India. "The Indian SMB market is waiting to be tapped," he says.

Despite the sluggish economic scenario in the region, the vendors are bullish on the prospects. "The SME segment is the biggest growth area globally, with 8.5 million companies, and the growth is being propelled in this segment mainly because of Internet-related services," Ghosh says, adding that in India more than 20,000 companies fall in the SME bracket, with a turnover range of Rs 5 crore to Rs 100 crore. The very fact there is a large number of companies in this segment points to untapped business potential, Ghosh says, adding that only about 31 per cent of these companies are aware of the ERP solutions.

"We are looking at providing an international software solution at a cost-effective price to the SMEs in the Indian market," he adds. Vendors, busy putting in place strategies to expand market reach, also plan to bring in new products to suit the SMB segment. They are involved in localising their products and at the same time are beefing up their sales and support channels by roping in implementation partners and systems integrators.

Vendors such as Accpac are also looking at providing local consultancy. SAP expects to leverage on its dominant position to tap the SMB market. "We have a major market share in the Indian SMB segment, which is a big area for us," says Sedghi. SAP is addressing the SMB segment through partners and value-added resellers. The company has introduced "All In One", a toned-down version of SAP's solution for SMB, which is "affordable and scaleable and is specifically targeted at the low-end market.""We have another solution, Business One, which we expect to bring into the Indian market this year," he says.

AccPac, which claims to have an early-mover advantage, says it expects to leverage on its strong presence in the global market, especially in the Asia-Pacific region to make inroads in the Indian market.

According to IDC, the ERP software market in India witnessed a negative growth of 12 per cent in 2001 and stood at Rs 192 crore in value terms, compared to a year ago. While the vendors jostle for a pie in the Indian SMB market, it remains to be seen whether the SMEs will really go in for ERP solutions and improve their competitive advantage.

vishwa@thehindu.co.in

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