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News
Hosted ERP for the Indian SMB
Microsoft’s hosted ERP model aims to up the ante when
it comes to making ERP affordable for SMBs. It eliminates upfront capital expenditure
and the need for in-house IT resources and infrastructure. By Faiz Askari
Sushant Dwivedi of Microsoft (ext Right), Srikant Rao of ABS
(ext Left) and Ravindra Kini of ABS (middle) announce the
first successful implementation of Microsoft Hosted ERP in
India |
It is considered to be a new beginning of a concept that was
evolving in the Indian IT fraternity for quite some time now. Yes, Software-as-a-Service
(SaaS) is one such trend that was discussed on many occasions during the past
few years. With Microsoft India introducing the concept of ERP-as-a-Service
in India, things are looking up on the SaaS front.
The Microsoft Dynamics Suite of ERP applications are now available
in India on a subscription basis. While announcing the successful implementation
of the first hosted ERP solution in India, Sushant Dwivedi, business group lead
– MBS at Microsoft India said, “This is a new concept for the Indian
market. This model will increase the affordability of ERP solutions by eliminating
upfront capital expenditure and also do away with the need for in-house IT resources
and additional infrastructure. Customer will have to pay on per user, per month
basis. Microsoft believes that this new offering will allow a much larger set
of SMBs in India to adopt and benefit from ERP services.”
Dwivedi said, “Everyone understands the potential of SMBs in India. Earlier,
these Indian SMBs were not looking at having an ERP solution for their infrastructure.
The reason for this attitude of SMBs towards ERP is high cost. Now hosted ERP
will be available to such SMBs, in a cost-effective offering.”
| The first adopter of Microsoft’s Hosted ERP
Service in India is Mysore-based Raman Fibre Sciences. This mid-sized organization
is actively into designing, developing and manufacturing of special fiber-based
products. While sharing his experience of using a hosted ERP, Aroon Raman,
Managing Director, Raman Fibre Sciences said, “For our organization,
we were looking at having an ERP solution not just for our business essentials,
but we needed an ERP that would support our manufacturing and project management
arms, as well. While we cannot afford to compromise on functionality, we
were looking for lowering the upfront captive investment along with scalability
and outsourced operational management.” Adding to this, Raman also
informed about what exactly convinced him to go for a Hosted ERP, “Our
decision to subscribe to Microsoft’s Hosted Dynamics AX offering from
ABS, was made after extensive market research. Our decision has helped us
streamline our business processes including R&D and pilot production
of components, without any initial investment,” said Raman. |
Strategy
This announcement signals an emerging market for hosted ERP in India. Talking
about the marketing strategy for hosted ERP, Microsoft, however, has adopted
a channel-driven marketing strategy for the hosted ERP application that can
be accessed by companies through multiple access modes such as VPN and over
the Internet. “The partner will also provide turnkey solutions right from
initial setup and staff training, to management of the application for the company
and complaint resolution,” Dwivedi said while naming Microsoft’s first
partner in India for this service, Bangalore-based Affordable Business Solutions
(ABS) an IT solutions provider that is focused on the SMB market in India.
Presently ABS is offering 3, 5 and 10-user ERP packs for basic material and
financial accounting functionalities for the small business segment. Srikant
Rao, CEO of ABS said, “These solutions are priced in India at Rs 25,000,
Rs 35,000 and Rs 60,000 per month. This is going to be a great alternative for
an upfront payment in the traditional model of ERP of around Rs 10-15 lakhs.
However, this figure is apart from the additional cost of hiring and training
an ERP professional to manage the application.”
While the hosted ERP application has all the functionality
that is available in the traditional on-site model of deployment, customers
can opt to subscribe to the specific functionalities that they need at the moment
and expand the subscription to others when they grow. Further adding to this,
Rao of ABS added, “Feedback from initial conversations with customers has
been encouraging, and we believe that this will trigger a rapid upswing in IT
usage especially in the SMB segment in India. We are proud to be the first to
associate with Microsoft Dynamics to bring the hosted, subscription-based ERP
model to India.”
Giving another parallel strategy for this line of offerings, Dwivedi added,
“We are definitely looking at capturing the market through our customers
and through their references. Word-of-mouth will definitely produce results.”
Security issues
Security constraints are always discussed while talking about SAAS models. However,
vendors are trying their best to offer a secure solution whereas, customers
are also gradually gaining faith in such models. While talking about security
in hosted ERP, Sushant of Microsoft said, “As far as security is concerned,
there is no question of compromise from our end as well as from our partner’s
end. The solution is ISO certified. We are offering a security-rich ERP offering.”
Responding to a question about whether security is still considered as a stumbling
block for the SAAS model, he responded, “It is I believe just a matter
of time and we will definitely see a huge market shift towards this.”
ERP for Indian SMBs
This announcement comes at a time when the market for ERP in India is booming
with an increasing number of firms, especially in the SMB segment, looking to
adopt ERP solutions as the first step to a broader IT deployment. According
to IDC, the ERP market is expected to maintain a CAGR of 18 percent over the
period 2006-2010. With the SMB segment accounting for 47 percent.
Rajeev Mittal, Group Director – Small and Medium Enterprises, Microsoft
India said, “I strongly believe that by reducing upfront investment costs
and by eliminating need for in-house IT management resources, our new offering
makes ERP solutions much more affordable and easy to deploy. We are, however,
confident that the SMB segment in India will get benefited from the accessibility
to ERP solutions that this model offers. It will, in turn, accelerate the already
healthy pace of IT adoption in the SMB community.”
Microsoft aims to provide hosted ERP services more broadly with the help of
its partners and is already in the process of enabling many more partners across
India. The software giant believes that this new world of software plus services
delivered via the Internet is a fundamental shift that will take place in the
future. This is, however, also a giant step towards helping users and partners
take advantage of the wide array of technology available today and realize the
full capabilities of the networked environment by delivering innovations such
as the hosted ERP model.
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