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Mar 6, 2018

ERP Markets in India

Introduction

An enterprise resources planning (ERP) solution allows companies to integrate their business transactions across the organization. ERP software enables both upstream (vendors) and downstream (customers) integration. This helps the organization to manage their inventory, reduce customer and vendor disputes, reduce working capital requirements, and quickly and accurately report on their financial position to the shareholders.
This article starts off with a focus on the ERP market in India covering the local historical growth in ERP investments starting from around 2012. Since GST has become a critical requirement in India, we look at what GST features must be available in an ERP solution. Next we take a quick look at the trends in the ERP market in India for 2018 and beyond.
Finally we have an overview of the Epicor ERP solution and how it can help companies in India become competitive.
Obtaining the latest data relating to the ERP market in India has been a challenge. To overcome it, I have tried to factor in the data covering the last five years starting from 2012.

The ERP market in India

According to a study by Appsruntheworld.com worldwide the ERP applications market (including cloud based ERP) is projected to reach$84.1 billion by 2021. This will include licenses, subscription, and maintenance revenues. New license revenue will account for about 50% of this. Cloud applications will show a robust growth of about 8% CAGR from 2016 to 2021, from $17.6 billion to $25.9 billion.
As per estimates by Gartner, the enterprise application spending in India (including ERP) will reach$2.39 billion in 2017. According to Infoholic Research, the cloud ERP market in India was valued at $97.8 million in 2015 and is expected to grow at a CAGR of 25.4% between 2015 and 2020. While this is still a small percentage of the overall ERP market in India, it is growing at a terrific pace, mostly driven by Government initiatives and SMEs. 
Among the SME sector, automotive, engineering, manufacturing, steel and consumer durables have shown a very high penetration of ERP solutions. These industries could represent significant potential in the coming years.
SAP, Oracle, and Microsoft continue to be the key players in the ERP market in India. However, the market is very competitive with players including Epicor, Tally, Sage, and Ramco competing for the customer pie. In addition, there is a strong appetite for low cost, open source ERP software, especially in the SME segment. In this segment, cost and customer support continue to be the key factors in the purchasing decision. In addition, availability of cloud offering could become a shortlist criteria.

Critical drivers for the ERP purchase

There are multiple drivers for organizations to turn to ERP solutions. Firstly, companies are turning to ERP solutions to improve their operating efficiency and integrate various application silos. Secondly, to catch up with competition who has achieved a quick ROI on their ERP investments. Thirdly, to increase shareholder value. Markets tend to value companies that use ERP applications higher than those that are not. Fourthly, in recent times, the lower cost of moving to cloud ERP is becoming an attractive option for many companies, especially the SME segment. 

GST support

The immediate challenge in India (and hence the critical purchase criteria for 2018 and beyond) is how an ERP application supports GST requirements. The following are the broad business functionalities relating to GST that any ERP application should handle.
1. Configuration flexibility—the application should handle the critical configurations related to GST including different taxes, rates, HSN (Harmonized System of Nomenclature: An International Product Naming Convention developed by World Customs Organization) codes etc.
2. Seamless transactions—the transactions should easily capture GST related information and calculate the tax impact accurately
3. Versatile reporting—including internal transaction reports, reconciliation reports, external statutory reports, and historical and exception reports
4. Intuitive accounting including GST Receivables/Payable/Paid accounting
5. Integration with the GST portal for GSTR uploads (https://gst.gov.in)
6. Quick and accurate input for credit calculations
7. End to end integration including inventory valuation and financial reporting
Receiving high quality proactive support from the application vendor via patches that are released to handle statutory changes will be a key differentiator.

ERP trends for 2018 and beyond

1. Core ERP solution: India is still an under penetrated market when it comes to ERP. Significant potential exists in the SME segment for core ERP applications to handle inventory management, production scheduling, and order fulfilment. However, in this market, simplicity and ease of use are the top critical success factors. 
2. SaaS: The SaaS (cloud) ERP market in India is still in its infancy. The model is still hybrid, with core applications being on-premise and satellite applications like HCM, CRM, procurement etc. in the cloud. The cloud market in India will be dominated by existing on-premises customers who want to expand to the cloud while new customers could be predominantly SMEs. According to research done by Infoholic Research, the cloud ERP market in India, which stood at $98 Million in 2015 is expected to grow at a CAGR of 25.4% from 2015 to 2020.  A complex taxation system and data security issues remain the major bottlenecks for full fledged cloud adoption in India.
3. Analytics: Getting ERP solutions to support strategic decision making remains a challenge in India. For most customers their ERP system still remains as an excellent OLTP (Online Transaction Processing) system. The focus will shift from descriptive and diagnostic analytics to predictive analytics that can anticipate potential challenges. More companies will use analytics to achieve continuous process improvements.
4. Warehouse and logistics: With the advent of GST, companies will need to look differently at their warehouse and logistics operations. The trend will be to wind down their extensive and complex inter-state operations and move to logistics service providers. This will call for investment in warehouse and transportation management solutions. The companies that can provide simple cloud solutions will have the first mover advantage.
5. Mobility: ERP on the go, mobile first and mobile only will be the mantras going forward. Using ERP systems on mobile phones and tablets will become the de facto features. Mobile will move from being used for notification and approval to end-to-end transactions and reporting.
6. Internet of Things (IoT): Companies will start focusing on integrating their ERP systems with IoT. The manufacturing sector will lead the demand and will use IoT for materials and spares planning as a first step. This opens the market for ERP products with embedded IoT features.

About Epicor ERP

Epicor Software Corporation (www.epicor.com) is a leading global ERP vendor that has been providing best of breed, industry-specific ERP solutions for over 45 years. Globally the company operates in over 150 countries and has more than 20,000 customers worldwide. In India, the company has aggressive plans. Epicor recently partnered with Redington India to focus on the manufacturing industry and capitalize on the opportunities created by the ‘Make in India’ and ‘Digital India’ programs.
As per the Top 10 ERP Systems Report 2017 by Panorama Consulting, Epicor is considered a leading ERP solution for the mid-market segment. It is ranked three for ‘ERP System Functional Score (Breadth of functionality)’ and two for the ‘Time to realize business benefits’. At 3.4% market share, it takes the fifth position in terms of market share in the report
The powerful electronic compliance engines embedded in the Epicor applications enable companies in India to quickly and seamlessly deliver the statutory reports related to GST. The application also enables direct interface with the GST portal to upload and download reports. 
Epicor Electronic Compliance Engine

The compliance engine allows content to be delivered dynamically as and when needed. This, in turn, enables the customer to be future ready today.
Epicor solutions are designed around the unique operational needs of each industry and are available in the cloud, hosted, or on premises. They help customers to better manage business complexity and focus on core growth activities. Epicor solutions support the smallest start-up to the largest multinational, as well as the differing complexities in specific industries. With multitude of deployment options, Epicor is well suited to meet the needs of the customer.
Epicor solutions deliver the choice, flexibility, and agility needed to support strategic initiatives and remove redundant processes. The Epicor ERP system offers a modular approach with robust capabilities focused on reducing costs, streamlining processes, and improving customer responsiveness across the enterprise—all top priorities toward achieving continued growth and profitability.
Epicor provides tailor made ERP solutions for manufacturing, distribution, retail, and services industries. The end to end integrated applications cover business functions including procurement, inventory management, manufacturing, order fulfilment, financials, budgeting, costing, accounting, and financial reporting. 
By implementing a global ERP solution such as Epicor ERP customers can take advantage of modern technologies like artificial intelligence (AI), data analytics, predictive analytics, robotics, Internet of Things (IoT), augmented reality (AR) and others. These technologies can help customers improve their business performance as well as support future growth.
The Epicor ERP solution comes with a single line of code which means that the cloud and on-premises versions are same so the customer doesn’t have to go through a cumbersome time consuming migration process if they decide to switch from one option to the other.

Note: This article is sponsored by Epicor. The information in the related section is provided by the company. All the remaining information is culled from publicly available information in the web, the links to which are mentioned in the 'References' section below.  I do not have any special relation with the company and am not endorsing the ERP product in anyway. This blog continues to be application agnostic.

References

3 comments:

Anoop Ravi said...

Good article VKR.😊

Naras said...

Very good one Ram.

Hannah Baker said...

ERP Software market in India steadily growing for the last few years. This growth has been across industry verticals in the manufacturing, retail, services, communication and information technology sectors.