IT for Manufacturing : Can SMB adapt ?

 

Last week on , 21 July 2015  I attended a conference in Nashik organized by CII. The workshop was titled ERP “A tool to drive your business”. Participants were small medium  business owners , ERP vendors and solution  partners. The workshop threw some great insights into highly engaging topics regarding IT adoption in manufacturing.

Relevance of  IT for Indian SMB

In his keynote  address, Mr Sudhir Mutalik,  Chairman- North Maharashtra Zonal Council, CII emphasized the role SMBs play in growth of  Indian economy. He shared, these industries account for staggering  1 crore 14 lakh enterprises in India.

Sudhir , himself a first generation  entrepreneur highlighted the huge gap in productivity for Indian SMBs  as compared to counterparts in developed countries.

While 95 % of industries fall into this bucket, however these industries are highly unorganized. He further emphasized that  renewed focus to "Make in India" requires Indian SMB to transform.

Opportunity as he pointed lies in the intersection  of Manufacturing  and  IT adoption. While challenges to SMB  are unique,  IT adoption can throw open new possibilities to be more efficient  , more  competitive and most importantly  grow rapidly.

ERP adoption for SMBs

ERP help scale and streamline operations for large corporations. However SMBs have lagged behind in ERP adoption. SAP , a market leader in ERP space presented their product offerings. Pressure on component manufacturers to lower cost in order to  innovate and be competitive  was highlighted.

Graphic on 1000 island dilemma (see picture) perhaps truly represents the fragmented nature of IT landscapes for many enterprises.

Mr Khanna, owner Kimplas piping systems shared his experiences in selecting, implementing  and using ERP solution from SAP.

Fujitsu  consulting presented their offerings including ability to share risk with customers.

Road ahead : What are the challenges ?

While need for IT is clear and there are solutions in market then important question  is why aren't  business  adopting these solutions ?
In my view there were two fundamental  barriers , which also surfaced from discussions:

• Flexibility of IT solution to cater to Industry and enterprise specific unique demands. While vendors claim 70 % of solutions can be used out of the box, enterprises are wary of the claim. The balance 30% which is unique to the enterprise , if not implemented correctly could result into failed implementation and be a disaster for businesses.
• Cost : Writing is on the wall. Current Cost of software Product  licenses , infrastructure , services, training and support together is simply way beyond what SMB  can afford. While SaaS , subscription based pricing and cloud deployment  were discussed , I think vendors and solution partners  need to work more on this front.

What I learnt ?

SMBs in India and perhaps elsewhere in developing economies represent vital element of  nation's  economy. There is huge opportunity  for IT to empower these industries with growth. Software vendors and Industries need to  figure out  a right answer to the challenges of solution flexibility at the right cost.

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