The general perception of ERP systems inside the business sector is that they are meant only for large-scale organisations. Reasons put forward include the high cost of ownership, the complexity of implementing such a system and of course, the question of adoption.

However, the reality is quite different, as proper ERP implementation in small and medium scale organisations can yield very positive results. Today, there are a variety of automation tools and techniques that can be used by SMEs to improve their productivity and efficiency. Many vendors have also started including features such as business intelligence, supply chain management and CRM. However, there are some challenges that need to be effectively dealt with small and medium scale enterprises.

Some of them are explained in brief below:

• Involvement of the top management and leadership: One of the first challenges SMEs face when implementing ERP solutions is the disinterest or un-involvement of the top management. This ultimately affects the efficiency of the ERP system put in place as they are the ultimate decision makers in the business. Along with the top management, each and every person involved directly with the supply chain must be made aware of the benefits of proper ERP implementation.
• Approach to ERP implementation: Normally it is recommended that businesses mould their processes and methodology in line with the ERP system. However, most SMEs have processes which are customised and have evolved over time. Thus, it becomes very difficult for them to change their methodology instantly. ERP systems can be customised, but the cost of implementation also increases. Thus, the best approach is to keep the degree of customisation to a bare minimum.
• Lack of awareness: There is a comparatively low level of awareness regarding ERP solutions amongst most small and medium scale enterprises. A lot of them consider ERP systems to be an instantaneous and automated solution to all their business problems. However, ERP systems also need some expertise and knowledge to be handled correctly. The lack of this knowledge can seriously hamper productivity levels.
• Lack of Training and Testing: Training and testing is generally conducted by the ERP consultants, who tend to provide training to the organisation’s core team only. The core team in turn is responsible for training the other staff responsible for carrying out the day to day tasks. The problems occur when the second stage of training is not completed efficiently or correctly, resulting in the staff not being able to handle the systems effectively. Thus, the overall efficiency of an ERP system decreases by a lot.

SMEs are often faced with global competition. It becomes imperative for them to look for ways to address this competition in this dynamic market environment. ERP systems stand as the only plausible solution for SMEs, which have seen some increases in demand in recent years.