In the present world, computers are playing a vital role in every one’s lives and information technology (IT) is an important component of every successful business or organization (Murthy, 2008). Every business in this world are more likely to use information communication technology (ICT) for their daily processing (Weng & Hung, 2014).
In today’s global business environment, there is a strong competitiveness among the organizations around the world (Bansal, 2013). Organizations are not only trying to achieve competitive advantage but also trying to maintain it (Bano, 2014). Simultaneously, the environment of business is becoming more complex with functional and inter-functional dataflow for decision making, timely production, inventory management, accounting, human resources and distribution (Hossain, Patrick & Rashid, 2002).
In order to survive the competition, organizations should be closer to the customers to deliver products and services on short possible time (Bansal, 2013). Managing the future means managing the information properly is the key to outreach the competition (Murthy, 2008). In this context, management of organizations needs efficient information systems to improve competitiveness by cost reduction and better logistics (Hossain, et. Al, 2002).
Information system infrastructure aligned with core business is the key for the competitiveness (Bano, 2014). Enterprise resource planning (ERP) is the most comprehensive of all enterprise wide systems (Beijsterveld, 2015). Enterprise Resource Planning (ERP) systems are considered a vital business innovation which is expected to benefit organizations of all sizes on implementation (Seethamraju, 2014). Organizations of any sizes have implemented or are in the process of implementing ERP on their systems (Upadhyay, Basu, Adhikary & Dan, 2010). However, ERP doesn’t live up to its acronym. Forget about planning and resources, enterprise is the only aim of ERP which is to integrate all departments across an enterprise (Parthasarathy & Anbazhagan, 2007).
According to (Murthy, 2008), (Parthasarathy & Anbazhagan, 2007) and (McGaughey & Gunasekaran, 2007), material resource planning (MRP) and (MRP II) are the predecessors of ERP. MRP is a software-based production planning and inventory control system used to manage manufacturing processes (Parthasarathy & Anbazhagan, 2007). It is a computer-based schedule system which considers all that goes into finishing an order (Murthy, 2008). When databases started replacing paper files with better communications, the need for greater efficient and effective non-manufacturing operations has put ERP in place (McGaughey & Gunasekaran, 2007). The non-manufacturing industries also got benefits of ERP system (Parthasarathy & Anbazhagan, 2007).
Information systems in industries are mostly done through ERP (Soltanzadeh & Khoshsirat, 2012). ERP is a software solution which is used to assimilate data and business functions into a single system that can be shared with in the various departments of an enterprise (Parthasarathy & Anbazhagan, 2007; Murthy, 2008). This software standardizes the business data and processes and converts the transactional data in to useful data which can be analyzed (Parthasarathy & Anbazhagan, 2007). ERP is one of the novel solutions for both large and small and medium sized enterprises in order to enhance the overall performance and productivity (Upadhyay et Al, 2010).
Implementing an ERP system in an enterprise has both direct and indirect benefits. Business integration, improved efficiency, flexibility, faster customer response and so on are some of the direct benefits. Customer satisfaction, improved corporate rank and so on are some of the indirect benefits (Parthasarathy & Anbazhagan, 2007).
lack of financial resources, lack of expertise, Lack of sufficient skilled professionals and management are some of the challenges faced by an enterprise on implementation of ERP. (Chang, Hung, Yen & Lee, 2010).
It is recognized by enterprises of all sizes globally that providing right information at the right time gives huge rewards to the business (Hossain, et al, 2002; Venkatraman & Fahd 2016). However, SMEs face various issues of integration with ERP solutions (Venkatraman & Fahd, 2016). Initially the ERP systems were used to run on LEs, but the SMEs are focusing on growth and customer services in recent days (Upadhyay, et. Al, 2010). However, the growing technology, time and human resource may not be considered as major constraints for LEs but, these are the main issues for SMEs on ERP implementation (Chang, Hung, Yen & Lee, 2010). SMEs have same issues as LEs but, either they do not have enough resources, or they are not willing to implement (Upadhyay, et. Al, 2010). SMEs are major contributors to the economy in many countries (Bansal, 2013). In India, SMEs contribute almost half of the country’s GDP. In the global scenario, Indian SMEs are eyeing the ERP solution for their system to gain competitive advantage globally (Upadhyay, et. Al, 2010).