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Critical Challenges for ERP implementation in Small and Medium Enterprises (SMEs)

An ERP implementation is aimed at achieving operational efficiency by streamlining business processes, and driving up productivity and reducing cost.
Today SMEs play a significant role in forming the economic backbone of a nation. In many economic sector, SMEs can drive innovation and competition.With changing nature of market, stiff competition faced from global players, SMEs are faced with various key issues that may not provide a congenial atmosphere for a successful ERP implementation. Thus, understanding the road blocks/challenges become as important as the contextual knowledge of business .
Low Awareness – There is a Low level of awareness among SMEs regarding capabilities of a ERP system and also the ERP vendors whom to approach. There is lack of clarity regarding the benefits to be gained from implementing ERP vs cost of ownership.
Common Perception – Most SMEs have the common perception that ERP is best suited for large scale industries due to high cost of ownership, complexity of implementation and subsequent maintenance cost.
Limited Resources – Most SMEs do not have skilled in-house IT resources who can provide suitable inputs and proper guidance to the implementation team. This may necessitate to hire external ERP consultants leading to added overhead in terms of cost and time of implementation.
Cost/Financial Owes – SMEs may have budget constraints that may inhibit them to fully realize the benefits of ERP implementation.
Change Management – Willingness of the company’s resources to accept the change also plays a key role in effectiveness of implementing ERP. Proper training must be imparted to the end users to let them familiarize and understand the concept and how the system will function.
Scope of Project Implementation and Strategy – Scope of Implementation may become vital if there are budgetary constraints. Companies should evaluate what they need from the ERP system and accordingly decide on the implementation approach – big bang (all  ERP modules in one go) vs phased roll out (one module at a time).
Although Phased roll-out approach may  be desirable researchers believe that Big Bang approach can be the more suitable for SME’s as it needs less amount of cost and time for implementation.
Customization – Most SMEs have specific business processes developed through the years based on their experience and understanding . For the ERP system to support these specific processes it would need customization of the standard software. Lack of thorough project planning can act as a hindrance for successful ERP implementation.

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