In today’s business environment, Small and Medium Enterprises (SMEs) are looking
beyond cost cutting strategies to increase the bottom line (LeGrande, Vandermere 2006).
Enterprise Resource Planning (ERP) today is more than a necessary technology by being
the potential source of operational improvements and cost savings, which will help them
to sustain and survive in the volatile economy. A study on the performance of ERP in
Indian SMEs revealed that SMEs was using some computerized application to reduce cost
had switched to an integrated application such as ERP to reduce data redundancy. Most
of the SMEs studies had benefited through ERP implementation in reducing inventory,
improved customer service, reduced planning cycle time and improved communication in
the order of priority. However the study also revealed that the SMEs were not extracting
the benefits from ERP to the fullest extent (Kale, Banwait, Laroiya, 2010).
Focus on SMEs is now expanding to include prompt the generation of Return-onInvestment (ROI) on ERP projects in order to justify continued investment and maximum
benefits (Venkatesh 2003). Standardization of business processes and adopting best
practices are required to optimize the performance. SMEs have a profound impact on
their decision to implement an ERP system. Planning and execution of ERP should be
done very carefully after taking into consideration the status of the current and desired
status of operational efficiency in each business process of the SME. Impact of ERP
implementation is organization wide and also through the SME’s supply chain (Malhotra,
Cecilia 2010).