Equipping small enterprises with technology

Chennai: When a medical device manufacturer in Chennai sent a wrong dispatch of contact lenses to a customer, it had to resend the consignment, which not only doubled the costs but almost led to losing a customer because of negligence. The company needed a reliable system that would track its supply chain.NextMAds

In the past decade, technology has propelled businesses forward. While big businesses have stormed ahead, small enterprises have been left behind. Surjith Singh, a 36-year-old entrepreneur, sensed a business opportunity in equipping small enterprises with information technology (IT) tools for tracking their business and developed Rural ERP—an enterprise resource planning application for small businesses.

ERP is a business management tool used to track various processes such as product development, manufacturing, sales and marketing. It helps in monitoring and quick decision-making. But owing to the cost and complexity associated with ERP, small businesses have been poor adopters.

“Small businesses, like every other business, need it. In fact, they need it all the more,” said Singh. “We wanted to break the myth around cost and complexity around ERP.”

Singh dealt with a lot of small- and medium-sized firms in his previous job and found that of the 50 million such companies in India, only 10% adopt any form of IT such as excel sheets and word processing software.

“Most of the small companies are family-owned enterprises. The last decade they missed the IT bus. But the current generation is keen to implement IT as the competition is getting aggressive among developing countries like Indonesia, Vietnam and China,” said Singh.

These businesses want to employ IT so that they can improve their processes and increase productivity.

Ninety-five percent of small and medium enterprises are companies that typically invest less than ₹ 25 lakh in equipment. Language was also a big hindrance for them, as most of their employees were school dropouts.

“The first hindrance in using an IT product at that level is the fear of English,” says Singh.

To overcome that, Singh and his team developed the entire application and user interface in Indian languages. The Rural ERP product is available in nine Indian languages—Tamil, Telugu, Hindi, Malayalam, Kannada, Gujarati, Marathi, Punjabi and Bengali. Rural here stands for Rural Urban Resources Across Languages, making it the first Indian language ERP on remote computer servers, popularly known as the cloud.

Singh, a management postgraduate from Madurai Kamaraj University, developed Rural ERP with an initial investment of ₹ 35 lakh borrowed from family and friends. The product is aimed at the manufacturing sector, which accounts for a majority of small firms.

While technology companies such as Oracle Corp., SAP AG, Microsoft Corp., Tata Consultancy Services Ltd, Tally Solutions Pvt. Ltd and Ramco Systems Ltd sell such software to big companies, they are also increasingly looking at small businesses.

But where Singh believes his Rural ERP can score over the others is the price. While the basic version costs ₹ 9,000 a year, the high-end version costs ₹ 39,000 for any number of users. The big competitors charge at least ₹ 2,000-8,000 per user a month.

Rural ERP is on the short list for the Manthan awards.

Currently, the products offered are customized to fit different business needs, but the company is moving towards offering off-the-shelf products from January, as it helps reduce its operating cost. For business, all they need is an Internet connection and a browser.

“Since small firms don’t need much customization, it makes sense to move to a Saas (Software as a service) model,” said Singh.

Rural ERP clocked a revenue of ₹ 25 lakh in the year ended March, and expects to break-even this year. It has already received orders worth ₹ 50 lakh in the first half of this year, and hopes to post ₹ 2 crore in revenue this fiscal.

The real challenge for ERP to take off among small businesses is the broadband penetration, and the availability of electricity in small towns. The company is also looking at mobile-based access. Rural ERP can be currently accessed through smartphones, but the development team is currently working on an SMS-based application, where small businesses can keep track of the work flow through text messages.

For instance, by texting the product code to your vendor, you can order the product. Singh hopes to get the SMS-based ERP ready by next year.

Rural ERP is currently available only in Tamil Nadu, where it has 25 customers and 850 users. Singh says he plans to take Rural ERP to all the southern states by next year and hopes to have a pan-India presence by 2014.

For this, the 13-member team will also be adding 30 employees, as it hopes to reach at least 1,000 companies by next year.

Singh said the company will also look for funding next year from angel investors or venture capitalists.

The Chennai-based entrepreneur also sees a big opportunity in the emergence of low-cost tablet computers. The company is evaluating a tie-up with low-cost firms such as Micromax and Karbonn Mobiles, so that even small grocery stores can use Rural ERP on the tablet as a point-of-sale device.

“We believe our product has the potential to bridge the rural-urban digital divide, and achieve digital inclusion,” says Singh.

Mint is a strategic partner of Digital Empowerment Foundation, which hosts the Manthan Awards.