Study on Opportunities, Challenges and Cost-effective Information Technology practices for Small & Medium-sized Enterprises

A RESEARCH SYNOPSIS SUBMITTED TO

JAIN UNIVERSITY

FOR THE DEGREE OF

DOCTOR OF PHILOSOPHY
IN MANAGEMENT

RM Sudhakar Director & CEO, Netsoft Solutions India Pvt. Ltd.

Under the Guidance of Dr. Y Vijayakumar PRINCIPAL Shirdi Sai Engineering College, Bangalore

RM Sudhakar Contents

Synopsis

Introduction ................................................................................................................................................. 3 Need for the Study ...................................................................................................................................... 4 The Questions to be probed ....................................................................................................................... 5 The review of the studies undertaken ....................................................................................................... 5 The gaps identified ...................................................................................................................................... 6 Theoretical and Conceptual framework ................................................................................................... 7 The Present Work: The Research Enquiry / Statement of the Problem................................................ 8 The Present Work: Research Design ........................................................................................................ 8 The Present Work: Research Objectives .................................................................................................. 8 Methodology ................................................................................................................................................ 9 Chapterisation ........................................................................................................................................... 10

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TITLE OF THE STUDY: STUDY ON OPPORTUNITIES, CHALLENGES

AND COST-EFFECTIVE INFORMATION TECHNOLOGY PRACTICES FOR SMALL & MEDIUM-SIZED ENTERPRISES

Introduction
Information Technology (IT) is even now termed as a costly affair especially in Small and Medium-sized Enterprises (SMEs), this is primarily because no clear definition of the expectation from the implementing companies. If IT is affordable for some companies, then the question is how to make best use of IT, and adoption strategy is a real challenge, and moreover, the success ratio or maximum utilization in most of the IT implementations is less than 50%. In todays competitive world IT is no more an option, it is a necessity and the winners are those who make good use of these IT technologies in the current competitive and un-certain business.

Relevance of IT for SMEs in India a quick glance SMEs is an integral part of Indias growth story. According to NASSCOMs strategic review 2009 report, there are 35 million SMEs in India. Karnataka alone is home to nearly 600,000 small scale units. The measures and numbers may be different, but the potential for IT adoption among SMEs is something that cannot be ignored. There are multiple driving factors for faster IT adoption such as higher competitiveness expected from the market, Governments upfront capital subsidies and specialized offerings suited for SMEs. About 8 million units in India have the potential to implement ERP systems. ERP enables SMEs to streamline their operations across business functions, compete in a larger network of supply chain or act as a partner to international conglomerates in their supply chain network. Apart from ERP there are various IT requirements for SMEs which is a requirement or implementing such can bring a potential benefit to their business.

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Need for the Study

SMEs face various challenges and few among those on top are: Uncertainty: Uncertainty about the business they are into and services they provide, as any business can be taken over or launched by the big players or conglomerates. For eg. As Retail is now being majorly covered by big players. Growing Fast: The current trend that we are into being all about the speed of business. SMEs grow in a much higher pace (in terms of growth, not to be compared with the turnover) than any bigger organizations. As we know any bigger organization YOY (Year on Year) growth shall not exceed 50% (except in some special cases like Apple). However the SMEs growth is unpredictable as some SMEs growth shall be 2 times to 10 times or even higher. This is one of the major challenges as the SMEs may derail in this fast growth process and may not be able to face the unseen challenges that comes with the higher business. Risk: The SMEs business is more about risk, as the support system for any main parameter like Finance, Resources, Infrastructure need to be organized by the Entrepreneur through his contact or capability. With this few indicator it is clear that there needs to be some strong support system that can support SMEs to overcome this challenge and IT can be one of the major breakthrough in this. The specific need for the study are as below: Challenges and problems faced by SMEs in India How these problems and challenges are addressed across the globe? Advantages and benefits of IT. How the SMEs can benefit from implementing IT and how it can help them to overcome the challenges and what new avenue the IT shall open up for them. Opportunity for SMEs What are the opportunities provided by the IT Vendor or what are the support systems that are there for the SMEs in adapting IT. How Government organizations and various other organizations are coming forward to support the SMEs.

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Motivation after need recognition It is understood by the majority of the SME business houses that with the right IT solution they can perform better in their business. But still there are a few hindrances or reasons which is holding them in going forward for the IT Solution.

The Questions to be probed

The various questions that need to be probed in this study are as below: Is the current business model of Indian SMEs suitable to deliver efficient and effective solutions to their customers and meet the challenges posed by their overseas counterparts? Is the myth that most of the SMEs in India is not inclined towards implementing IT solutions fearing high investments and low returns true? Are there any cost effective IT solutions suitable for Indian SMEs? Is the Indian SME willing to adapt to IT solutions if it meets their requirements?

The review of the studies undertaken

Various Literatures were reviewed in the past and found the following selected literatures more relevant to my study and few of them are as below. Parker, Richard Andrew, (2008), Explaining successful information management in small business. The research study is based in the UK and in general focused on small businesses along with more systematic and scientific way of Research and concludes stating conduct one case study in significant depth using a reproductive research strategy to develop critical realist ideas further. Ghobakhloo, Morteza et al., (2011), Information Technology Adoption in Small and Mediumsized Enterprises; An Appraisal of Two Decades Literature. The authors state that IT has critically become an indispensable tool for daily operations of organizations. Most comprehensive study of IT adoption within SMEs investigating SME-related influencing factors

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simultaneously with other aspects (drivers, enablers and inhibitors) of IT adoption seems to be necessary. Murthy, Nagaraja, (2012), Problems Being Faced by SMEs in India (An Attempt to Study MSME Segment Minutely), The author says that SMEs in India face a number of problems absence of adequate and timely banking finance, non-availability of suitable technology, ineffective marketing due to limited resources and non-availability of skilled manpower. Ghobakhloo, Morteza et al., (2012), Strategies for Successful Information Technology Adoption in Small and Medium-sized Enterprises. The authors say due to the numerous advantages of IT, SMEs is trying to adopt IT applications to support their businesses. IT adoption by SMEs differs from larger organizations because of their specific characteristics, such as resource constraints. Federici, Tommaso, (2007), ERPs IN SMEs: EX-POST EVALUATION OF SUCCESS FACTORS, the introduction of ERPs into SMEs cannot be based on a sheer reproduction of the experiences with larger companies and represents a new challenge with significant peculiarities to be considered. ERP introduction is evaluated as a success and that the benefits obtained are mostly related to the simplification of internal procedures, a much easier information retrieval, an improved performance management and some increase in production efficiency.

The gaps identified

Based on the literature review and study on the subject, below are the gaps identified: Mapping SMEs and IT solutions organizations in India. Comprehensive study of IT for SME as a whole not done, as most of them are with reference to any specific challenge or opportunity. SMEs is big in number, challenge to cover them in a sophisticated way for certain study. Empowering SME business through the aid of IT. Support system for success factor in IT implementation is hardly worked on. A model system for the SMEs to adapt IT in a successful manner.
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How SMEs can take the benefit of the external Eco system towards IT & grow in their business?

Theoretical and Conceptual framework

The study shall be initiated based on the various stages. The SMEs shall be profiled based on the demographics that they are into and also based on the SMEs expectation and perception on IT. Further it shall be focused on descriptive & exploratory methodology. Various relationships need to be studied in details like IT & SMEs, SMEs & Competition, Pressure & Innovation and so on.

Relationship
IT &SMEs, SMEs & Competition, Pressure & Innovation

Descriptive & Exploratory

Demographics Profile Expectation & Perception

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The Present Work: The Research Enquiry / Statement of the Problem

IT is no more an option for Business including SMEs!
The aim of this research is to identify the key challenges of SMEs to gain excellence in their

domain and how adoption of IT can help them to achieve the same. Also this study aims at simplifying the IT implementation practices in most affordable & a cost-effective way.

The Present Work: Research Design

In conducting a literature review, it was found that most of the Indian SMEs is facing a lot of challenges in implementing IT. To get a clear picture about the same a descriptive research has to be conducted to identify variables which may answer research questions. Variables like IT solutions, affordability, business model, and .. Will be identified and studied. The other details of Research design are as below: Type of design: Qualitative, Descriptive and Explanatory Population: SMEs in India Sample size: 300 Sample design: based on region, size, sector, type, entrepreneurial style. Data collection: Primary data through questionnaire and personal interview. Secondary data through MSME Organization, NASSCOM, Research Organizations.

The Present Work: Research Objectives

1. To study the existing structure of the SMEs 2. To study and understand the underlying factors that influence the organization perform efficiently and effectively. 3. To understand the problems and challenges faced by SMEs that could possibly be addressed by proper implementation of IT, which in turn can enhance the overall productivity of the organization. 4. To understand the various categories of SMEs that have adapted IT solutions. 5. To study various IT solutions available that caters to SMEs including the modules available.

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Methodology
This study shall be in general and not focused on any single organization or type. Judgmental sampling shall be used where the sample is selected based on the input provided by industry experts. Sources of Data Collection are classified into two: Primary data through questionnaire and personal interview and Secondary data through company manuals, journals and specific websites. Mode or method of Data Collection shall be based on the questionnaire and personal interview.

Analysis of the Results / Statistical Analysis: Use of MS Excel.

Limitations of the Study: Geographical Limitations The time frame is less Responses may be biased in some industries by some respondents Peer influence may lead to inaccurate data

The scope of the study: Study is inclusive of all the SMEs in India irrespective of the industry they are in.

Utility of the Study: The outcome of this research shall be an open web tool or best possible guidelines that can be easily downloadable or available as a handbook for any SMEs to get all that is required for the successful IT implementation in their organization, which shall help them towards the business progress by identifying the opportunities to make the better use of IT, how to overcome the common challenges in implementing the IT and the best possible cost-effective way of implementing IT all these with the clear case-study .

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Chapterisation

Cover and Initial Pages Executive Summary Chapter 1: Introduction Chapter 2: Review of Literature Chapter 3: Conceptual Framework & Research Methodology Chapter 4: Data Analysis and Interpretation Chapter 5: Summary of Findings Chapter 6: Conclusion and Recommendations Bibliography Annexure

Thank You,

RM Sudhakar
Director & CEO, Netsoft Solutions India Pvt. Ltd. www.rmsudhakar.com http://www.linkedin.com/in/rmsudhakar

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