Performance Evaluation of Enterprise Resource Planning System in Indian MSMEs Sherin P Regi Department of Mechanical Engineering National Institute of Technical Teachers Training and Research Chandigarh, India Dr. S. S Banwait Professor & Dean (R&D), Department of Mechanical Engineering National Institute of Technical Teachers Training and Research Chandigarh, India Abstract—The auto-components industry is a major subsector of the automobile manufacturing sector and the largest feeder industry that has put India on the global map for excellence and innovation. The present work seeks to bridge the gap between the Micro, Small and Medium Enterprises (MSMEs) and Enterprise Resource Planning (ERP) implementation via deducing the critical success factors (CSFs) and critical failure factors (CFFs) of the ERP system to relate to the practical proposed framework, over and above to reinforce the body of knowledge for the successful implementation of ERP system in the respective industries. The present work design involves an exploratory study to identify and evaluate the impact of various CSFs on performance measures of the ERP system implemented in Indian auto-component manufacturing industries. In the present work, a survey methodology with a statistical tool has been used with the help of structured data collection from twenty auto-component manufacturing MSME units. Based on the observations, it is pertinent to mention that only 10% and 30% of the surveyed organizations had been intensely focusing on Change Management and Business Process Management respectively. Therefore, only 10% of the organizations have been realizing the expected business benefits, wherein People-Processes-Technology implementations have been more focused than Technology-focused implementations. Keywords— Enterprise Resource Planning (ERP), Business Process Management, Change Management, Critical Failure Factors (CFFs), Critical Success Factors (CSFs), ERP Benefits, Micro, Small and Medium Enterprises (MSMEs) I. INTRODUCTION In the context of the Indian Economy, the Indian MSMEs are the engines of the Indian Economy, they constitute the majority of business enterprises, and are vital for employment generation and poverty alleviation. In a knowledge-based economy, Indian enterprises have challenges to provide a high-quality product at a low cost, to remain more competitive in the world. Moreover, the Indian MSMEs are desperately trying to enter the global market and establish a key position for their products [1]. Against this backdrop, Brazil, Russia, India, China, South Africa (BRICS) countries have become significant players in the world market, aiming to convince the Micro, Small and Medium Enterprises (MSMEs) to open a fresh mindset and to leave the traditional MSME framework behind. It hopes to motivate BRICS entrepreneurs to rethink and recreate the way they do business to ensure that the delivery of their products and services satisfy the needs of the 21st-century global marketplace [2]. According to the Government of India’s MSMEs Development Act, 2006[1]; MSMEs in India are classified based on Manufacturing Enterprises and Service Enterprises respectively. Furthermore, Manufacturing Enterprises and Service Enterprises are further categorized with respect to the Investment in Plant & Machinery and Investment in Equipment respectively, which has been depicted in Table I and Table II respectively. TABLE I. CLASSIFICATION OF MSMES IN INDIA – MANUFACTURING ENTERPRISES Type of Enterprise Investment in Plant & Machinery (INR) Investment in Plant & Machinery (USD) Micro Enterprise Up to INR 25 Lakh Up to $ 62,500 Small Enterprise Above INR 25 Lakh & up to INR 5 Crores Above $ 62,500 & up to $ 1.25 million Medium Enterprise Above INR 5 Crores & up to INR 10 Crores Above $ 1.25 million & up to $ 2.5 million TABLE II. CLASSIFICATION OF MSMES IN INDIA – SERVICE ENTERPRISES Type of Enterprise Investment in Equipment (INR) Investment in Equipment (USD) Micro Enterprise Up to INR 10 Lakh Up to $ 25,000 Small Enterprise Above INR 10 Lakh & up to INR 2 Crores Above $ 25,000 & up to $ 0.5 million Medium Enterprise Above INR 2 Crores & up to INR 5 Crores Above $ 0.5 million & up to $ 1.5 million The Annual Report for the FY 2018 – 19 of Ministry of MSME, Govt. of India, reveals that the MSME sector accounts for approximately 45% of the manufacturing output and 40% of the total exports of the country. Furthermore, the Ministry of MSMEs highlights that the MSMEs accounted for 29% of GDP in FY 2018 – 19 [2]. Hence, the development of the MSME sector becomes essential as it is well-thought-out to be the backbone of the Indian economy. However, despite high growth rate and good prospects, the Indian MSMEs have been endangered to certain constraints; most remarkably technological backwardness. It is said that Information Communication Technology (ICT) can play a greater role for MSMEs as they face stiffer competition from their rival neighboring countries, chiefly; China, Philippines, Indonesia, and Thailand. Hence, the need of the hour is to upgrade the existing technology. For Indian International Journal of Engineering Research & Technology (IJERT) ISSN: 2278-0181 http://www.ijert.org IJERTV9IS110237 (This work is licensed under a Creative Commons Attribution 4.0 International License.) Published by : www.ijert.org Vol. 9 Issue 11, November-2020 473