Adoption of Software as a Service (SaaS) Enterprise Resource Planning (ERP) Systems in Small and Medium Sized Enterprises (SMEs)

Abstract

Enterprise Resource Planning (ERP) systems are now offered on the cloud under the Software as a Service (SaaS) model. For small and medium sized enterprises (SMEs), this is considered the best opportunity to take advantage of the capabilities of an ERP system without the investment and management costs associated with the on-premise model. Using a cross-sectional field study conducted across four case study organizations, this study investigated the determinants and challenges in the adoption of SaaS ERP systems by SMEs. The study found that the determining factors in deciding to adopt SaaS ERP are software vendor's reputation in the market, software fit to the business, the potential willingness of the vendor to support the customer throughout the product life cycle, the vendor's participation in co-creation of value for customers and the generic benefits of implementing an integrated ERP system. With switching considered a costly option, accounting shift of capital costs to operating expenses is considered advantageous by firms. Competitive pressures faced by the enterprise, external factors, concerns about data security and system performance have no influence on adoption decision, according to this study. Change management and increasing the effectiveness of use are challenges, but the willingness of the software vendor to work with organizations' requests for changes and improvements and the continuous co-creation of value through improved product offerings is reassuring to the firms in the post-implementation phase.