Factors that Influence Selection of Cloud ERP for Indian SMEs: An Empirical Study

Abstract

The Small and Medium Enterprises play a very important role in the growth and development of the economies of all the developing and developed nations of the world. The role of SMEs is becoming prominent for sustainable development and inclusive growth initiatives in most of the countries. SMEs are known as the lifeblood of any vibrant economy. These are considered as the silent drivers of a nation’s economy. SMEs of India are one of the most aggressive adopters of ERP packages. Most of the Indian SMEs have adopted the traditional ERP Systems and have incurred a heavy cost while implementing these systems. High investment in terms of cost, manpower and time were the major hurdles in the use of traditional ERP package. Cloud computing is one of the most important changes made by Indian SMEs in the use of Information Technology. It is a set of services that provide infrastructure resources using internet media and data storage on a third party server. The ERP solutions of “On-Premise” and the “Hosted” are not feasible for SMEs enterprises as they run their business within a very limited scale. As such they prefer cloud based ERP systems for an efficient and cost-effective business management. A SME evaluates an ERP solution from Economical, Technological and People perspectives. The deployment of an ERP system on Cloud is the best fit for Indian SMEs due to its lower infrastructure cost and flexible payment. This paper makes a modest attempt to analyze the various benefits provided by cloud based ERP to SMEs. We have also discussed all the issues related to Traditional and Cloud Enterprise Resource Planning. For this study, 120 SMEs across India were contacted. In the Cloud Computing environment, the SMEs will not have to own the infrastructure and this will save them capital expenditure, which is a significant amount of money. They can utilize the resources as a service and pay as per their requirements and usage. We consider the results of the paper to be supportive to our proposed research objectives.