The adoption of information technology as decision support system in SMEs

Abstract

The purpose of the study is to develop the information systems (IS) for SMEs as well as to investigate the factors that influence the decision of SMEs to adopt information technology (IT). Using a development research approach, it focuses on developing the Web-based Decision Support System (DSS) IT on SMEs, with the Waterfall model’s implementation. Structured interview (by phone) was conducted with 120 SMEs, and the results were tested using Confirmatory Factor Analysis. It shows that the implementation of the Web-based DSS for SMEs provides benefits for them as a database for management decision-making tools. In addition, it is also beneficial to the Indonesian policy makers in regards to the empowerment of SMEs. The findings of the study confirm the Technological, Organizational and Environmental (TOE) framework, that the decision to adopt IT by SMEs in Indonesia are influenced by technological factors including consideration of benefits, compatibility, and costs; organizational factors include the readiness of companies to adopt technologies including technological infrastructure readiness, relevant systems, and technical skills; environmental factors include customer/supplier pressures and competitor pressures. The findings also show that different sector of SMEs (manufacturing and service sectors) has different considerations in deciding the implementation of IT.