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

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  • Ravi Seethamraju

    (The University of Sydney Business School)

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.

Suggested Citation

  • Ravi Seethamraju, 2015. "Adoption of Software as a Service (SaaS) Enterprise Resource Planning (ERP) Systems in Small and Medium Sized Enterprises (SMEs)," Information Systems Frontiers, Springer, vol. 17(3), pages 475-492, June.
    • Handle: RePEc:spr:infosf:v:17:y:2015:i:3:d:10.1007_s10796-014-9506-5
    DOI: 10.1007/s10796-014-9506-5
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    7. Olakunle Jayeola & Shafie Sidek & Azmawani Abd Rahman & Anuar Shar Bali Mahomed & Hu Jimin, 2020. "Contextual Factors and Strategic Consequences of Cloud Enterprise Resource Planning (ERP) Adoption in Malaysian Manufacturing SMEs: A Conceptual Framework," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 176-201.
    8. Efpraxia D. Zamani & Nancy Pouloudi & George Giaglis & Jonathan Wareham, 2021. "Accommodating Practices During Episodes of Disillusionment with Mobile IT," Information Systems Frontiers, Springer, vol. 23(2), pages 453-475, April.
    9. Nityesh Bhatt & Sunita Guru & Shashank Thanki & Gunjan Sood, 2021. "Analysing the factors affecting the selection of ERP package: a fuzzy AHP approach," Information Systems and e-Business Management, Springer, vol. 19(2), pages 641-682, June.
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    12. Shuraida, Shadi & Titah, Ryad, 2023. "An examination of cloud computing adoption decisions: Rational choice or cognitive bias?," Technology in Society, Elsevier, vol. 74(C).
    13. Pei-Fang Hsu, 2022. "A Deeper Look at Cloud Adoption Trajectory and Dilemma," Information Systems Frontiers, Springer, vol. 24(1), pages 177-194, February.
    14. Ariful Islam & Sazali Abd Wahab, 2023. "Configuring a Quadruple Helix Innovation Model (QHIM) Based Blueprint for Malaysian SMEs to Survivethe Covid-19 Pandemic," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 107-132.
    15. Ariful Islam & Sazali Abd Wahab, 2023. "Configuring a Quadruple Helix Innovation Model (QHIM) Based Blueprint for Malaysian SMEs to Survivethe Covid-19 Pandemic," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 13(1), pages 102-127.
    16. Mero, Joel & Leinonen, Miira & Makkonen, Hannu & Karjaluoto, Heikki, 2022. "Agile logic for SaaS implementation: Capitalizing on marketing automation software in a start-up," Journal of Business Research, Elsevier, vol. 145(C), pages 583-594.
    17. Agnieszka Skala, 2022. "Sustainable Transport and Mobility—Oriented Innovative Startups and Business Models," Sustainability, MDPI, vol. 14(9), pages 1-20, May.
    18. Shah, Tushar R., 2022. "Can big data analytics help organisations achieve sustainable competitive advantage? A developmental enquiry," Technology in Society, Elsevier, vol. 68(C).
    19. Elaheh Yadegaridehkordi & Mehrbakhsh Nilashi & Liyana Shuib & Shahla Asadi & Othman Ibrahim, 2019. "Development of a SaaS Adoption Decision-Making Model Using a New Hybrid MCDM Approach," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 18(06), pages 1845-1874, November.
    20. Gavrila Gavrila, Sorin & de Lucas Ancillo, Antonio, 2021. "Spanish SMEs’ digitalization enablers: E-Receipt applications to the offline retail market," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    21. Nripendra P. Rana & Yogesh K. Dwivedi & Banita Lal & Michael D. Williams & Marc Clement, 2017. "Citizens’ adoption of an electronic government system: towards a unified view," Information Systems Frontiers, Springer, vol. 19(3), pages 549-568, June.
    22. Humphrey M. Sabi & Faith-Michael E. Uzoka & Kehbuma Langmia & Felix N. Njeh & Clive K. Tsuma, 2018. "A cross-country model of contextual factors impacting cloud computing adoption at universities in sub-Saharan Africa," Information Systems Frontiers, Springer, vol. 20(6), pages 1381-1404, December.
    23. Nripendra P. Rana & Yogesh K. Dwivedi & Banita Lal & Michael D. Williams & Marc Clement, 0. "Citizens’ adoption of an electronic government system: towards a unified view," Information Systems Frontiers, Springer, vol. 0, pages 1-20.

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    More about this item

    Keywords

    SaaS; ERP; SMEs; Adoption;
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