Department of Information Science

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Browsing Department of Information Science by browse.metadata.advisor "Boake, Andrew"

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    Adoption of SaaS-based ERP by SMEs in an emerging market economy : giving up control over mission critical business software
    (Stellenbosch : Stellenbosch University, 2018-12) De Wet, Philippus Bernardus; Watson, Bruce; Boake, Andrew; Stellenbosch University. Faculty of Arts and Social Sciences. Dept. of Information Science. Socio-Informatics.
    ENGLISH SUMMARY : Small and Medium Enterprises (SMEs) are playing a key contribution to a healthy economic environment. Traditional Enterprise Resource Planning (ERP) systems are generally too expensive for SMEs. Fortunately for technological enhancements, cloud computing makes it possible for companies to rent ERP on a subscription or a pay-per-use model. Due to cash flow, capital and human resource constraints, the public cloud is an ideal solution for SMEs. The business application as well as the server infrastructure is owned and maintained by cloud service providers. Previous studies have found that by losing direct control over systems is one of the main disadvantages of Software-as-a-Service (SaaS-based) ERP. By adopting SaaS-based ERP, organisations fear that they will lose control over the security and privacy of their data making their systems vulnerable to data breaches. In addition, loss of control over system performance and uptime might also cause rejection of SaaS. The purpose of this qualitative research study is to explore the adoption of SaaS-based ERP by SMEs in an emerging economy like South Africa, when not only control, but also trust is placed in the hands of third-party providers to manage, protect and support the heart of a business, i.e. its mission critical business system. An analysis is required of the adopter categorisation where local SMEs currently find themselves in and an understanding of SMEs willingness to outsource their IT, data and business software. This study has found that on the basis of Roger’s diffusion of innovations (DOI) theory, if any of the SME participants would want to adopt a SaaS application, they would fall in the “late majority” adoption category. With 53% of the business applications used in this research study is of a SaaS type, it can be said that the peak of the innovativeness curve has been reached for SMEs partaking in this study. Overall, it has been found that SaaS-based ERP performed better than conventional ERP by achieving a 32% higher ranking in functionality and a 27% higher ranking in provider support. While planned downtime outside business hours has no effect on the adoption of SaaS-based ERP by SMEs in this study, planned downtime within office hours, unplanned downtime and severe cloud outages does have an effect. Most SMEs wouldn’t reject SaaS-based ERP; they would rather prefer to switch cloud providers. It turns out that most SMEs in this study are risk averse and will reject a system previously hacked. It has been found that a major security breach would have an impact on SaaS-based ERP adoption. Such an event would cause most participants to switch to an alternative provider; half of which would migrate back to an on-premise ERP application. Vendor lock-in Small and Medium Enterprises (SMEs) are playing a key contribution to a healthy economic environment. Traditional Enterprise Resource Planning (ERP) systems are generally too expensive for SMEs. Fortunately for technological enhancements, cloud computing makes it possible for companies to rent ERP on a subscription or a pay-per-use model. Due to cash flow, capital and human resource constraints, the public cloud is an ideal solution for SMEs. The business application as well as the server infrastructure is owned and maintained by cloud service providers. Previous studies have found that by losing direct control over systems is one of the main disadvantages of Software-as-a-Service (SaaS-based) ERP. By adopting SaaS-based ERP, organisations fear that they will lose control over the security and privacy of their data making their systems vulnerable to data breaches. In addition, loss of control over system performance and uptime might also cause rejection of SaaS. The purpose of this qualitative research study is to explore the adoption of SaaS-based ERP by SMEs in an emerging economy like South Africa, when not only control, but also trust is placed in the hands of third-party providers to manage, protect and support the heart of a business, i.e. its mission critical business system. An analysis is required of the adopter categorisation where local SMEs currently find themselves in and an understanding of SMEs willingness to outsource their IT, data and business software. This study has found that on the basis of Roger’s diffusion of innovations (DOI) theory, if any of the SME participants would want to adopt a SaaS application, they would fall in the “late majority” adoption category. With 53% of the business applications used in this research study is of a SaaS type, it can be said that the peak of the innovativeness curve has been reached for SMEs partaking in this study. Overall, it has been found that SaaS-based ERP performed better than conventional ERP by achieving a 32% higher ranking in functionality and a 27% higher ranking in provider support. While planned downtime outside business hours has no effect on the adoption of SaaS-based ERP by SMEs in this study, planned downtime within office hours, unplanned downtime and severe cloud outages does have an effect. Most SMEs wouldn’t reject SaaS-based ERP; they would rather prefer to switch cloud providers. It turns out that most SMEs in this study are risk averse and will reject a system previously hacked. It has been found that a major security breach would have an impact on SaaS-based ERP adoption. Such an event would cause most participants to switch to an alternative provider; half of which would migrate back to an on-premise ERP application. Vendor lock-in will complicate such a transition process. It has also been found that the local SMEs don’t take full responsibility for protecting their systems against security breaches. Trust is considered to be the third most important cloud adoption factor and that the majority of these SMEs are comfortable with handing control over to cloud providers. Brand, reputation and a comprehensive Service Level Agreement (SLA) impacts trusting relationships and provides peace of mind to SaaS tenants. It appears that changes and challenges related to control cause a shift in trust, from personal relationships in the traditional sense to a system that’s secure and stable with little downtime. All the SaaS-based ERP tenants are located in or close to main cities. By focusing on SME operating in remote towns with a poor technological infrastructure, further research will add more value by focussing on last mile connectivity, broadband technology and connection latency challenges.