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Master thesis

Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs Kushal Agrawal Student ID: h1337062

Department​: Information Systems and Operations Institute​: Information Management and Control Supervisor​: Univ. Prof. DI Dr. Edward W.N. Bernroider Date of Submission​: 19 December 2016

Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria

Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

Abstract

Enterprise Resource Planning (ERP) adoption factors have been studied quite extensively over the years. However, this master thesis tries to investigate upon the less explored area of Cloud ERPs. Relatively less research has been conducted, when it comes to adoption of Cloud ERP especially in Small and Medium sized Enterprises (SMEs). SMEs of the European Union (EU) and India are specifically targeted, as they both represent non-homogeneous markets which make a significant contribution in the respective economies. Primarily, the Cloud ERP adoption factors are identified and classified into different dimensions using the Technology, Organization and External task environment (TOE) framework. Important dimensions of ‘Awareness’ and ‘Company characteristics’ are also added to this research model. Furthermore, the data analysis is done to understand the demographics, mean agreement levels, correlations and standard deviations among the identified factors of Cloud ERP adoption. The research findings indicate that ‘Cloud awareness’ is the major barrier of Cloud ERP adoption, for SMEs of the EU and India. Moreover, some Technical, Organizational and External factor correlations are also discovered with respect to ERP adoption. Furthermore, evidences are dispensed to support some of the previous research done in Cloud ERP domain. All the results are presented in a comparative manner, where SMEs of the EU and India are compared and contrasted. However, due to a low statistical power, the significance of some results could not be established. Despite the research limitations, the findings confirm a high potential for the Cloud ERP market within EU and Indian SMEs, and further recommend the Cloud ERP vendors to focus on Cloud awareness. Finally, the research also makes literature contributions and advocates the future scope of research in the Cloud ERP landscape.

Keywords: Cloud ERP, Cloud ERP adoption, Cloud ERP adoption in SMEs, Cloud ERP adoption in the EU, Cloud ERP adoption in Europe, Cloud ERP adoption in India, Cloud ERP adoption in EU and India, On-premise vs. Cloud ERP

Copyright © 2016 Kushal Agrawal

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

Table of Contents

Chapter 1: Introduction to ERP 1.1 Cloud Computing . 1.2 Cloud ERP . . 1.3 ERP adoption factors . 1.4 On-premise vs. Cloud ERP 1.5 Research questions . 1.6 Research objectives . 1.7 Research methodology Chapter 2: Research background

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2.1 SMEs in the Europe Union . . 2.2 Cloud adoption in the European Union 2.3 SMEs in India . . . . 2.4 Cloud adoption in India . . 2.5 Less considered aspects of ERP adoption Chapter 3: Research framework

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3.1 TOE Framework . . 3.2 Cloud ERP awareness . . 3.3 Technical pressures in SMEs . 3.4 Organizational pressures in SMEs 3.5 External pressures in SMEs . 3.6 Other factors . . . 3.7 Research hypothesis summary Chapter 4: Data and research ​analysis

4.1 Demographic presentation . . . . 4.2 Company characteristics presentation. . . 4.3 Cloud awareness and evaluation impact on ERP adoption 4.4 Technical environment impact on ERP adoption . 4.5 Organizational impact on ERP adoption . . 4.6 External environment impact on ERP adoption . 4.7 TOE factor composition . . . . 4.8 Cloud ERP vs On-premise ERP performanc​e .

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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Chapter 5: Research conclusions

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5.1 Research results . 5.2 Research limitations . 5.3 Research discussions . 5.4 Future scope of research

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References

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Acknowledgements

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Appendix

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Copyright © 2016 Kushal Agrawal

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

Chapter 1: Introduction to ERP

Enterprise Resource Planning, commonly know as ERP today, has its roots in the 1960s when manufacturing companies tried to optimize their inventory control [22]. ERP is not a modern term anymore, it was first used by Gartner in 1990s. Today, ERP has evolved as an information system that serves as a single point of integration for all business processes that drives the enterprise towards its strategic goals [3]. ERP is used by managers to efficiently serve the organizational needs right from planning, purchasing, accounting to sales [3]. It is quite evident that ERP has its applications in various functions of the organization like in Customer Resource Management (CRM), Human Resource Management (HRM), Procurement etc. and is used across industries. As the organizations grow, ERP becomes an essential requirement for managing different organizational resources coherently. ERP enables a holistic business dashboard for enterprises and also gives them a complete organizational database [22]. Simply put, in most cases the ERP systems serve as a backbone for organizations.

Broadly speaking there are three different types of ERP implementations in which an organization can deploy the ERP system today: 1. Purchase a license from a ERP vendor and have a completely On-premise ERP: This implies that the organization is responsible for having an On-premise server, application and maintenance for the ERP. 2. Outsource some part of the On-premise ERP, like development and/or service component: This is also referred to as a hosted ERP where the ERP is On-premise however the administration is done by a vendor which is over the internet or private network. 3. ERP as SaaS (Software as a Service) package where only the ERP software is accessible for the enterprise: The software can be over the Cloud as well, which then makes it a Cloud ERP.

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

Some researches claim that although the ERP SaaS turns out to be the first choice of SMEs due to upfront costs, there are several downsides to it, like that of data security, customer lock-in, license fees etc. On the other hand, having a ERP On-premise gives an enterprise flexibility and security, but it comes at a high upfront cost that is often not feasible for SMEs [3, 4, 5]. Studies have shown strengths and weaknesses of each type of ERP system implementation [3]. A successful ERP implementation depends on various factors, some of those factors are: (a) Understanding of strategic goals, (b) Excellent top management skills, (c) Data accuracy, (d) Performance measure, (e) Employee training, etc. [22].

1.1 Cloud Computing

To understand Cloud ERP, let us first try to understand how cloud computing works, and what are the benefits and drawbacks of cloud computing in general. ​The NIST definition of ‘Cloud Computing’ as per a study done in 2011 was, ​“Cloud Computing (CC) is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction” [1].

Cloud computing is gaining significant importance considering the different dimensions it relates to in the broad Information Technology (IT) sector. These different dimensions range from the Information and Communication Technology (ICT) world to Internet of Things (IoT). Cloud computing is powered by many enablers like hardware virtualization, grid computing, web services, system management and so on [3].

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

CC has five essential characteristics [1]: 1. On-demand self-service: A consumer can access the Cloud services without human intervention. 2. Broad network access: Capabilities of Cloud services and accessibility through standard mechanisms like mobile phones, computers etc. 3. Resource pooling: Flexibility of the Cloud to store and retrieve the resources on demand, irrespective of the client type, number of clients, or client location. 4. Rapid elasticity: Optional scalability with ease of accessibility. 5. Measured service: Cloud systems can automatically control and optimize resource use. Moreover, the resource usage can also be monitored, controlled, and reported. This enables transparency, for both - the provider and the consumer, for the utilized service which further enables accountability.

CC has three basic service models [1]: 1. Software as a Service (SaaS). SaaS enables the client’s feasibility to use the applications and services on a Cloud infrastructure. The applications or services are accessible from client devices through interfaces like for example a web browser. The consumer is decoupled from the responsibility of underlying Cloud infrastructure including network, servers, operating systems, storage, or sometimes even the individual applications. 2. Platform as a Service (PaaS). PaaS enables the client’s capability to deploy applications to the Cloud infrastructure, typically realized through pay-per-use or charge-per-application basis. 3. Infrastructure as a Service (IaaS). IaaS enables the client’s flexibility of processing, storage, networks, and other fundamental computing resources, where the client is able to deploy and run arbitrary softwares and applications. The client is free from responsibility to manage or control the underlying Cloud infrastructure but retains control of owned resources and accessibility.

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

CC has four deployment Models [1]: 1. Private Cloud: The Cloud infrastructure is customized for limited use by a single organization consisting of multiple clients (e.g., business units). However, it may be managed by a third party or a combination of two or more business units. 2. Community Cloud: The Cloud infrastructure is customized for restricted use by a specific community of individuals or organizations that have shared concerns like for example missions, policies, compliance organizations. It may be managed by one or more organizations in the community. 3. Public Cloud: The Cloud infrastructure is provisioned for open use by the general public. It may be managed by a business, university, or government, or even a combination of them. 4. Hybrid Cloud: The Cloud infrastructure is composed of two or more distinct Cloud infrastructures that are coupled together by standardized or proprietary technology.

CC is and will make the IT industry more efficient, as it gives better resource management to the organizations. For Small and Medium sized Enterprises (SMEs) Cloud computing helps at the inception stage, because it removes the large capital requirement of software systems and provides the services on demand over the Cloud. Furthermore, CC gives flexibility to choose over the service usage or hosting on different pay scales, like pay-per-user or pay-per-service which gives the businesses flexibility to choose their business models according to their business needs [2].

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

1.2 Cloud ERP

Simply put, Cloud ERP is an ERP system deployable in the Cloud i.e. over the internet. Today, if not all, most of the Cloud ERP systems are centered around the load balancing technology, which means that they share multiple server tiers and database resources over the Cloud. Moreover, the scope of Cloud computing looks fascinating, acknowledging that updates to the systems becomes more easy and that there is no downtime for system upgrades. This saves considerable amount of cost, especially in certain industries where the system downtime directly affects the company sales. When it comes to cost, ERP systems take up to almost 50% of the budget of an SME [4] and therefore, the selection process of an ERP system for any SME is very crucial and a critical one. Cloud ERP systems have proven to reduce the upfront and maintenance cost. This is mainly because it is supported by an external vendor and does not require any additional server upfront cost by the client. However, Cloud ERPs are often accused for the ‘data security breaches’ and give rise to numerous other security concerns.

Today there are multiple types of Cloud implementations: (a) Private Cloud (b) Public Cloud and (c) Hybrid Cloud. These Cloud implementation techniques can be used to decide which type of Cloud implementation of ERP suits the best for a particular type of SME [4]. At this point, it is also important to understand the different types of Cloud ERP implementations. Cloud ERP implementations can be classified into 3 types: (1) Cloud Infrastructure, (2) Cloud Platform and (3) Complete Cloud Application. Cloud Infrastructure ERP (CI-ERP) would provide only the client with a virtualized hardware over the internet, where the ERP application and the Operating System (OS) are still physically installed on the client’s premise. Cloud Platform ERP (CP-ERP) would provided the client with Cloud infrastructure (hardware) and Cloud platform (operating system), however the ERP application would still reside on the client side. Complete Cloud ERP (CC-ERP) is a Cloud ERP solution where the ERP application, platform and

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

the infrastructure resides in the Cloud and is accessed via the client browser. In all of the above implementations the client would access the ERP by the client browser [3].

There is a thin line of difference between Hosted ERP (H-ERP), CI-ERP and CP-ERP. If the H-ERP is hosted via the internet then it becomes a CI-ERP or CP-ERP depending on the amount of service layers provided over the internet. CC-ERP is the complete or most modern form of ERP where the client needs only a browser to access the ERP system. Moreover, at this point it is important to mention that the Cloud ERPs in essence are hosted ERPs, as they are both provided by an external vendor over the internet for the client [7]. However, given the scope of the research topic, it was decided to consider all types of Cloud implementations of ERP as Cloud ERP.

1.3 ERP adoption factors

A study done in 2005 about factors that affect the ERP adoption in the SMEs and large corporations stated, that 'business complexity' as a whole was a weak predictor for ERP adoption, but 'company size' was a good predictor. The study further claimed not the financial constraint but organizational reasons become a barrier for ERP adoption specifically for SMEs [23]. However, the research model of this study was based on the assumption that 'business complexity' and 'organizational change' are the influencing factors for ERP adoption which is yet to be proven. Furthermore, the classification of factors seem to overlap as 'business complexity' and 'company size' both are the factors that can be categorized under organizational factors of the TOE framework [19].

A comparative study of SAP ERP systems, On-premise and Cloud ERPs conducted in 2012 showed, that when it comes to implementation cost, implementation time, user friendliness and scalability, Cloud ERP turned out to be a better option than an On-premise ERP system. However, from security perspective, On-premise ERP system stands a firm ground [5]. Furthermore, the selection of an ERP system also depends on

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

numerous other factors like resources at disposal, requirements, infrastructure etc. The selection of ERP highly impacts from the availability and type of ERP vendors. One may choose traditional ERP vendors that provide migration services from On-premise and Hosted ERPs to the Cloud ERP, for example ‘Microsoft Dynamics’. Alternatively, one can also take services from the new Cloud ERP vendors that provide only the latest ERP systems with new technology like SAP ByDesign [6].

From the literature research done so far, it can be identified that migrating or installing a Cloud ERP is more beneficial than a bottleneck for SMEs. However, surprisingly we have not seen the amount of migration that should have taken place from On-premise ERP to Cloud ERP. According to Aberdeen Group’s 2011 report [8], more than 70% of SMEs, despite of acknowledging the benefits of Cloud ERP, still own an On-premise ERP. SMEs sole justification was that they do not want their customer data in the hands of a third party. Moreover, they seemed to be further concerned with their data privacy and internet downtime. This was observed across industries. Furthermore, this survey also noticed that there was a steady decrease in willingness to move to Cloud ERP from 2009 to 2011 among the respondents from across industry [8]. An argument can be made that the survey may be biased towards the U.S.A SMEs, owing to its target group. It has been previously found that the geographic location plays a crucial role in deciding upon an ERP solution.

However, despite the acknowledged benefits of Cloud ERP, specially for SMEs, the non-migration and non-adoption of Cloud ERP, both have generated questions for research and development in this area. Furthermore, there are also studies on which type of ERP, On-premise or Cloud ERP, is better. For understanding the adoption of Cloud ERP in SMEs, it is first essential to look at the comparisons done between On-premise and Cloud ERP from different perspectives.

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

1.4 On-premise vs. Cloud ERP

Over the past decade, there have been many studies that have tried to understand the differences between the traditional On-premise ERP systems and the Cloud based ERP systems. These studies have adopted different research perspectives to compare the On-premise and the Cloud based ERP. Some studies [3, 6, 7, 62] have tried to identify the benefits and challenges of the Cloud ERP or Cloud based technologies in general, whereas others [7, 8, 58, 61, 64] have focused towards understanding the adoption of Cloud based technologies and its challenges among SMEs and individuals. Furthermore, some studies have also made technical comparisons between On-premise and Cloud based ERP systems [7, 63]. The below ​table 1.4 represents a comprehensive composition of these research findings, that have previously contributed to create a landscape from different viewpoints on comparisons between On-premise ERP and Cloud based ERP systems. ​Table 1.4 is adapted from an in-depth research finding [7] from 2012, that analyses the On-premise ERP and Cloud based ERP from a multidimensional research perspective, and is further correlated with other relevant literatures mentioned. This clearly outlines the need to classify the adoption factors of Cloud ERP, using a framework that encompasses the most significant variables which enable the adoption of the technology in a particular given context.

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

Features

® WU ID: h1337062

OnCloud premise based ERP ERP

Sources

Lower upfront cost



3, 6, 7, 8, 61, 64

Lower operating costs and efforts



6, 7, 8, 58, 61, 64

No subscription fees

6, 7, 63



Scalability, faster time to market



3, 6, 7, 8, 58, 61

Rapid implementation, easier to switch among IT providers



3, 6, 7, 8, 58

Enables enhanced focus on core competencies



6, 7, 61, 64

Higher level of independency from the ERP provider



3, 6, 7, 8, 62, 64

Functionally rich to satisfy the back-office needs of organizations in all types of industries



6, 7, 63

Rapid acquisition of bug fixes and new functionality



3, 6, 7, 61

Improved accessibility, mobility, and usability



3, 7, 58, 64

Enables extensive customization and complex integration

3, 6, 7, 58, 61, 63, 64



Easier integration with other cloud services



7

Low dependency on deficiency of network reliability and speed



6, 7, 8, 61

Ease of retaining legacy systems



3, 7, 61, 63

Enables high level of security and confidentiality



3, 6, 7, 8, 58, 61, 62, 63, 64

Easier compliance to data & environmental regulations



6, 7, 58, 61, 64

Table 1.4 adapted from [7] and correlated with [3, 6, 8, 58, 61, 62, 63, 64]

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

1.5 Research questions

Based on the initial literature review, and considering the comparisons between On-premise ERP and Cloud ERP adoption factors, the following research questions were raised:

[RQ1]

Do the company characteristics like ‘number of employees’ play a crucial role for EU SMEs, when it comes to adoption of Cloud ERP?

[RQ2]

Which among the identified ‘Technical’, ‘Organizational’ and ‘External’ pressures, is the most influential enabler, for EU SMEs, to adopt Cloud ERP?

[RQ3]

Which among the identified ‘Technical’, ‘Organizational’ and ‘External’ pressures, is the most influential barrier for SMEs of the EU and India, to adopt Cloud ERP?

[RQ4]

Does ‘Cloud awareness’ have a major influence on adoption of Cloud ERP in the case of SMEs of the EU and of India?

[RQ5]

Does external pressure in terms of ‘macro environmental’ factors have influence on the adoption of Cloud ERP?

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

® WU ID: h1337062

1.6 Research objectives

There are many factors that influences the decision making of ERP adoption in the SMEs, and a substantial amount of research has already been done in identifying the strengths and weaknesses of On-premise and Cloud ERP systems [3, 4, 5, 6, 7]. However, most of these studies follow a qualitative research model and miss out on the quantitative result to get a statistical significance on their results. Furthermore, the literature review conducted so far shows, there is a lack of proper classification factors that lead to adoption of ERP systems specifically for SMEs. In addition, a proper quantitative research focused towards Cloud ERP adoption among SMEs did not come to light given the scope of literature review.

Building upon this unexplored area of research, this research aims at understanding the following: (a) The awareness level among the SMEs about Cloud ERP (b) The decision making factors for SMEs that influence the adoption of Cloud ERP and (c) The decision making factors for SMEs that become a barrier in Cloud ERP adoption. The research aims to focus at the young SMEs, which are defined as the ones which have an age of 10 years or less [34, 35, 36, 37]. However, the research it is not restricted to this, as it depends on the number of responses obtained. The most common reasons for SMEs to adopt technologies are discovered to be: (a) Market survival instincts, (b) Staying competitive, and (c) Being innovative [38]. Young SMEs are targeted in particular because empirical evidences suggest that young SMEs are more innovative, have a higher risk appetite and a greater growth rate, compared to older SMEs [33].

This research is targeted across the industries to get a holistic understanding of Cloud ERP adoption. Moreover, for understanding the enablers and barriers of Cloud ERP adoption, respective factors were identified with the help of literature review and then classified into three dimensions of (a) Technology, (b) Organizational and (c) External task environment, according to the TOE framework. The overall objective of this

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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research is thus to get a statistical significance on the ‘financial’ as well as the ‘non-financial’ decision making factors for SMEs, that affect the adoption of Cloud ERP or become a barrier in the adoption of Cloud ERP.

1.7 Research methodology

The research methodology was divided into a simple five stage process as shown in the figure 1.7

Figure 1.7

1.7.1 Literature review

To understand the factors that influence the adoption of Cloud ERP, an in depth literature review was done using the famous online search engines and libraries. Based on this literature review, all the common factors that influence the decision making of having an ERP in SMEs, were then classified according to the TOE framework [19]. As the topic is yet unexplored there was little less done in this field. The literature review was conducted using the interdependent technique. The adoption factors and barriers of the following were looked upon (a) ERP and Cloud ERP, (b) Cloud, (c) Internet and so

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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on. All of the literature review was conducted with respect to SMEs in EU member states and in India. However, as there was less specific literature about Cloud ERP adoption in SMEs in the region, the research work also refers to the studies done on different continents of the globe on the same topic. Some industrial and company reports from authentic sources are also cited in this research for statistical significance. The investigation of this study should not be compared or confused with the previous work done in understanding the adoption factors of ERP, comparison of ERP and Cloud ERP, or strengths and weakness of Cloud ERP. As said earlier, the clear objective of the research was to understand the decision making of SMEs in adoption of Cloud ERP, based on the three dimensions of the TOE framework.

1.7.2 Application of TOE framework

For understanding the factors that influence the decision making of an SME, in terms of adoption of Cloud ERP, the technology adoption framework, TOE framework [19] is used. This framework allows us to understand what are the various technological, organizational and external factors that act as an enabler of the technology. In this research context, the TOE framework was used to understand the Technical, Organizational and External pressures SMEs have, that lead them to adopt or not adopt the Cloud ERP.

1.7.3 Empirical survey

To identify the factors that influence the adoption of ERPs among young SMEs, a survey based on the literature work was conducted. The email addresses of young SMEs of EU member states in particular, those incorporated on or after the year 2005, were fetched from the Orbis database [31] using the WU (Vienna University of Economics and Business) network [32]. This database can only be accessed by the WU students and researchers strictly for research purpose. The search strategy to retrieve the email addresses of SMEs was based on the European Commission’s definition of Small and

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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Medium sized Enterprises (SMEs) [26]. Only those that fit the criteria according to the European Commission's definition of SME [26] and the ones that were incorporated on or after the year 2005 were contacted via email. However, the Orbis database [31] is a huge database and has many data discrepancies in terms of email address duplications, incorrect or misspelled email addresses and so on. Therefore, data cleaning was a crucial step, where the incorrect data was cleansed and furthermore, only unique and private email addresses were used to contact the Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Financial Officer (CFO) and other such top management executives of young SMEs of EU, to get a better response rate. The Indian SMEs were contacted based on a convenience sample that was generated based on the contacts in manufacturing industry. All of these EU and Indian SMEs were then contacted using the popular email marketing service provider - mailchimp [53]. Several email campaigns were designed and rolled out in the first two weeks of November 2016.

The survey was divided into ten sections (ten pages), where the first section contained only the basic information and survey instructions. In the second section, the respondents (SMEs) begin by giving some basic demographic information about themselves and their company, however, this section was optional and could be skipped by the respondents. The third and fourth sections measured the Cloud and Cloud ERP awareness of the survey audience. In the fifth section the respondents were asked to give their current situation of ERP. The sixth and the seventh sections measured the respondent's current ERP performance and satisfaction. These were dependant sections, which would only appear to the survey audience, should they confirm that they have an ERP system in section five. If the respondents said that they did not have an ERP in the section five, they would be skipped to section eight directly. In the sections eight, nine and ten, Technological, Organizational and the External pressures of the enterprises were evaluated respectively. At the end of the section ten, the respondents were further asked if they had any other form of pressures in terms of their company. This was an

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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optional question, where the respondents could have stated any other pressures they face, which was not already asked to them.

1.7.4 Data analysis

The survey data was collected through google forms [52] in comma separated values (.csv) format and downloaded as an excel file. Some variables in the data had to be coded for data analysis purpose. For example, the gender, existing ERP system, annual revenue and so on, this has been mentioned in the research instrument, please refer to appendix. In the data analysis, firstly a data summary of the emails sent, emails opened, and other email statistics are presented. Secondly, a summary of the basic demographics of the data collected is presented. Finally, the core data analysis was done in terms of understanding the mean values of the respondent opinions. This was classified under two groups: (a) EU SMEs and (b) Indian SMEs, for comparing and contrasting. Furthermore, correlations ​(Pearson’s R) analysis between the existing ERP status of SMEs, with different dependant and independent variables was performed to meet the research objectives. The dependent variables used were: the existing ERP performance and ERP satisfaction level, and the independent variables were: the Technical, Organizational and External environmental pressures that the SMEs faced. Apart from these, some other interesting correlations of Cloud ERP adoption were analysed and presented in the data analysis report. A significance level of 0.05 ​(where p < 0.05) was used to check the validation of results along with the standard deviations. Based on the data analysis and literature findings, the research questions were answered. There were certain limitations to the research that have been elaborated in the final chapter under the title ‘Research limitations’.

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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1.7.5 Final results

During the data analysis, the research hypotheses are validated and the final results are presented. Based on these validations and correlations, and after comparing the research findings with existing literature, the concluding remarks are drawn along with research discussions. Finally, the limitations to the research work and the future scope of research is presented.

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Adoption of Cloud ERP - Empirical investigation of EU and Indian SMEs

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Chapter 2: Research background

Enterprise Resource Planning (ERP) is a dimension that can be viewed upon from different perspectives. ERP is mostly used in terms of a software product, however it can also be viewed as a roadmap for the organization to plan and structure their resources. According to the major ERP vendors today, such as SAP, Oracle, PeopleSoft etc. ERP can support almost all the organizational modules like finance, production, marketing, sales, distribution, human resources etc. Traditional ERP systems can be deployed in two ways: (a) On-premise ERP (OP-ERP) (b) Hosted ERP (H-ERP). In OP-ERP the deployment takes place via the licensing model. The software is installed on the client server which is physically on the client's location along with the client machine. The client is then responsible for the infrastructure and the platform. Furthermore, the responsibility of maintenance remains with the consumer. However, in H-ERP, the ERP acts as a service which is offered to the client. In this case, the server is not located at the client side and they are no longer responsible for the server maintenance. Furthermore, the client is given the access to the ERP system via a private network that may or may not take place through the internet [7].

If the ERP system access is given to the consumer via the public network (Internet), then this type of infrastructure is known as Cloud ERP. The Cloud ERP can be further divided into different types of Cloud ERP implementations [3] as explained earlier. However, considering the scope of the research topic, all of these Cloud ERP implementations have been considered as Cloud ERP.

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2.1 SMEs in the European Union

ERP adoption in large corporations has come to a saturation since 2000, simply because they have already adopted their ERP systems and are now looking to reuse it as their e-business model. However, the Small and Medium sized Enterprises (SMEs) are still a major market for ERP vendors, because SMEs still have to make their decision for having an ERP system [24]. SMEs contribute a fair share in country’s growth and industrial economy [25]. Specifically in the EU, SMEs constitute of about 99% of all businesses and serve as backbone of the European economy. The European SME market is an attractive and unexplored one for ERP vendors. Primarily because of the Small Business Act (SBA) by the European Commission that aims to improve the entrepreneurship in the EU by removing the economic development barriers. Furthermore, there are many such promotion and development policies that enable growth and opportunities for the SME market within the European Union [26].

The definition of Small and Medium sized Enterprises (SMEs) vary depending on the country and its economy. However, the European Commission has defined the SMEs definition for EU member states in the EU recommendation 2003/361 as follows, ​“The main factors, that determine whether an enterprise is an SME, are: (1) Staff headcount and (2) either turnover or balance sheet total” [27]. According to this law, an SME in the EU can be categorized in the following three ways: (a) ‘Micro’ if the staff headcount is less than 10, and either turnover or ‘balance sheet total’ is less than 2 million euros, (b) ‘Small’ if the staff headcount is less than 50 and either the turnover or ‘balance sheet total’ is less than 10 million euros, (c) ‘Medium-sized’ if the staff headcount is less than 250 and either the turnover is less than 50 million euros or the ‘balance sheet total’ is less than 43 million euros [26]. This uniform definition of SMEs in the non-homogeneous market in the European Union, which consists of 28 countries, makes this market a very unique and exciting one for research and development.

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2.2 Cloud adoption in the European Union

Cloud computing in general are the information technology services that a client can use over the internet on demand. Services over the Cloud have a huge impact on the fixed cost, which are critical for any businesses especially for SMEs. Today major expenditure for modern firms are related to their Information and Communication Technology (ICT) needs. Cloud computing plays a huge role for reducing these ICT expenses across industries [28]. It is difficult to understand the adoption of a particular technology in a particular context, but understanding the adoption of technology in general is still possible to an extent.

The European e-Business report 2008 [29] confirmed that by 2008 almost 50% of companies in EU member states, that were surveyed across industries, said that at least some of their business processes were conducted electronically and approximately 20-35% of those companies confirmed that their entire business processes were conducted electronically. Specifically in the case of ERP systems the report [29] stated that, there is a clear gap in ERP adoption between small and medium-sized corporations versus the large corporations. However, the overall ERP adoption trend in the EU member states since 2003 is still a positive one. This statistics provided further motivation to investigate the adoption of Cloud ERP specifically in the EU member states.

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2.3 SMEs in India

SMEs in India face several challenges in terms of business environment and infrastructures. Although, there has been constant encouragement from the government, for entrepreneurs to start their own ventures, the required infrastructure is not compatible enough for them to compete in the global market. This severely affects the adoption and perceived utility of technology. Previous findings [54] indicate that technology adoption is severely affected by the macro-environmental factors such as: (a) Social, (b) Political, (c) Legal and so on. Cultural and religious beliefs of people have further been identified as critical factors determining the acceptance of a product or service in the market [54]. This has led India into the problem of digital divide.

On the bright side, because of cheap labour in the country, the IT industry in India has flourished. Primarily, because developed countries have outsourced their IT services in India, there are plenty of opportunities in IT. However, the main barriers in the Indian SME sector are: (a) Niche players, (b) Resources at disposal, (c) Market strategy, (d) Long term vision and (e) Lack of transformation or rigid attitude towards change management [55]. Moreover, the Indian SMEs are also found to be inflexible to change which causes them to be less competitive compared to developed economies. Findings from previous studies [56] reveal that due to lack of awareness, Indian SMEs lead to non-adoption of ERP systems. Moreover, the upfront cost was also identified to be a key barrier for ERP adoption in Indian SMEs. Furthermore, though the Indian SMEs are able to understand the impact of Information Systems (IS), the adoption was not as high as it should have been. Majorly, the adoption of IS by Indian SMEs was seen in the fields of Accounting, Sales and Order management to streamline their daily operational tasks [56].

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2.4 Cloud adoption in India

From large enterprises like Tata Motors, HDFC Bank, Welspun to SMEs we have seen some significant adoption of Cloud computing in India. Previous literature investigations suggest that there is a fascinating scope of Cloud computing in different sectors of India [57]. However, when it comes to adoption of Cloud within the Indian SMEs, the situation is slightly different. The same study [57] that found the scope of Cloud computing fascinating, revealed that the inhibitors of Cloud computing in the case of Indian SMEs were: (a) Data security, (b) Vendor lock-in, (c) Data backup and so on. However, ‘awareness’ was found to be the major barrier in terms of adoption of Cloud based technologies in the Indian SMEs [57]. This lack of awareness further generates a lack of trust in the technologies and dampens the possibilities of growth.

Furthermore, SMEs report [58] that ERP packages usually contain many sets of features, that are quite often complex for them to understand and moreover are unnecessary for their business requirements. Moreover, due to these increased set of features, the cost of ERP packages increases, that is often not affordable by the SMEs. But despite the barriers, a high spending for adoption of traditional ERP systems can be seen in Indian SMEs. A cost oriented study [58] done in 2010, provided results to show that Cloud based ERP solutions reduce the cost for ERP implementations in Indian SMEs to a great extent. However, despite the added benefit of cost reduction, the adoption of Cloud based ERP in the case of Indian SMEs is next to negligible.

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2.5 Less considered aspects of ERP adoption

Apart from cost and data security, there are several other factors that currently play, or in future will play an important role, for SMEs and for large corporations, in the decision making of their ERP system. These aspects are the less explored space of Cloud ERP dimension. Considering the research objective, it was important to identify these factors that influence or may influence the decision making of SMEs in terms of ERP adoption.

2.5.1 Big data and Internet of Things impact on future ERPs:

Another less viewed dimension is the Big Data impact on ERP systems. Everyone talks about it, but there has been almost negligible effort in alignment of Big Data and ERP systems. Undoubtedly, the ERP system of the near future will need the capability for handling the huge amount of data that organizations and the world would generate. Reports from 2014 show that 90% of the world data has been generated from 2012 to 2014. This implies that if external data is what the organization seeks for gaining competitive advantage in the market, their ERP systems should be capable of doing so. First logical approach in this scenario would be the Cloud ERP solution, as they are much cheaper and can be scaled easily. On-premise ERP systems would be a bottleneck in this case in terms of cost, implementation and maintenance [12].

Furthermore, if we talk about Internet of Things (IoT), another widely used buzzword which focuses basically on real-time analysis of data and enables device communication without human intervention, again ERP systems have not yet been seen as a part of their ecosystem. In this future scenario, the ERP systems should be capable of heavy customizations, as new tools will be required for reporting and managerial aspects that helps organizations keep track of their products or services in the IoT domain. On-premise ERP systems as the research illustrates so far, are more flexible in

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customization compared to Cloud ERP solutions. But then again, IoT produces Big Data and On-premise ERP are not capable of processing or even storing that amount of data. This certainly will alarm lot of ERP vendors, both in On-premise and Cloud ERP services, as there seems to be a clear need for further development.

2.5.2 Environmental impact on ERPs:

Another important issue today is the environmental footprint of servers, data storage devices, networking and so on. A recent study done by Microsoft in Cloud computing and sustainability showed, that organizations that outsourced the applications reduced their energy consumption significantly. The study also revealed that this was especially true in small businesses where the reduction in computing emission reduced up to 90% in case of Cloud solutions [13]. This shows one different aspect while making a choice for ERP system deployment. Cloud ERP would significantly reduce the carbon footprint for the organization than having an On-premise ERP. Sustainability is what an organization looks for in terms of growth and profit, however, the young organizations should additionally look for sustainability in terms of ecological impact. Cloud ERP solution providers also need to consider the costs associated with running the multiple clients, which directly affects their competitiveness compared to On-premise ERP, majorly in terms of cost [14]. However, considering the sustainability aspect, Cloud ERP seems to be a much better sustainable model compared to On-premise ERP, as Cloud ERP minimizes the use of hardware resources. A study done in 2011 revealed that the use of Cloud solutions, when compared to the use of On-premise solutions, are much more durable in terms of economic, social and ecological aspects [14].

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2.5.3 Business model / Customization impact on ERPs:

A study from 2011 evaluated two popular business models in Cloud computing namely, Cloud Cube Model (CCM) and Hexagonal Model, and proposed a new Cloud Computing Business Framework (CCBF). CCM enables secure collaboration that meets the business needs and Hexagonal model on the other hand is researched and practiced upon in the industry for negotiations, operations, strategies etc. The proposed CCBF then highlights the gist of both the models for Cloud computing. The study revealed that the main stream business models like IaaS (Amazon), PaaS (Microsoft, Google Search) and SaaS (Google Docs, Google App engine Salesforce) still have unexploited areas for services and profits, however data privacy is a bottleneck for this model and high competition is expected [15]. This clearly indicates the potentials of Cloud ERP deployment and challenges it faces. ERP deployment in the Cloud often becomes target to challenges like customization, data security, Software Development Kit (SDK) absence, etc. Customization plays an important role, as some organizations are interested in modifying their Cloud solutions based on their specific business requirements. However, maintaining these customizations becomes a major challenge for Cloud service providers. They need to establish backward and upfront compatibility with the upgrades and their existing client-base [16]. On the other hand, Cloud ERP has proven its potential in terms of cost, scalability and so on, from the research done so far.

2.5.4 Dependence impact on ERPs:

Another important aspect brought up in the Cloud vs. On-premise ERP solutions frontier is about the dependency. On-premise solution is dependant on an external IT consultant i.e. it needs expertise maintenance once the ERP solution is installed. In Cloud ERP, the maintenance and support remains completely with the solution provider. This has a significant impact for SMEs, as in case of On-premise deployment the system maintenance role becomes crucial and finding long term personnel is in itself a challenge for SMEs. On the other hand, having a Cloud ERP solution would result

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into the external solution provider dependency, that may not be available on demand, constraining the business process for SMEs [9].

A recent study done in 2014 identified other important factors that influence the decision of SMEs as well as large corporations while adapting to ERP solutions. These factors were external in nature like geographical spread of activities, seasonality, country and industry that impacts the decision making process for a SME significantly. The study further revealed that SMEs benefit or exploit the most from the Cloud ERP solutions than large corporations in general. They can further profit from the latest updates and technology in Cloud solutions, as it is feasible to reengineer their business processes when compared to large corporations and therefore adapting to changes is much easier. However, the study develops some interesting conclusions that may be challenged. For instance, one of the concluding remarks of the study is that the data processing, storing and security may not be a big concern for SMEs while adopting to Cloud ERP solutions. ​However, for those SMEs which are in the health sector or in any such industries where they transact with sensitive customer data, this could be problematic. ​[17] 2.5.5 ERP vendor impact:

A joint study from Microsoft, IBM, and others done in 2010 revealed that one of the major concerns of data center managers was the large number of applications and complexity to manage and run these applications. These manager confirmed that one of their objectives in the coming years would be to reduce the data center cost. Public Cloud computing was seen to be as a viable option from the survey respondents of the study. However, most were still in the planning stage. Furthermore, the study revealed that there is little known fact about performance over the Cloud, as it would be affected by the network speed, server uptime and so on. Moreover, industry specific ‘regulations’ and ‘national data privacy laws’ may further influence the decision of the clients to move to Cloud solutions. Hybrid Cloud solutions which are partially hosted

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over the Cloud have gained significant interest in the industry. These architectures claim to offer a right balance between keeping important and sensitive information On-premise and leverage from the Cloud applications as well [18]. However, hybrid solutions may not really pay-off for SMEs, as they have little knowledge about which are the applications to keep On-premise and which of those to host. Moreover, hybrid solutions require more cost than Cloud ERP solutions and therefore the core value for the decision making process seems to fade out there.

2.5.6 Cloud ERP and Data protection:

Cloud ERP is often considered as a last resort especially when it comes to the data security. On-premise ERP has its own security concerns in terms of vulnerable infrastructure, where the organization can be affected with natural hazards, a rogue employee or similar such reasons that are secure in terms of Cloud ERP implementation. However, data security is constantly improving in Cloud ERP domain, as Cloud computing itself has evolved over the years and encryption over the basic internet browsing has gotten more secure than ever. A case study [11] done in 2011, showed that three studied SMEs implemented Cloud ERP solution and saw improvement in numerous factors such as: (a) Cost (b) Customizations (c) Data processing time (d) System runtime etc [11].

Less considered aspects of ERP

Sources

Big data and Internet of Things impact on future ERPs

[12]

Environmental impact on ERPs

[13, 14]

Business model / Customization impact on ERPs

[15, 16]

Dependence impact on ERPs

[9, 17]

ERP vendor impact

[18]

Cloud ERP and Data protection

[11] Table 2.5

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Chapter 3: Research framework

The literature so far illustrates that when looked upon on a holistic level, Cloud ERPs outweigh the strengths of On-premise ERPs significantly. However, for certain crucial factors like data security, customization etc. On-premise ERP is found to be a better option. This brings us to certain use cases that are not given considerable importance in Cloud ERP solution. One of such use cases is that of migration from Cloud ERP to any other ERP implementation [6]. A study done in 2012 [10] identified several challenges that are faced during the Cloud ERP implementation: (a) Difficulty in data extraction from Cloud, (b) Legal issues and liability, (c) Customization, (d) Awareness, (e) Perception etc. Another insight from the same study was that the Cloud ERP over the period of 5 years can save up to 50% of the cost as compared to On-premise ERP [10]. However, this was a particular use case and whether it can be generalized or not remains open for further investigation.

3.1 TOE Framework

To test this and several other use cases it was decided to use the Technology, Organization and Environment (TOE) framework. The TOE framework is an organizational level framework which helps the firm in decision making of the technology adoption from three distinct yet interrelated dimensions. These dimensions are: (a) External task environment, (b) Organization and (c) Technology [19].

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Image taken from Tornatzky, Louis G., Mitchell Fleischer, and Alok K. Chakrabarti. “​Processes of technological innovation.” 1990 [20]

The TOE framework was first proposed by DePietro, Wiarda, and Fleischer in 1990 [19] where they explain and prove that the processes, by which a firm adopts and implements the technological innovations, are influenced by (a) The technological context, (b) The organizational context, and (c) The environmental context. (a) The technology dimension consists of the internal and external technologies that are important to the organization. In this regards, the technologies may include equipment as well as the processes. (b) The organization dimension consists of the characteristics and resources of the organization, including the organization’s size, degree of centralization, degree of formalization, managerial structure, human resources, amount of slack resources, and linkages among employees. (c) The environment dimension consists of the size and structure of the industry, the organization’s competitors, the macroeconomic context, and the regulatory environment.

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These three dimensions represent both, the challenges and the opportunities for technological innovation. Thus they influence the way an organization uptakes: (a) The need for new technology, (b) Searches for new technology and (c) Adopts to the new technology [19]. The TOE framework is ideal for understanding the decision making factors when it comes to adoption of technology in organizations. With the help of this framework, the identified factors that influence the adoption of Cloud ERP have been classified under Technology, Organizational and External task environment dimension. This classification further helps to understand if there exists any correlations between the different influencing factors of Cloud ERP adoption.

3.2 Cloud ERP awareness

Top managements, who have the required knowledge and awareness about existing IT solutions for their business requirements, are more likely to adopt new IT solutions for their organization, compared to unaware organizations [44]. An empirical study of SMEs done in 2005, reveals that awareness (knowledge capture) ‘if done properly’ can save huge costs, and also generate organizational growth [60]. Since the inception of Cloud based technologies, the skepticism in adoption of Cloud technologies, especially in the Business world, has been evident. Some of the common occuring reasons for non-adoption of Cloud based technologies are: (a) Security risks of the Cloud and (b) Fear of not knowing where the organizational data resides and as a result facing any legal or regulatory issues [61]. This has been identified a major challenge for vendors of Cloud based services as well.

Similar scenario is true in the case of Cloud ERP as well. Awareness and knowledge about Cloud ERP raises skepticism, which in turn causes non-adoption of Cloud ERP. According to an exploratory research [61] done in 2012, SMEs have shown strategic, operational and technical intentions to have Cloud ERP. These reasons ranged from reduced IT costs, scalability to faster market time, automatic upgrading and so on.

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These evidences suggest a huge potential market of Cloud ERP, making it interesting for research especially in the case of SMEs. Therefore, it was very important to check if ‘Cloud awareness’ was one of the major barriers of Cloud ERP adoption in EU and Indian SMEs.

Research hypothesis [H1]

A low level of 'Cloud awareness' has a negative influence on adoption of Cloud ERP.

[H2]

Indian SMEs have a lower level of ‘Cloud awareness’ when compared to EU SMEs.

3.3 Technical pressures in SMEs

Figure 3.3

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3.3.1 Providing many different IT solutions for a range of business requirements

Although SMEs have limited market scope compared to large enterprises, they still have to provide customized IT solutions for a range of business requirements they inhabit. This is majorly because of the high competitive market they operate in. The adoption of technology in an SME highly depends on the perceived benefits and organizational readiness [44]. Sometimes, the businesses also change their working according to software, so that they do not have to spend money on the software customizations [43]. However, this might also happen because SMEs may lack the understanding of their existing business processes. It has been discovered that the SMEs implement ERP system based on the “business opportunity” they have in the moment, rather than thinking of ERP as a long term enterprise solution [41]. Moreover, the ERP adoption in SMEs is found to be highly correlated with the technological and organizational factors [48].

3.3.2 Developing or reconfiguring IT to meet changing business needs

One of the major challenges that any SME faces is developing or reconfiguring their IT to meet the changing business needs [41, 43]. Understanding the evolving business requirements and accordingly bringing the required IT changes in the firm, is one of the top agendas for most of the top managements today. These changes are required to be managed in a coherent way, so that the existing business processes are not disturbed and can be mapped in a correct and smooth way. ERP systems play a crucial role, by facilitating smooth transition for such dynamic environment in organizations [43]. Thus, there is a pressure on SMEs to develop or reconfigure their IT systems to meet their changing business needs.

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3.3.3 Developing IT for information sharing (internally and/or externally)

Communicating internally between employees, top management, or externally, with customers, vendors, suppliers, partners, has been identified as a critical organizational success factor [41, 44]. For developed economic markets such as U.S.A, the simple adoption of internet has created better market reach and further improved the operational efficiency of the SMEs [40]. When it comes to ERP implementation, the business requirements needs to be clearly conveyed to all the associated business entities, so that an effective utilization of ERP is achieved to meet the business goals [43]. Often we observe that the communication barriers, within the organization internally or externally, further hinder the adoption of technology in the organizations. Therefore, the SMEs face the pressure for developing IT, for information sharing both internally and externally.

3.3.4 Providing secure solutions for data protection, storage, analysis etc.

Empirical evidences from a study [40] done in 2004, suggest that the prior use of technology by SMEs, plays a crucial role in understanding the adoption of Internet in SMEs. Moreover, an investigation done in 2002, that evaluated the consumer perceptions about purchasing on the internet [51], found that the consumer’s primary concern for not purchasing over the internet was security, whereas the consumers who did purchase on the internet wanted a reliable source to do so. The major barriers of e-commerce activities as identified by an Australian study [47] done in 2003 are: (a) Security and privacy of transactions, (b) Cost of consultants and (c) Lack of IT expertise. Often we also observe skepticism about the Cloud based technologies (products or services offered over the Internet), and therefore there is a high pressure on SMEs to provide secure solutions for data protection, storage and analysis and so on.

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3.3.5 Online business transactions and digital marketing

Empirical evidences from a study [40] done in 2004 suggest that, SMEs are inclined to adopt to online business transaction and digital marketing in terms of owning a website or promoting their content online, owing to the highly competitive environment they operate in. The study further revealed that, this adoption was also influenced by the prior use of technology in the organization. Digital marketing takes place exclusively via the internet, and many studies have confirmed that the internet in general has plenty of benefits such has global reach, online selling, checking competitions, price comparisons, consumer demands and so on. To avail these benefits and to be competitive in the global market of today, a firm has to establish its digital presence [44]. To establish the digital presence of SMEs that have not yet adopted internet, means to have a dynamic company culture and change management in place. Moreover, it has been previously identified that a ‘company’s culture’ and the ‘change management policies’ also play an important role in adoption of ERP system [43]. Furthermore, when it comes to ERP adoption, the SMEs have found to take the advantage of the moment, rather than looking at the business related factors [41].

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Dimensions

Technical pressures of SMEs

Sources

IT requirements

Developing or reconfiguring IT to meet changing business needs

[41, 43, 44, 48]

IT requirements

Providing many different IT solutions for a range of business requirements

[41, 43]

IT requirements

Developing IT for information sharing (internally and/or externally)

[40, 41, 43, 44]

Data Management

Providing secure solutions for data protection, storage, analysis etc.

[40, 47, 51]

Internet adoption

Online business transactions and digital marketing

[40, 41, 43, 44]

Table 3.3

Research hypothesis [H3]

High technical pressures in terms of 'data management', 'IT requirements', 'business requirements', and 'internet adoption' are related with ERP adoption among SMEs in the EU and India.

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3.4 Organizational pressures in SMEs

Figure 3.4

3.4.1 Avoiding high upfront costs for providing IT solutions

It is not a myth that the SMEs avoid a high upfront cost for any investment they seek. An Australian study of SMEs [40] done in the late 1990s, revealed that there are primarily three IT acquisition phases for an SME: (a) Assessment of IT benefits, organisational culture and IT compatibility, (b) Sufficient internal resources for IT implementation and (c) External environment evaluation for the lacking in-house resources. Moreover, higher perceived benefits, organizational readiness, risk appetite and management support, lead to a quicker adoption of enterprise systems [48]. Furthermore, previous studies [40, 48] have confirmed that the investment of SMEs depends on various aspects like: (a) Disposable financial resources, (b) Prior use of technology in the firm, and so on. Furthermore, the research findings [40, 48] also indicate, the higher the financial resources and the technical exposure, the greater is the technology adoption in the SME. Therefore, it was relevant to understand if upfront cost was actually a driver to adoption of Cloud ERP.

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3.4.2 Working on low budgets for operating, changing or scaling IT solutions

Today’s SMEs operate in a global environment with high competition where low budgets are a primary concern. To overcome this challenge, SMEs try to adopt technology, for cost cutting benefits and operational efficiencies. However, the cost is a critical feature for SMEs to adopt the technology. Previously, studies [45] have found cost to be the primary hindrance of technology adoption. ERPs help to reduce the operating costs of SMEs by improving their business processes [48]. However, ERPs in general are not a cheap software tool, often they incur an high upfront cost that is not affordable by SMEs. Therefore, the working (operating) budgets are another dimension to cost, and are evaluated separately to understand its influence on adoption of Cloud ERP.

3.4.3 Team collaboration and cooperations (internally and/or externally)

Team collaboration and corporations has become a rule of thumb for organizational success today. Presently, firms operate in different geographies, have a diversified product portfolio, dispersed customer base and dynamic business requirements. To cope up with this dynamic business processes, the SMEs need a better team collaboration and corporations. This information exchange may happen internally among the employees of the organization, or externally among the organization and its customers or suppliers etc [41, 46]. This information exchange can be done in an easy, efficient and cheaper way through the digital means (Internet). However, the adoption of Internet in the SMEs depends on the prior use of technology by the firm [40]. Moreover, the ERPs demand that the team collaboration takes place on an organizational level. Several literature studies done previously in ERP domain, have also identified ‘Team collaboration’ and ‘Cooperations within and outside the organization’ as one of the critical ERP adoption factors in the enterprise [43]. Moreover, empirical evidences also suggest that the perceived use of technology is influenced by shared beliefs of technology users and training, which is further influenced by project (internal) communication [42].

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3.4.4 Lack of IT skills and experience in the organisation

It is a known fact that there is a clear gap between large corporations and SMEs. One of the reasons for such a gap is the access and know-how of technologies in SMEs as compared to that in large corporations [40]. Therefore, the previous experience and knowledge of top management becomes very crucial in terms of IT skills in the organization. Only through knowledge, the organization can achieve the flexibility it targets. Furthermore, in family operated firms, evidences suggest that the lack of professionalism hinders the adoption of technology due to autocratic behavior of the top management [46]. Moreover, it is often found, especially in small organizations, the lack of technical know-how usually leads to non-adoption of technology [48]. In case of SMEs we often observe this in top managements. Therefore, it was important to understand if lack of IT skills and experience in the organization had become a barrier to Cloud ERP.

Dimensions

Organizational pressures of SMEs

Sources

Financial

Avoiding high upfront costs for providing IT

[40, 48]

management

solutions

Financial

Working on low budgets for operating,

management

changing or scaling IT solutions

Human resource

Team collaboration and cooperations

[40, 41, 42, 43,

management

(internally and/or externally)

46]

Knowledge

Lack of IT skills and experience in the

[40, 46, 48]

management

organisation

[45, 48]

Table 3.4

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Research hypothesis [H4]

High organizational pressures in terms of ‘financial management’, ‘human resource management’ and ‘knowledge management’ are related with ERP adoption among SMEs in the EU and India.

3.5 External pressures in SMEs

Figure 3.5

3.5.1 Strong competitors

Previous studies [40] confirm evidences that firms operating in different geographic environments report the technology adoption as per their requirements. For example, the SMEs of the U.S.A adopt Internet for gaining competitive advantage, whereas the SMEs of developing countries adopt Internet for communication purpose [40]. Adoption of technology in different aspects can make a firm competitive on various levels. For example, introducing IT in the product and services the firm offers can make their product highly competitive in the market [45]. However, not all SMEs think that adoption of IT has a competitive advantage. A study done in 2003 reports that some firms still do not prefer to have an online product catalog, as they think it might pose a

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threat to their competitive advantage [49]. Therefore, it was important to understand the correlation of strong competitors in SMEs, when it comes to Cloud ERP adoption.

3.5.2 Value chain (customers, partners or suppliers)

It would not be an exaggeration to say that the gold-mine of business is in its customers, partners and/or suppliers. This is where the business generates its income from and survives in the competitive market of today. However, these days it is also very important not to just get the customers, but also to protect the existing customer base. This incurs a search cost for understanding the customers and keeping them onboard through various promotions or marketing schemes [48]. Previous studies confirm that the adoption of technology has helped SMEs, to prevent customer churn in different sectors [40]. The same goes true for partners and suppliers as well. In today’s highly competitive global environment, it is logical to have multiple partnerships and suppliers for better market share. However, having multiple partnerships and suppliers depends highly on internal and external factors of the company that further influences the IT adoption in the company [45]. Sometimes it is important to adopt technology just to meet the demands of partners and/or suppliers or to simply give support to the customers.

3.5.3 Coping with global markets

With the advent of internet, today’s SMEs operate in a global market. This implies that the SMEs face a global challenge from their competitors, right from the start. It is therefore, important for SMEs to cope up with this global challenge and introduce innovation. Previous studies [43, 48] confirm that the more innovative the organizations are, the better are the chances that they will resort to ERP adoption. Furthermore, for sustainable growth, the organizations should have a long term business plan and vision that meets the global market demands in order to grow [43]. These findings suggest that

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SMEs have a strategic intent for technology adoption, and therefore it is important to understand the influence of global market on SMEs in terms of Cloud ERP adoption.

3.5.4 Complex and/or unreliable macro-environment (economic, political, social or technological)

A business does not only face challenges from its competitors. One of the prominent challenges that SMEs face is from the macro-environmental dimension. The studies [40, 45] have confirmed that although the macro-environmental factors do not influence the technology adoption like internal factors do, they do have a noticeable effect on enforcing the business. Therefore, it is important to measure the effect of these macro-environmental factors like: (a) Political situations, (b) Economic conditions, (c) Social freedom

and (d) Technological flexibility in terms of Cloud ERP adoption.

However, since the importance and correlation of these factors were previously found very low [45, 49], these factors were composed as one macro-environmental factor.

3.5.5 Regulatory or legal requirements (e.g. data protection)

Regulatory or legal rules and regulations impact the technology adoption in any SME directly or indirectly. The more flexibility and support is given by the governments to the SMEs, the higher is the IT adoption [40, 45]. Moreover, the technology adoption may also occur in SMEs, if there are governmental compulsions to do so. For example, as reported in a previous study [45], about the adoption of Electronic Data Interchange (EDI) by SMEs. On the other hand, the same rules and requirements can become a barrier for the SMEs to adopt any form of technology. A lack of integration of internal and external systems can be one of the barriers of technology adoption [49]. This is observable even today in India, where the government work is still a paper based transaction. Therefore, it was relevant to consider the influence of regulatory or legal requirements on adoption of Cloud ERP.

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Dimensions

External pressures of SMEs

Sources

Market structure

Strong competitors

[40, 45, 49]

Industrial

Value chain (customers, partners or suppliers)

[40, 45, 48]

Coping with global markets

[43, 48]

Macro

Complex and/or unreliable macro-environment

[40, 45, 49]

environment

(economic, political, social or technological)

Regulations

Regulatory or legal requirements (e.g. data

characteristics Geographical dispersement

[40, 45, 49]

protection) Table 3.5

Research hypothesis [H5]

SMEs of the EU face external pressure in terms of macro-environmental factors to adopt Cloud ERP.

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3.6 Other factors

There are several other factors that impact any form of technological adoption in organizations, especially in the case of SMEs. These factors may be internal or external in nature with respect to the organization. An empirical investigation [40] done in 2004 found that the adoption of internet among the SMEs of the United States (US), was influenced by factors like age and size of the firm, prior use of technology by the firm, experience of the firm and so on. This internet adoption was measured in terms of ownership of websites by the SME, and the online e-commerce transactions the SMEs had. Furthermore, empirical evidences from another study [33] done in 2013, confirmed that age and size of SMEs, are the fundamental characteristic of growth in the case of young SMEs. However, the same study also revealed that in the case of old SMEs, age and size do not determine or impact the growth of the organization, but research and development and labour productivity does. Furthermore, empirical evidences [48] also suggest that firms with a larger size in terms of ‘number of employees’ are the primary adopters of Enterprise Systems.

Research hypothesis [H6]

The company characteristic ‘number of employees’ directly impacts the adoption of ERP system in SMEs.

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3.7 Research hypothesis summary

Based on the literature review done so far it is identified that even though SMEs get the advantage of upfront cost savings by Cloud ERP, the migration from On-premise ERP to Cloud ERP has not been that evident [8]. The primary reason observed during the literature review, for non-migration of Cloud ERP, was the ‘data security’ aspect of the Cloud. The following ​hypotheses are developed: [H1]

A low level of 'Cloud awareness' has a negative influence on adoption of Cloud ERP.

[H2]

Indian SMEs have a lower level of ‘Cloud awareness’ when compared to EU SMEs.

[H3]

High technical pressures in terms of 'data management', 'IT requirements', 'business requirements', and 'internet adoption' are related with ERP adoption among SMEs in the EU and India.

[H4]

High organizational pressures in terms of ‘financial management’, ‘human resource management’ and ‘knowledge management’ are related with ERP adoption among SMEs in the EU and India.

[H5]

SMEs of the EU face external pressure in terms of macro-environmental factors to adopt Cloud ERP.

[H6]

The company characteristic ‘number of employees’ directly impacts the adoption of ERP system in SMEs.

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Chapter 4: Data and research analysis

The number of emails opened were tracked using the mailchimp service, that tracks the email opened based on the micro one pixel image sent in the recipient's email [53]. A very low number, only 17.53% of emails sent were even opened. From those 17.53% emails that were opened, only a mere 0.70% completed the survey. The survey instrument [52] had a limitation of its own, it was not able to record the partial responses. Only if the respondents click on the final submit button, all the responses were recorded. Needless to say, the number of responses was the biggest limitation of this research, despite the efforts put behind it.

Looking at the very poor response rate from the EU SMEs, a different strategy was used to get the responses from Indian SMEs. To obtain responses from the Indian SMEs, Mr. Sanjeev Agrawal was contacted, the owner of Essen Electromech, a small sized manufacturing company in the state of Gujarat in India. He was humbly asked to communicate the survey to his business contacts. The same survey instrument was then circulated among the Indian SMEs, with a small modification such as the replacement of ‘number of countries in the EU’ with the ‘number of states in India’. We were able to get responses mostly from all the participants contacted in India, primarily because they were business contacts and moreover they were also contacted on their phones and requested to fill out the survey. Another interesting insight from the Indian participants was, all of the respondents from India happen to be from the state of Gujarat.

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4.1 Demographic presentation

The survey recorded a sum of 48 responses in total, as observed from ​figure 4.1.1, this comprised of 66.7% EU SMEs, 31.3% Indian SMEs and the remaining from outside EU. From within the EU SMEs, Hungary (29%) and Bulgaria (22.6%) together formed approximately 50% of the sample population. Austria (12.9%) and Germany (12.9%) formed nearly 26% of the responses and remaining sample was divided among Denmark, Latvia, Finland, Greece and Romania. This implies that the EU SMEs responses obtained were biased towards some countries.

Figure 4.1.1

All of the 15 responses from India were recorded from the SMEs located in the state of Gujarat. This implies that the Indian sample does not represent whole India, but only the Indian state Gujarat. Furthermore, there was only a single response recorded from outside EU, and therefore it was excluded from data analysis.

The demographic section in the beginning of the survey consisted of optional data, and therefore not all the respondents gave the information. However, from the recorded data, it was observed that 29% of the entrepreneurs of the EU SMEs were female, whereas in the case of Indian SMEs, a 100% male entrepreneurs responded. As a result,

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the total distribution of gender among the respondents was skewed towards the male as shown in the ​figure 4.1.2

Figure 4.1.2 The age questions was unattended by most of the respondents as observable from ​figure 4.1.3. However, from the received responses, we do observe that in the case of the EU SMEs, the respondents were quite young compared to the Indian respondents. Approximately 30% of the entrepreneurs from the EU SMEs were less than 40 years of age. Whereas, in the Indian SMEs more than 50% of the entrepreneurs were more than 50 years of age. This shows that the EU sample consisted of young entrepreneurs compared to the Indian SMEs.

Figure 4.1.3

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Since the average age of entrepreneurs from the EU SMEs was less compared to the Indian SMEs, it was quite obvious that they would have less experience in terms of management capacity than Indian entrepreneurs. As seen from ​figure 4.1.4, approximately 80% of the EU SMEs entrepreneurs had less than 20 years of experience in management capacity. On the other hand, 50% of the Indian entrepreneurs had approximately less than 20 years of experience, the remaining sample had more than 20 years of experience in terms of management capacity.

Figure 4.1.4

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4.2 Company characteristics presentation

According to previous studies [40, 41], ‘age’ of the SME turned out to be a better predictor of ERP adoption in SMEs, compared to ‘business complexity’ as a composed factor. ‘Age’ of the SMEs was further found to be a relevant predictor of technology adoption in many previous literature studies. Therefore, we analysed the age of the respondent SMEs. As observable from the ​figure 4.2.1, from among the EU SMEs, approximately 90% were incorporated on or after the year 2005 (young SMEs). In the case of Indian SMEs more than 50% of SMEs reported to be established before the year 2005 and the remaining were young SMEs.

Figure 4.2.1

Furthermore, the industry of the SMEs also plays an important role in adoption of ERP and technology in general [40, 41, 50]. From the responses obtained, approximately 50% of the EU SMEs were categorized under ‘Information and Communication’ (29%) and ‘Professional, Scientific and Technical activities’ (19.4%). The remaining EU SMEs were categorized in different industrial categorized as seen in ​figure 4.2.2. In the case of the Indian SMEs, majority (66.7%) of the sample was in the manufacturing sector.

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Figure 4.2.2 Financial budgets are the primary reason for adoption or non-adoption of technology in enterprises [44]. In the data we got, nearly 75% of the EU SMEs, and approximately 90% of the Indian SMEs reported to have an annual turnover of less than 2 million euros as observed from the ​figure 4.2.3.

Figure 4.2.3 Furthermore, if we look at the ​figure 4.2.4, approximately more than 30% of both the Indian and EU SMEs had less than 10 employees. Neither the EU SMEs nor the Indian SMEs reported to have more than 249 employees from our sample population.

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Figure 4.2.4

When it comes to the current situation of the ERP, the findings were quite unexpected. As seen from the ​figure 4.2.5, more than 70% of the Indian SMEs confirmed that they use an On-premise ERP, whereas this was only 1/3 in the case of the EU SMEs. However, we did observe that the Indian SMEs reported ‘NO’ Cloud ERP adoption. Moreover, from the responses we also observed that the EU SMEs reported a higher non-adoption of ERP (nearly 60%) compared to the Indian SMEs (approximately 25%).

Figure 4.2.5

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4.3 Cloud awareness and evaluation impact on ERP adoption

Before understanding the technical, organizational and environmental impact on Cloud ERP adoption, it was essential to understand if the respondents were even aware about the Cloud ERP, and if they have trailed or evaluated the same. Therefore, to answer the research question [RQ4], the respondent’s awareness was checked on four distinct but interrelated Cloud awareness variables, and three unique but correlated Cloud evaluation variables as mentioned in the​ table 4.3.1

How aware are you about Cloud ERP? I have heard a lot of Cloud based solutions to meet ERP requirements.

AW1

I know what Cloud based ERP is.

AW2

I know how Cloud ERP works.

AW3

I understand the implications of Cloud based ERP for my company.

AW4

We have also extensively.. evaluated Cloud ERP solutions

CEVAL1

trialed Cloud ERP solutions

CEVAL2

tested Cloud ERP solutions

CEVAL3 Table 4.3.1

Since these variables were reflective in nature, they had high intercorrelations. Therefore, it was decided to compose the variables. All of the four Cloud ERP awareness variables [AW1, AW2, AW3, AW4] were composed into a single [AW] variable, and all of the three Cloud ERP evaluation variables [CEVAL1, CEVAL2, CEVAL3] were composed into a single [CEVAL] variable. The composition of values was done by taking the mean values of a variables.

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Figure 4.3.1

To test the hypothesis [H1] and [H2] and to understand the Cloud ERP awareness and the Cloud ERP evaluation, a comparison of EU and Indian SMEs was done. As it can be seen from the ​figure 4.3.1, the EU SMEs slightly agree over the Cloud ERP awareness, when compared to Indian counterparts who are in a disagreement over Cloud ERP awareness. This validates the hypothesis [H2], that when compared to the EU SMEs, the Indian SMEs have a negligible Cloud ERP awareness. When it comes to the evaluation of Cloud ERP, both Indian SMEs and the EU SMEs tend to disagree, where the Indian SMEs disagree even more compared to the EU SMEs. This further validates the hypothesis [H1] that Cloud awareness has a negative influence on the adoption of Cloud ERP (in-general). These findings support the previous research findings [44], which showed that there exists a positive correlation between the technology adoption and the awareness in SMEs.

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ERP adoption correlation and ​p-value EU SMEs Indian SMEs

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AW

CEVAL

-0.38 ​(0.29)

-0.38 ​(0.14)

0.70 ​(0.00)

0.59 ​(0.02)

Table 4.3.2 (values in brackets indicate the p-value of the respective correlation)

Furthermore, the correlations ​(Pearson’s R) of [AW] and [CEVAL] was checked with the existing ERP situation of SMEs. As shown in the previous ​table 4.3.2, a correlation was found in the case of the Indian SMEs (with strong significance), between [AW] and ERP adoption. However, no significant correlation was discovered in the case of the EU SMEs for the same. For [CEVAL], a slight correlation was observed in the case of the Indian SMEs, but for the EU SMEs this was insignificant. This answers the [RQ4] that in the case of the Indian SMEs, Cloud awareness has a major influence on adoption of Cloud ERP, but Cloud awareness has no influence or a negative influence on adoption of Cloud ERP for EU SMEs. Although marginal and insignificant, it is interesting to observe a negative correlation for EU SMEs, when it comes to Cloud ERP adoption.

Standard deviations

AW

CEVAL

EU SMEs

2.36

2.10

Indian SMEs

2.27

1.49

Table 4.3.3 To understand the significance of the results, apart from the significance level ​(p-value) reported in ​table 4.3.2, standard deviations of [AW] and [CEVAL] with respect to ERP adoption were also calculated. As shown in ​table 4.3.3, the standard deviations turn out to be relatively high for both the composed variables. Therefore, it is clear that the sample population did not have a uniform opinion on Cloud ERP awareness or on Cloud ERP evaluation. This confirms the less significance of the results obtained, based on the composed variables, as there is a high variation in the responses obtained.

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4.4 Technical environment impact on ERP adoption

To check the influence of technical factors on the adoption of Cloud ERP, the respondents were asked to show their agreement over five different technical variables listed in the​ table 4.4.1

In terms of the technical environment, we have high demands for.. providing secure solutions for data protection, storage, analysis etc.

TEC1

developing or reconfiguring IT to meet changing business needs

TEC2

providing many different IT solutions for a range of business requirements

TEC3

online business transactions and digital marketing

TEC4

developing IT for information sharing (internally and/or externally)

TEC5

Table 4.4.1

When it comes to the technical pressures in the organizations, there is a significant difference between the EU SMEs and the Indian SMEs. As observed from the ​figure 4.4.1 in general, EU SMEs agree that they face a higher technical pressure when compared to Indian SMEs. From among the technical pressures, SMEs in the EU confirm that, they face the most technical pressure in terms of [TEC5]. However, interestingly there was a low technical pressure observed in general, among the Indian SMEs compared to the EU SMEs. One reason for this could be that, the majority of the Indian SMEs sample was categorized into manufacturing sector.

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Figure 4.4.1

Although, there was a significant mean agreement in the EU SMEs over high technical pressure from [TEC5], there was no significant correlation observed between [TEC5] and ERP adoption of the EU SMEs. However, interestingly for the Indian SMEs, the technical pressure [TEC1] has a moderate correlation with their ERP adoption, as observed from ​table 4.4.2. This shows that, the Indian SMEs admit to face a particular technical challenge of providing secure solutions in terms of data protection, storage, analysis and so on, that affects their EPR adoption decision.

ERP adoption correlations and p-values EU SMEs

TEC1

TEC2

TEC3

TEC4

TEC5

-0.33 ​(0.07) -0.35​ ​(0.05) -0.40 ​(0.03) -0.35​ ​(0.05) -0.35​ (0.06)

Indian SMEs 0.57 ​(0.03) 0.39 ​(0.15) 0.51 ​(0.05) 0.40 ​(0.14) 0.48​ (0.07) Table 4.4.2 (values in brackets indicate the p-value of the respective correlation) Overall, as observed from ​table 4.4.2, although we see some significance in the correlations (where p 0.05) to be considered as an ERP adoption factor.

ERP adoption correlations and ​p-values EU SMEs

ORG1 -0.06 ​(0.73)

ORG2

ORG3

ORG4

0.01 ​(0.94) -0.31 ​(0.09) -0.27 ​(0.14)

Indian SMEs

0.35 ​(0.20) 0.41 ​(0.13) 0.11 ​(0.70) 0.15 ​(0.60) Table 4.5.2 (values in brackets indicate the p-value of the respective correlation)

Moreover, for other organizational pressures [ORG1, ORG3 and ORG4], we do not observe any significant correlations. This rejects the hypothesis [H4] that the organizational pressures become a barrier for ERP adoption. Furthermore, to validate the significance of the mean agreement in organizational factors, the standard deviations of the same were analysed.

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Standard deviations EU SMEs Indian SMEs

ORG1

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ORG2

1.45 2.06 Table 4.5.3

ORG3

ORG4

1.08

1.59

2.13

1.51

2.13

2.00

Although we see a very low significance level ​(p-value) reported in ​table 4.5.2, we do observe from the ​table 4.5.3 that the standard deviation of organizational pressure [ORG2] is relatively less, this indicates a uniform opinion among the respondents. One interpretation of this could be that, although there is no significant correlation of the ERP adoption with organizational pressure [ORG2], SMEs of the EU and to a certain extent the SMEs of India as well, do face a high pressure in terms of ‘avoiding high upfront costs for providing IT solutions’. This further supports the findings from the studies [45, 48] that in terms of internal environment, the SMEs tend to avoid high upfront cost for providing secure IT solutions. Organizational pressures [ORG1, ORG2 and ORG4] have high standard deviations, which means that there is less significance of results obtained in these organizational pressures, as there was a high variation in the data.

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4.6 External environment impact on ERP adoption

To check the impact of external factors on the adoption of Cloud ERP, the respondents were asked to show their agreement over five different external variables listed in the table 4.6.1

In terms of the external environment, we have high demands .. from many and/or strong competitors

EXT1

from the value chain (customers, partners or suppliers)

EXT2

in coping with global markets

EXT3

due to a complex and/or unreliable macro-environment (economic, political, social or technological)

EXT4

due to regulatory or legal requirements (e.g. data protection)

EXT5

Table 4.6.1

When we look at the mean values of external pressures [EXT1 to EXT5] in SMEs of EU and India, as shown in ​figure 4.6.1, we observe that there is no firm agreement or disagreement among the respondents. However, Indian SMEs report to face more external pressure [EXT1] compared to EU SMEs, and the EU SMEs report to face more [EXT2] compared to the Indian SMEs. This result partially validates the hypothesis [H5] and supports the findings of [40, 45, 48] previous investigations done, which prove that in terms of external pressure the SMEs face high demands from their value chain (customer, suppliers, partners) and competitors.

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Figure 4.6.1

Although we see some differences in the external pressures [EXT1 and EXT2], we do not observe any correlations between these factors and the ERP adoption in SMEs. As it can be seen from the ​table 4.6.2, there are no significant correlations between any external pressures [EXT1 to EXT5] and the current ERP situation of EU SMEs or Indian SMEs.

ERP adoption correlations and p-values EU SMEs

EXT1

EXT2

EXT3

EXT4

EXT5

-0.20 ​(0.28) -0.20 ​(0.28) -0.24 ​(0.18) -0.48 ​(0.01) -0.48 ​(0.01)

Indian SMEs

0.28 ​(0.31) 0.20 ​(0.48) 0.33 ​(0.23) 0.03 ​(0.92) -0.25 ​(0.36) Table 4.6.2 (values in brackets indicate the p-value of the respective correlation)

However, interestingly we do observe a marginally significant negative correlation among the EU SMEs (p < 0.05) in terms of external pressure [EXT4 and EXT5]. This means with the increase in unreliability of the macro-environmental factors [EXT4], there is a decrease in the ERP adoption in EU SMEs. Furthermore, as the regulatory or

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legal requirements [EXT5] increases, ERP adoption of the EU SMEs decreases. We do not observe any significant correlations between the ERP adoption of Indian SMEs with any of the external pressures [EXT1 to EXT5]. This finding is quite contrary to what previous studies [40, 45, 49] indicated, that SMEs face a high demand in terms of complex or unreliable macro-environment factors and legal or regulatory requirements.

Standard deviations

EXT1

EXT2

EXT3

EXT4

EXT5

EU SMEs

1.79

1.74

1.99

1.96

2.19

Indian SMEs

1.96 1.96 Table 4.6.3

1.97

1.49

1.55

Apart from the p-values reported in ​table 4.6.2, to understand the significance of the results even further, the standard deviations of external pressures [EXT1 to EXT5] with the current ERP situation in SMEs was analysed. As observable from ​table 4.6.3, we can see that there is a high standard deviation among the external pressures SMEs of the EU and India report. This could mean that, even within the separate groups i.e. the EU and Indian SMEs, the respondents did not share a uniform opinion. This further confirms the less significance of the results obtained.

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4.7 TOE factor composition

Since high standard deviations were observed across the technical, organizational and environmental factors, it was decided to compose these variables and check if there was any general significant correlation among these variables and the ERP adoption among the SMEs.

Figure 4.7.1 As it can be seen from the ​figure 4.7.1 we observe that EU SMEs agree to face a higher technical pressures [TEC] overall, compared to Indian SMEs. However, both EU and Indian SMEs show a marginal agreement over the organizational pressures [ORG] they face, but do not take a firm stand on the external pressures [EXT] they face. Moreover, from all the three types of pressures in an SME we observe that both, the EU and Indian SMEs reported to face a high pressure in terms of their ‘internal organization’, when it comes to the ERP adoption. To understand this further, the correlations (with p-values) and standard deviations of these composed factors were analyzed.

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ERP adoption correlation and ​p-values

EU SMEs

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TEC

ORG

EXT

-0.48 ​(0.18)

-0.27 ​(0.28)

-0.44 ​(0.13)

Indian SMEs 0.51 ​(0.50) 0.43 ​(0.47) 0.21 ​(0.14) Table 4.7.1 (values in brackets indicate the p-value of the respective correlation)

As seen from the ​table 4.7.1 we observe that in the Indian SMEs case, there is a marginal positive correlation (with very low significance) between their ERP adoption and the composed technical pressures [TEC] they faced. Meaning, if the Indian SMEs would be facing a high technical pressure overall, there was a higher chance that they would adopt an ERP system. However, in the case of the EU SMEs, the opposite was the case, the higher the technical pressure the lower was the adoption of an ERP system. We do not observe any significant correlations for either SMEs in terms of composed organizational [ORG] and external [EXT] pressures they face.

Standard deviations EU SMEs Indian SMEs

TEC

ORG 1.37

2.22 Table 4.7.2

EXT 1.04

1.44

1.09

1.20

Table 4.7.2 shows the standard deviations from the composed Technical [TEC], Organizational [ORG], and External [EXT] pressures respectively. For the Technical pressures [TEC], we observe a low value in the case of EU SMEs, meaning that there is a uniform opinion among the respondents to face a higher technical pressure [TEC], when it comes to the ERP adoption. This is contrary to the low significance (p = 0.18) of the negative correlation [TEC] obtained for the EU SMEs. However, for the Indian SMEs, a higher value of standard deviation [TEC] indicates that there is no uniform opinion among the respondents, which further confirms the low significance (p = 0.50) of the marginal correlation observed in ​table 4.7.1. Furthermore, the low standard deviations in the organizational [ORG] and external [EXT] pressures indicate a uniform

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opinion among the respondents, which is contrary to the low significance observed in the correlation analysis ​(table 4.7.1). Therefore, on a holistic level we can interpret that, from the three major types of pressures [TEC, ORG and EXT], the SMEs reported that the organizational pressures [ORG] influences them the most. But due to the low significance (p-value) in the results, we are unable to confirm if this actually becomes an enabler or a barrier for the Cloud ERP adoption in the SMEs.

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4.8 Cloud ERP vs. On-premise ERP performance

To understand how satisfied the SMEs were with their current ERP solutions, we asked four distinct questions [ERPM1 to ERPM4] to the respondents, as listed in the ​table 4.8.1. For analysis purpose we calculated the mean values for these responses.

Our current ERP solution increased / improved .. Operational efficiency of IT services

ERPM1

Downtime or reliability of IT services

ERPM2

Perceived utility of IT services

ERPM3

Impact of IT services on business goal achievement

ERPM4

Table 4.8.1

Based on the survey responses, it was noticed that a 100% of the Indian respondents confirmed having an On-premise ERP, whereas the EU respondents had On-premise ERP and Cloud ERP as well. Therefore, a comparison of On-premise ERP and Cloud ERP performance evaluation was done, as shown in ​figure 4.8.1

Figure 4.8.1

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We can observe from the ​figure 4.8.1 that there is an agreement within EU SMEs, which suggests that having any type of ERP solution does improve their performance over different dimensions [ERPM1 to ERPM4]. Moreover, although insignificant, we do observe that, EU SMEs having Cloud ERP report a slightly higher performance [ERPM1 to ERPM3] satisfaction when compared to On-premise ERP users.

Figure 4.8.2

Furthermore, since the EU and the Indian SMEs both reported having On-premise ERP, the performance satisfaction comparison of On-premise ERP was done ​(figure 4.8.2). We observed that both, the EU and the Indian SMEs reported performance satisfaction over different evaluation parameters [ERPM1 to ERPM4]. However, in the case of the Indian SMEs, they neither agree nor disagree that their ERP increases their perceived utility of IT [ERPM3].

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Chapter 5: Research conclusions

5.1 Research results

Primarily, the most significant contribution of this research [RQ4] is the empirical evidences obtained to prove that ‘Cloud awareness’ does have a major influence on adoption of the Cloud ERP. This was found true in the case of EU SMEs as well as Indian SMEs. However, it was discovered that Indian SMEs had even lower ‘Cloud awareness’ compared to EU SMEs. This validates the findings from a previous study [44] that ‘awareness’ has a negative influence on technology adoption.

Moreover, it was also discovered that [RQ1] company characteristics like ‘number of employees’ and [RQ5] macro environmental factors such as ‘economic, social, and political environments’ do have substantial influence on the adoption of the Cloud ERP in SMEs of the EU and India. In the case of EU SMEs [EXT2] - the value chain (customers, partners or suppliers), and in the case of Indian SMEs [EXT1] - strong competitors, turned out to be the most influential external factors that become a barrier for Cloud ERP adoption.

Finally, among the identified ‘technical’, ‘organizational’ and ‘external’ pressures [RQ3 and RQ4] it was discovered that the EU SMEs find (a) [TEC5] - developing IT for information sharing (internally and/or externally), (b) [ORG2] - avoiding high upfront costs for providing IT solutions and (c) [EXT2] - the value chain (customers, partners or suppliers), to be the most influencing factors that drive the adoption of Cloud ERP.

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Finally, the research also makes initial contributions in identifying the new potential factors ​(table 2.5) such as the Big Data, Internet of Things, Business models and so on, that would influence the organizations in the adoption of their ERP system in the near future. A holistic approach that combines the benefits, challenges, adoption and technical comparisons of the On-premise and Cloud based ERP ​(table 1.4) adds the final corollary to the research contributions.

Research Questions

Results

[RQ1]

Do the company characteristics like ‘number of employees’ Yes (Low play a crucial role for EU SMEs, when it comes to adoption significance) of Cloud ERP?

[RQ2]

Which among the identified ‘Technical’, ‘Organizational’ and ‘External’ pressures, is the most influential enabler, for EU SMEs, to adopt Cloud ERP?

Insignificant results

[RQ3]

Which among the identified ‘Technical’, ‘Organizational’ and ‘External’ pressures, is the most influential barrier for SMEs of the EU and India, to adopt Cloud ERP?

Insignificant results

[RQ4]

Does ‘Cloud awareness’ have a major influence on adoption of Cloud ERP in the case of SMEs of the EU and of India?

Yes

[RQ5]

Does external pressure in terms of ‘macro environmental’ factors have influence on the adoption of Cloud ERP?

Yes (Low significance)

Table 5.1

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5.2 Research limitations

There are a couple of limitations to the research that needs to be addressed. Primarily, one of the biggest limitations of the research is the low number of responses, which in turn reduces the statistical significance of the reported findings. Unfortunately, despite the efforts and the given time restrictions, it was not possible to get a statistically significant number of responses. Moreover, because of a low statistical power, it was not feasible to deploy sophisticated data analysis techniques, that could have been further used to find inter-correlations and dependencies among the covariates.

Moving on, the primary objective of this research was to understand the adoption of Cloud ERP in SMEs, however, since approximately only 10% of the sample had Cloud ERP installation, this directly impacted the research findings. A sample containing higher percentage of SMEs that adopted to Cloud ERP, would have perhaps added more value to the research findings. Moreover, the sample population had a limitation of its own. The responses recorded from the EU SMEs reflected only a handful of European Union countries, and in the case of the Indian SMEs the sample population was concentrated towards the state of Gujarat. Therefore, since it was not possible to get a good representation of the sample population, this affected the research findings as well.

Furthermore, the research instrument had a limitation of its own. The response was only saved if the respondent clicked on the final submit button. It was not possible to record partial responses. Since the survey had multiple sections (although only selection based) that could have been one of the reasons for low responses. Rarely people take out time for online surveys today, especially when there is no real incentive to gain, and even then the response rate is very low.

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5.3 Research discussions

Despite the acknowledged limitations, the research has been able to make some meaningful contributions in understanding the enablers and barriers of Cloud ERP adoption in SMEs of the EU and India.

Research Hypothesis

Results

[H1]

A low level of 'Cloud awareness' has a negative influence on Supported adoption of Cloud ERP.

[H2]

Indian SMEs have a lower level of ‘Cloud awareness’ when compared to EU SMEs.

Supported

[H3]

High technical pressures in terms of 'data management', 'IT requirements', 'business requirements', and 'internet adoption' are related with ERP adoption among SMEs in the EU and India.

Not supported

[H4]

High organizational pressures in terms of ‘financial management’, ‘human resource management’ and ‘knowledge management’ are related with ERP adoption among SMEs in the EU and India.

Not supported

[H5]

SMEs of the EU face external pressure in terms of Partially macro-environmental factors to adopt Cloud ERP. supported

[H6]

The company characteristic ‘number of employees’ directly Partially impacts the adoption of ERP system in SMEs. supported Table 5.3

Primarily, the most significant finding of this research is that ‘Cloud awareness’ is a major barrier of Cloud ERP adoption, especially in the case of Indian SMEs. The responses obtained from the Indian SMEs shows a high rate of On-premise ERP adoption compared to the EU SMEs, but the Indian SMEs reveal a low level of awareness when it comes to Cloud ERP adoption. This further supports the findings from the investigation [44] done in 2001, that awareness plays an important role in

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adoption of technology. Although, the awareness of the Cloud is better in EU SMEs compared to Indian SMEs, they do not agree about Cloud awareness completely. For those EU SMEs who show Cloud awareness, disagree on having tried or evaluated the Cloud ERP solutions. Any technology adoption is not just knowledge, but further requires evaluations and trials to support a proper diffusion [59]. This clearly indicates that Cloud ERP vendors have not yet been able to penetrate the potential Cloud ERP markets. Both developed and developing market need a proper marketing strategy in terms of Cloud ERP diffusion. However, due to a low sample size and marginal representation of the EU and Indian SMEs, the findings cannot be generalized.

Secondly, if we look at the company characteristics alone, we observe there as well that Indian SMEs when compared to EU SMEs, have a higher share of On-premise ERP adoption. The Indian SMEs were majorly clustered in ‘manufacturing sector’ and were further quite ‘older in age’ when compared to the EU SMEs. This supports the study [44] done in 2001, that company characteristics like age, industry etc. do play an important role when it comes to adoption of technology in SMEs. However, due to low significance in results, this finding cannot be generalized.

Furthermore, after composing the different Technical, Organizational and External factors, it was observed that SMEs of the EU and India both represent a higher mean agreement in the overall Organizational pressures they face. With less standard deviation in these results, this confirms a part of the result from previous studies [45, 48], which showed that the Technical and Organizational factors do influence the technology adoption in SMEs more than the External factors. However, due to low significance (p-value) of results, it was not possible to confirm the influence of overall Technical pressures in SMEs for Cloud ERP adoption. Although with low significance, it was still evident that the overall Organizational and External pressures both report to influence the Cloud ERP adoption in SMEs of the EU and India as they report low standard deviations. Another peculiar observation is that the correlations with the ERP adoption, of the composed Technical [TEC], Organizational [ORG] and External

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environmental [EXT] pressures respectively, was negative in the case of the EU SMEs and positive in the case of the Indian SMEs. On a holistic level, there are two interpretations of this finding: (a) For the EU SMEs, the lower the Technical, Organizational and External environmental pressures respectively, the higher is the ERP adoption, and (b) For the Indian SMEs, the higher the Technical, Organizational and External environmental pressures respectively, the higher is the ERP adoption. However, it is unclear at this stage as to why exactly we observe an inverse relationship for ERP adoption in EU SMEs case. One of the reasons for the same could be the low statistical power. However, there could also be cultural reasons behind the decision making of technology adoption in the times of pressure. Perhaps this indicates another area of future investigation.

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5.4 Future scope of research

This research opens up a number of opportunities that are yet to be explored in the field of Cloud based technologies. To begin with, this research only targets the Cloud ERP adoption in SMEs, however many SMEs use different enterprise systems like Supply Chain Management (SCM), Customer relationship Management (CRM) and so on. It would be interesting to explore individually, the adoption of these different types of Cloud enterprise systems, specifically in the case of SMEs. A comprehensive study, based on understanding the adoption of all types of Cloud enterprise systems that the SMEs adopt, could be another interesting direction.

Another possible approach could be the extension of this research and TOE framework, to concentrate on particular countries, and then compare the cultural differences in understanding the adoption of Cloud based enterprise systems in SMEs. Furthermore, a mixed approach based on a case study and a survey study could be conducted. The case study approach would help to accurately understand the current factors that cause the SMEs to adopt different Cloud enterprise technologies. Based on this case study, a survey study could be implemented that would ask structured questions to accurately understand the adoption and barrier of Cloud based enterprise systems in SMEs. Such an investigation would be more time consuming, especially in term of getting quality and quantity of responses, and therefore perhaps this indicates a PhD topic.

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Acknowledgements

Primarily, I would like to acknowledge the expert guidance and feedbacks from Univ. Prof. DI Dr. Edward W.N. Bernroider on every stage of this Master thesis. Despite the limitations of time, it was very kind of Dr. Bernroider to give quick feedbacks and share his useful insights on the topic, without which the thesis would never meet the research objective. Furthermore, I would extend my gratitude to Ms. Samira Al-Hakim (a literature student from University of Vienna), for proofreading the master thesis and to check for any grammatical errors. Finally, I would like to thank Mr. Sanjeev Agrawal (my father) for helping me in circulating the survey to his business contacts in India.

Appendix

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No

Geographical dispersement Financial management

7 8

Dimension Demographic characteristics Demographic characteristics Demographic characteristics Company characteristics Company characteristics

Industrial characteristics

Feedback

6

1 2 3 4 5

44 44

40, 41, 50

40, 44, 48 40, 41

Sources

IND

Code AGE GEN OCC EMP FOU

In which country is the head quarters (HQ) of your company? LOC What was the annual turnover (operating revenue) of your company in the finanFIN

In what industry is your company categorized?

Questions What is your age? What is your gender? How many years of experience do you have in a management capacity? How many employees does your organization have? In which year was your company established

Values Comment 18 to 99 (a) Male (b) Female coding: a=1, b=2 0 to 99 0 to 999999 Whole number 1 Agriculture, Forestry and Fishing, 2 Mining and Quarrying, 3 Manufacturing, 4 Electricity, Gas, Steam, and Air Conditioning Supply, 5 Water Supply, Sewerage, Waste Management and Remediation Activities, 6 Construction, 7 Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles, 8 Transportation and Storage, 9 Accommodation and Food Service Activities, 10 Information and Communication, 11 Financial and Insurance Activities, 12 Real Estate Activities, 13 Professional, Scientific and Technical Activities, 14 Administrative and Support Service Activities, 15 Public Administration and Defense, Compulsory Social Security, 16 Education, 17 Human Health and Social Work Activities, 18 Arts, Entertainment and Recreation, 19 Other Service Activities, 20 Activities of Households as Employers, Undifferentiated Goods- and ServicesProducing Activities of Households for Own Use, 21 Activities of Extraterritorial None 1 Austria, 2 Belgium, 3 Bulgaria, 4 Croatia, 5 Republic of Cyprus, 6 Czech Republic, 7 Denmark, 8 Estonia, 9 Finland, 10 France, 11 Germany, 12 Greece, 13 Hungary, 14 Ireland, 15 Italy, 16 Latvia, 17 Lithuania, 18 Luxembourg, 19 Malta, 20 Netherlands, 21 Poland, 22 Portugal, 23 Romania, 24 Slovakia, 25 Slovenia, 26 Spain, 27 Sweden, 28 United Kingdom (UK), 29 Outside European Union (EU) None Nominal (a) < 2 mil. Euros per annum (b) 2 to 10 mi. Ecoding: a=1, b=2, c=3, d=4

Scale Cardinal Nominal Cardinal Cardinal None

Background Information Internal comment: Young SMEs are targeted in particular because empirical evidences suggest that young SMEs are more innovative, have a higher risk appetite and a greater growth rate, compared to old SMEs [33]

Research Instrument

9

Dimension Knowledge management

39, 44 39, 44 39, 44 39, 44

Sources

10

Dimension Cloud evaluation

39, 44 39, 44 39, 44

Sources

11

Dimension ERP strategy

Sources 39, 44, 45

Questions My company currently uses an ..

Questions We have also extensively .. evaluated Cloud ERP solutions trialed Cloud ERP solutions tested Cloud ERP solutions

Questions How aware are you about Cloud ERP? I have heard a lot of Cloud based solutions to meet ERP requirements. I know what Cloud based ERP is. I know how Cloud ERP works. I understand the implications of Cloud based ERP for my company.

12

Dimension ERP use

Questions Our ERP solution is already being .. 41, 43, 44, 48 extensively used to support specific business processes 41, 43, 44, 48 widely used across major business functions

Sources

No

13

Dimension ERP performance evaluation

Questions Our current ERP solution increased / improved .. Operational efficiency of IT services 43, 44, 45 Downtime or reliability of IT services 43, 46 43, 44, 45, 46 Perceived utility of IT services Impact of IT services on business goal achievement 43, 44, 45

Sources

ERP Performance Internal comment: Only companies with "ERPS=1-2" get this question. This question is dependant on question 11

No

ERP Infusion Internal comment: Only companies with "ERPS=1-2" get this question. This question is dependant on question 11

No

Current ERP situation Internal comment: All companies are asked this question.

No

Cloud Evaluation or Trial Internal comment: All companies are asked this question.

No

Cloud Awareness Internal comment: All companies are asked this question. This determines the knowledge of SMEs about Cloud based ERP

Scale

Likert Likert Likert Likert

Scale

Scale

Scale Likert Likert Likert

ERPM1 ERPM2 ERPM3 ERPM4

Code

Likert Likert Likert Likert

Scale

CUSE1 Likert CUSE2 Likert

Code

Code ERPS1 ERPS2 ERPS3

CEVAL1 Likert CEVAL2 Likert CEVAL3 Likert

Code

AW1 AW2 AW3 AW4

Code

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

Values On-premise ERP system (non-Cloud) = 1 Cloud-based ERP system = 2 None of the above = 3

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

Comment

Comment

this takes to Q-14

Comment

Comment

Comment

14

Data management IT requirements IT requirements Internet adoption IT requirements

Dimension

Questions In terms of the technical environment, we have high demands for .. 40, 47 providing secure solutions for data protection, storage, analysis etc. 41, 43 developing or reconfiguring IT to meet changing business needs 41, 43, 44, 48 providing many different IT solutions for a range of business requirements online business transactions and digital marketing 40, 41, 44 40, 41, 43, 44 developing IT for information sharing (internally and/or externally)

Sources TEC1 TEC2 TEC3 TEC4 TEC5

Code Likert Likert Likert Likert Likert

Scale strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

Comment

15

Sources

Questions In terms of the internal environment, we have high demands .. Financial management working on low budgets for operating, changing or scaling IT solutions 45, 48 Financial management avoiding high upfront costs for providing IT solutions 45, 48 Human resource management 40, 42, 43, 46 allowing for team collaboration and cooperations (internally and/or externally) Knowledge management due to a lack of IT skills and experience in the organisation 40, 46, 48

Dimension ORG1 ORG2 ORG3 ORG4

Code Likert Likert Likert Likert

Scale

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

16

Macro enviornment Regulation

Market structure Industry characteristics Geographical dispersement

Dimension

40, 45, 49

40, 45, 48 40, 45, 48 43, 48 40, 45, 49

Sources

No

17

Other factor influences

Dimension

39

Sources

Other Pressure Internal comment: All companies are asked this question

No

Questions In terms of the company environment, are there any other types of high demands that your company encounters? (Optional)

Questions In terms of the external environment, we have high demands .. from many and/or strong competitors from the value chain (customers, partners or suppliers) in coping with global markets due to a complex and/or unreliable macro-environment (political, economic, social or technological) due to regulatory or legal requirements (e.g. data protection)

OTHP

Code

EXT4 EXT5

EXT1 EXT2 EXT3

Code

None

Scale

Likert Likert

Likert Likert Likert

Scale

Text input

Values

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1) strongly agree (7) to strongly disagree (1)

Values

External Pressure Internal comment: All companies are asked this question Definition: The environmental context includes the size and structure of the industry, the firm’s competitors, the macroeconomic context, and the regulatory environment. [19]

No

If any other relevant factor

Comment

Comment

Comment

Definition: The organizational context refers to the characteristics and resources of the firm, including the firm’s size, degree of centralization, degree of formalization, managerial structure, human resources, amount of slack resources, and linkages among employees. [19]

Organizational Pressure Internal comment: All companies are asked this question

No

Technical Pressure Internal comment: All companies are asked this question Definition: The technological context includes the internal and external technologies that are relevant to the firm. Technologies may include both equipment as well as processes. [19]

Sources (No. are the same as in the final thesis document) No Description Depietro, R., Wiarda, E., & Fleischer, M. (1990). The context for change: Organization, technology and environment. The processes of technological innovation , 199 (0), 151-175. 19 Nunes, P. M., Gonçalves, M., & Serrasqueiro, Z. (2013). The influence of age on SMEs’ growth determinants: Empirical evidence. Small Business Economics , 40 (2), 249-272. 33 Segaar, Dewi, C. Bolman, and M.C. Willemsen (2007), "Identifying determinants of protocol adoption by midwives: a comprehensive approach", Health Education Research, 22, 14-26. 39 Dholakia, R. R., & Kshetri, N. (2004). Factors impacting the adoption of the Internet among SMEs. Small Business Economics, 23(4), 311-322. 40 Buonanno, G., Faverio, P., Pigni, F., Ravarini, A., Sciuto, D., & Tagliavini, M. (2005). Factors affecting ERP system adoption: A comparative analysis between SMEs and large companies. Journal of Enterprise Information Management, 18(4), 384-426. 41 Amoako-Gyampah, K., & Salam, A. F. (2004). An extension of the technology acceptance model in an ERP implementation environment. Information & Management, 41(6), 731-745. 42 Nah, F. F. H., Zuckweiler, K. M., & Lee-Shang Lau, J. (2003). ERP implementation: chief information officers' perceptions of critical success factors. International Journal of Human-Computer Interaction, 16(1), 5-22. 43 Mehrtens, J., Cragg, P. B., & Mills, A. M. (2001). A model of Internet adoption by SMEs. Information & management , 39 (3), 165-176. 44 Fink, D. (1998). Guidelines for the successful adoption of information technology in small and medium enterprises. International journal of information management , 18 (4), 243-253. 45 Bruque, S., & Moyano, J. (2007). Organisational determinants of information technology adoption and implementation in SMEs: The case of family and cooperative firms. Technovation , 27 (5), 241-253. 46 Lawson, R., Alcock, C., Cooper, J., & Burgess, L. (2003). Factors affecting adoption of electronic commerce technologies by SMEs: an Australian study. Journal of small business and enterprise development, 10(3), 265-2 47 Ramdani, B., Kawalek, P., & Lorenzo, O. (2009). Predicting SMEs' adoption of enterprise systems. Journal of Enterprise Information Management, 22(1/2), 10-24. 48 Scupola, A. (2003). The adoption of Internet commerce by SMEs in the south of Italy: An environmental, technological and organizational perspective. Journal of Global Information Technology Management, 6(1), 52-71. 49 RAMON - Reference And Management Of Nomenclatures. (n.d.). Retrieved October 30, 2016, from 50 http://ec.europa.eu/eurostat/ramon/nomenclatures/index.cfm?TargetUrl=LST_NOM_DTL&StrNom=NACE_REV2&StrLanguageCode=EN&IntPcKey=&StrLayoutCode=

Survey Email

Survey

ERP adoption study of SMEs Basic information: This survey is part of my Master thesis at WU (Vienna University of Economics and Business).  Your help would be very important to allow me to finish the thesis.  My aim is to understand the adoption decision of Cloud based ERP (Enterprise Resource  Planning) in young SMEs (Small and Medium sized Enterprises). This flash survey should take  only up to 8 minutes of your time.  Data privacy: All the data will be kept private and will be strictly used for this research only. In­case of any  queries please contact me on: [email protected] Click NEXT to start the survey. *Required

Background Information 1. What is your age?

2. What is your gender? Mark only one oval.  Male  Female 3. How many years of experience do you have in a management capacity?

4. How many employees does your organization have?

5. In which year was your company established?

6. In what industry is your company categorized? Mark only one oval.  Agriculture, Forestry and Fishing  Mining and Quarrying  Manufacturing  Electricity, Gas, Steam, and Air Conditioning Supply  Water Supply, Sewerage, Waste Management and Remediation Activities  Construction  Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles  Transportation and Storage  Accommodation and Food Service Activities  Information and Communication  Financial and Insurance Activities  Real Estate Activities  Professional, Scientific and Technical Activities  Administrative and Support Service Activities  Public Administration and Defense, Compulsory Social Security  Education  Human Health and Social Work Activities  Arts, Entertainment and Recreation  Other Service Activities  Activities of Households as Employers, Undifferentiated Goods­ and Services­ Producing Activities of Households for Own Use  Activities of Extraterritorial Organization and Bodies

7. In which country is the head quarters (HQ) of your company? Mark only one oval.  Austria  Belgium  Bulgaria  Croatia  Republic of Cyprus  Czech Republic  Denmark  Estonia  Finland  France  Germany  Greece  Hungary  Ireland  Italy  Latvia  Lithuania  Luxembourg  Malta  Netherlands  Poland  Portugal  Romania  Slovakia  Slovenia  Spain  Sweden  United Kingdom (UK)  Outside European Union (EU)

8. What was the annual turnover (operating revenue) of your company in the financial (7) ­ Strongly (7) ­ Strongly (1) ­ Strongly (1) ­ Strongly year 2015­16? (6) (6) (5) (5) (4) (4) (3) (3) (2) (2) agree agree disagree disagree Mark only one oval.  Less than 2 million Euros per annum  2 to 10 million Euros per annum  10 to 50 million Euros per annum  More than 50 million Euros per annum

Cloud Awareness Cloud ERP enables a company’s accounting, operations management and reporting to run in the  cloud (over the internet). 9. How aware are you about Cloud ERP? * Mark only one oval per row. (7) ­ Strongly agree

(6)

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

I have heard a lot of Cloud based solutions to meet ERP requirements. I know what Cloud based ERP is. I know how Cloud ERP works. I understand the implications of Cloud based ERP for my company.

Cloud Evaluation or Trial 10. We have also extensively .. * Mark only one oval per row. (7) ­ Strongly agree

(6)

evaluated Cloud ERP solutions trialed Cloud ERP solutions tested Cloud ERP solutions

Current ERP situation 11. My company currently uses .. * Mark only one oval.  On­premise ERP system (non­Cloud)  Cloud­based ERP system  None of the above 

Skip to question 14.

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

ERP Infusion

(7) ­ Strongly agree

(6)

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

(6)

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

12. Our ERP solution is already being .. * Mark only one oval per row. (7) ­ Strongly agree extensively used to support specific business processes widely used across major business functions

ERP Performance 13. Our current ERP solution increased / improved .. * Mark only one oval per row. (7) ­ Strongly agree

(6)

Operational efficiency of IT services Downtime or reliability of IT services Perceived utility of IT services Impact of IT services on business goal achievement

Technical demands your company encounters 14. In terms of the technical environment, we have high demands for .. * Mark only one oval per row. (7) ­ Strongly agree

(6)

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

providing secure solutions for data protection, storage, analysis etc. developing or reconfiguring IT to meet changing business needs providing many different IT solutions for a range of business requirements online business transactions and digital marketing developing IT for information sharing (internally and/or externally)

Organizational demands your company encounters

15. In terms of the internal environment, we have high demands .. * (7) ­ Strongly (6) (5) (4) (3) Mark only one oval per row. agree (7) ­ Strongly agree

(6)

(5)

(4)

(3)

(2)

(1) ­ Strongly disagree

(2)

(1) ­ Strongly disagree

(2)

(1) ­ Strongly disagree

working on low budgets for operating, changing or scaling IT solutions avoiding high upfront costs for providing IT solutions allowing for team collaboration and cooperations (internally and/or externally) due to a lack of IT skills and experience in the organisation

External demands your company encounters 16. In terms of the external environment, we have high demands .. * Mark only one oval per row. (7) ­ Strongly agree from many and/or strong competitors from the value chain (customers, partners or suppliers) in coping with global markets due to a complex and/or unreliable macro­ environment (political, economic, social or technological) due to regulatory or legal requirements (e.g. data protection) 17. In terms of the company environment, are there any other types of high demands that your company encounters? (Optional)

(6)

(5)

(4)

(3)