Enterprise Systems - Non-IT Inclusive
Cost Estimation for ERP Adoption in SMEs: A Conceptual Framework
Haddara, M. and Elragal A., "Cost Estimation for ERP Adoption in SMEs: A Conceptual Framework", IRIS 32 - Information Systems Research Seminar in Scandinavia, 9-12 Aug 2009, Molde-Norway.
It has been alleged that Enterprise Resource Planning (ERP) systems are not needed in small and medium enterprises... more
It has been alleged that Enterprise Resource Planning (ERP) systems are not needed in small and medium enterprises (SMEs). However, many factors led SMEs for an ERP adoption decision. Based on the facts that SMEs have limited budgets, resources, have great sensitivity to costs, and that an ERP implementation is one of the biggest projects an enterprise could embark on. When SMEs take the first step into implementing an ERP system, they need to think about a lot of things, foremost among which is cost of adoption.
Research statistics revealed that most ERP system implementations fail due to inaccurate budget estimations. With the absence of a model to estimate costs related to the introduction of ERP systems e.g. costs of change management and costs related to infrastructural changes, ERP system adoption faces a high risk of failure.
Although ERP adoption failures could be caused by several factors, but the scope of this research is focused on costs estimation. There has been plenty of research in the area of cost estimation; however, literature of cost estimation of ERP systems adoption needs a lot of progress, expertise, and international efforts.
This paper focuses on factors that influence costs in the ERP adoption process, starting from the vendor selection to the Go-Live phase. And it proposes a conceptual framework with several research efforts that will lead to the construction of a cost estimation model (CEM) for ERP adoption in SMEs. The CEM is expected to help SMEs (beneficiaries), consultants, and vendors to better estimate costs and provide more realistic and accurate budget estimates related to ERP adoption projects. This study will adopt stakeholder theory in its initial phase, in order to identify all the actors involved within the ERP adoption process and their relationship with cost drivers.
Keywords: ERP Adoption, Cost Estimation, Cost Drivers, SMEs, Stakeholder theory.