ERP adoption cost factors in SMEs

Abstract

Small and medium enterprises (SMEs) have limited budgets, resources, and great sensitivity to costs. When SMEs take the first step into implementing an enterprise resource planning (ERP) system, they need to think about many things, foremost the cost of adoption. Most ERP implementations fail due to inaccurate and optimistic budget and schedule estimations, as well as, anticipating indirect costs beforehand is problematic. With the deficiency of a clear model of cost factors for ERP adoptions, ERP adoptions face a high risk of failure Failures could be caused by several factors, but the scope of this research is focused on studying the factors that escalate costs. This could aid SMEs in visualizing the different expected costs, and would consequently assist in better future cost management and estimations. There has been plenty of research in ERP; however, a clear gap in ERP cost management and estimation exists. This paper focuses on identifying direct and indirect cost factors that influence total costs in the ERP adoption process. The paper presents a cost list that has been developed through literature and an ERP expert panel. Furthermore, this study validated the costs list through interviews with different stakeholders within ERP adoption projects in Egypt. Keywords: ERP; cost estimation; cost factors; SMEs.

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