Managing Erp System Risk in SMEs: A Multiple Case Study

Abstract

ERP systems are increasingly accessible to small and medium-sized enterprises (SMEs). If the potential benefits of these systems are significant, the same applies to the risk associated with their implementation. A number of authors emphasize that IS risk management is most effective when it is initiated at the earliest possible moment in the system's lifecycle, that is, at the adoption phase. But how do SMEs actually manage the risk of ERP implementation during the ERP adoption process? The research objectives are (1) to identify and describe the influence of the SMEs’ context on their implementation risk exposure, and (2) to understand whether and how, within the adoption process, SMEs actually manage the risk of implementing an ERP system supplied by an ERP vendor, with open source software, or through in-house development. In order to do so, four case studies of SMEs having implemented an ERP system were undertaken. The study shows that to manage risk at the adoption stage, SMEs can proceed in a rather intuitive, informal and unstructured manner, that is explicitly based however upon an architecture of basic principles, policies and practices.

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