What drives organizations to switch to cloud ERP systems? The impacts of enablers and inhibitors

Abstract

PurposeSwitching to public cloud enterprise resource planning (ERP) systems not only provides financial and functional benefits to organizations, but also results in sunk costs of incumbent systems and uncertainty costs of cloud systems. The purpose of this study is to investigate the enablers and inhibitors concerning switching to cloud ERP systems at the organizational level.Design/methodology/approachData were collected from 212 top managers and owners of the enterprises in Taiwan, and 10 hypotheses were examined using structural equation modeling.FindingsTechnological (system quality), organizational (financial advantage), and environmental contexts (industry pressure) are found to be the antecedents of switching benefits. Perceived risk of cloud ERP systems and satisfaction with and breadth of use of incumbent ERP systems are found to be the predictors of switching costs. Switching benefits positively affect switching intention, but switching costs negatively affect switching intention.Research limitations/implicationsThis study develops a theoretical model grounded in a set of theoretical foundations, including two-factor theory, technology-organization-environment (TOE) framework, information systems (IS) success model, and expectation confirmation theory (ECT). Two-factor theory is used to characterize switching benefits and costs that affect switching intention. Technological factors come from IS success model, and the factors affecting benefits are organized based on TOE framework. Sunk costs of incumbent ERP systems are developed based on ECT.Originality/valueDifferent from previous studies on cloud computing adoption, this study provides insights into switching intention to cloud computing. The study also proposes an integrated model grounded in multiple perspectives to explain organizations' decisions to switch to cloud ERP systems. These findings help cloud service providers better understand how to promote cloud ERP adoption from technical, organizational, and environmental perspectives.

Factors Affecting Intention to Adopt Cloud-Based ERP from a Comprehensive Approach

“…There have been studies conducted in Europe, South Africa, Egypt, and Taiwan. Yu-Wei Chang [35] explored the enablers and inhibitors that drive organizations to switch to cloud-based ERP systems. EPR packages are mainly used in Korea and Japan in Asia, while few studies have been conducted in Korea or Japan.…”

“…AlBar and Hoque [6] also investigated cloud-based ERP adoption intention based on the TOE framework, and found that ICT skill, ICT infrastructure, top management support, regulatory environment, and competitive environment were significantly related to cloud-based ERP adoption, while organizational culture was not significantly related. Yu-Wei Chang [35] studied cloud-based ERP switching intention using the TOE framework, and discovered that financial advantage, system quality, and industry pressure were significantly related to cloud-based ERP switching intention, while information quality and government support were not significantly related.…”

“…A survey was conducted to verify the research model. The measured items regarding TOE and innovation characteristics were selected from prior studies [5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20]24,35,[40][41][42][43][44][45][46]. In addition, the measured items regarding resistance characteristics were selected from revisions of existing items to better fit the research context [3,13,[21][22][23]38,[47][48][49][50][51][76][77][78][79][80][81][82][83].…”

“…According to studies that researched the user's perception of cloud-based ERP, there are many positive views of cloud-based ERP, but there are also many negative views of cloud-based ERP as well. In a paper recently published in Taiwan [35], both motivational factors and risk factors were considered simultaneously. Accepting that view, we also considered factors, not only in terms of innovation characteristics but also in terms of innovation resistance.…”

“…First, it was good to introduce the TOE viewpoint, but because there are too many variables in the model, only one factor per T, O, and E, respectively, was considered. However, according to other papers that introduced the TOE framework [5][6][7][8][9][10][11][12][13][14][15]35,42], in addition to ICT skill, ICT infrastructure, information quality, etc., were also considered as the technology context. In addition to organizational culture, we considered, top management support and enterprise size are considerable.…”