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  • CLOUD COMPUTING AS AN

    ENTRANCE FOR START-UPS INTO ERP

    SOLUTIONS

    Master Thesis

    M.Sc. Business Administration

    Name: Sabine Rauleder

    Contact E-Mail: s.rauleder@student.utwente.nl

    Supervisors: 1. Prof. dr. ir. L.J.M. (Bart) Nieuwenhuis (University of Twente)

    2. Dr. M.L. (Michel) Ehrenhard (University of Twente)

    3. Karina Cagarman, M.Sc. (Technical University of Berlin)

    Bibliography program used: Endnote

    Enschede, October 10th

    , 2016

  • I

    Management Summary

    This master thesis focuses on factors impacting the decision to adopt Cloud ERP solutions among the

    organizational setting of start-ups. The literature argues that Cloud Computing and its service models

    fit the needs of smaller firms perfectly as they cannot afford high-cost structures for software

    implementation and need flexibility and better access to global markets (Ross & Blumenstein, 2015;

    Sultan, 2011). Even though start-ups are a viable business form, there is no specific research which

    targets start-ups and their willingness to adopt Cloud ERP solutions. This study identifies this gap and

    therefore contributes to the on-going academic literature by examining this sub-group. The findings

    regarding factors impacting the decision to adopt Cloud ERP or Cloud Computing are concentrating

    on SMEs. Thus, an extensive literature research was conducted to answer the central research question

    (Which factors influence the adoption of Cloud-based ERP-systems in the organizational setting of

    start-ups?). First, Cloud Computing and the resulting servitization of software solutions are explained,

    followed by a definition of (Cloud) Enterprise Resource Planning (ERP) with its benefits and

    drawbacks and a review of Cloud ERP adoption literature. Additionally, the context of start-ups used

    in this research is clarified. To determine the factors which impact the adoption decision the

    Technology-Organizational-Environmental (TOE) framework, which was employed by Alshamaila,

    Papagiannidis, and Li (2013) in their study about Cloud Computing adoption of SMEs, is most

    appropriate. By reviewing the literature regarding Cloud ERP and the TOE framework, propositions

    could be developed. This research follows a qualitative approach and data is gathered through 15

    semi-structured interviews with start-ups and experts. The results show that certain factors are

    significant for start-ups and their Cloud ERP adoption. Therefore, it is important to understand the

    relative advantage (e.g. fewer costs, scalability, and location flexibility) as well as have little

    complexity in the ease of use and implementation along with an easy integration. The prior experience

    with ERP and testing the technology was also related to the decision to adopt Cloud ERP. Even though

    top management support was found to be important, the support of the employees is at least equally

    important in a start-up. Also, the industry and the market scope impacts the decision to adopt Cloud

    ERP. Moreover, the network effects and recommendations are significant factors influencing start-ups

    in their decision whereas uncertainty and competitive pressure were not found to be relevant in this

    organizational context. All in all, start-ups are an appropriate target group for Cloud ERP providers,

    and there is great potential to elaborate further on this research field.

    Keywords: SMEs, start-ups, Cloud ERP, Cloud Computing, adoption, TOE framework, adoption in

    small businesses, adoption in start-ups

  • II

    Contents

    Management Summary ............................................................................................................... I

    Index of Figures ....................................................................................................................... IV

    Index of Tables .......................................................................................................................... V

    List of Abbreviations ................................................................................................................ VI

    1. Problem Statement ............................................................................................................. 1

    1.1. Introduction ................................................................................................................. 1

    1.2. Research Objectives and Questions ............................................................................. 1

    1.3. Significance of the Research ....................................................................................... 3

    1.4. Thesis Structure ........................................................................................................... 3

    2. Literature Review ............................................................................................................... 4

    2.1. Planning of the Literature Review ............................................................................... 4

    2.2. Servitization in the Context of Cloud Computing ....................................................... 5

    2.2.1. Definition of Servitization .................................................................................... 5

    2.2.2. Definition of Cloud Computing ........................................................................... 9

    2.2.3. Connection of Cloud Computing and Servitization ........................................... 12

    2.3. What are Cloud ERP Solutions? ................................................................................ 14

    2.3.1. Definition Cloud ERP ........................................................................................ 14

    2.3.2. Benefits of Cloud ERP Solutions ....................................................................... 17

    2.3.3. Drawbacks of Cloud ERP Solutions .................................................................. 20

    2.4. Cloud ERP Adoption Literature ................................................................................ 23

    2.5. Definition of Start-ups ............................................................................................... 25

    3. Theoretical Framework .................................................................................................... 27

    3.1. Theoretical Background ............................................................................................ 27

    3.2. Innovation Diffusion Theory ..................................................................................... 28

    3.3. TOE Framework ........................................................................................................ 30

    3.4. Adapted TOE Framework with Aspects of IDT ........................................................ 32

    3.4.1. Technological Factors ........................................................................................ 34

    3.4.2. Organizational Factors ....................................................................................... 35

    3.4.3. Environmental Factors ....................................................................................... 36

    4. Methodology .................................................................................................................... 37

    4.1. Research Approach and Research Strategy ............................................................... 38

    4.2. Research Design ........................................................................................................ 39

    4.3. Data Collection and Data Analysis ............................................................................ 40

  • III

    4.4. Scientific Quality ....................................................................................................... 43

    4.4.1. Validity ............................................................................................................... 43

    4.4.2. Reliability ........................................................................................................... 43

    4.4.3. Bias and other Pitfalls of Interviews .................................................................. 44

    5. Results .............................................................................................................................. 44

    5.1. Findings and Discussion of the Interviews ................................................................ 45

    5.1.1. Technology Factors ............................................................................................ 45

    5.1.2. Organizational Factors ....................................................................................... 47

    5.1.3. Environmental Factors ....................................................................................... 49

    5.2. Evaluation of the TOE Framework in respect to Cloud ERP and Start-ups .............. 52

    6. Conclusion and Discussion .............................................................................................. 55

    6.1. Conclusion ................................................................................................................. 55

    6.2. Theoretical and Practical Implications ...................................................................... 56

    6.3. Limitations ................................................................................................................. 58

    6.4. Further Re

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