Adoption of Cloud-Based ERP Systems in SMEs: An Empirical Study Using the TOE Framework

Abstract

Enterprise Resource Planning (ERP) systems are essential for integrating and supporting critical business processes across organizations. Traditional on-premise ERP systems, while effective, are costly, time-intensive and require significant infrastructure. Cloud-based ERP systems, delivered through Software-as-a-Service (SaaS), offer a flexible, cost-efficient and scalable alternative, particularly beneficial for small and medium-sized enterprises (SMEs). This study investigates the factors influencing the adoption of cloud-based ERP in SMEs in the UAE, applying the Technology-Organization-Environment (TOE) framework. A survey of 105 SMEs was conducted to identify critical adoption drivers, including relative advantage, top management support, firm size, technological preparedness and external pressures. Regression analysis indicates that relative advantage, upper management support, technological readiness and firm size significantly influence adoption, while complexity and compatibility are less critical. Findings provide insights for SME managers, SaaS providers and policymakers, highlighting the importance of leadership commitment, resource readiness and training. The study underscores that cloud ERP adoption is driven more by perceived benefits and organizational readiness than by competitive pressure. Future research should broaden the scope across industries and geographies to generalize the results.