ERP Selection in SMEs: Understanding Risk Attitude

The sixth observation and discussion point as a result of this series of articles is the risk attitude of the interviewed SMEs who have opted for a Tier 1 ERP solution. As supported by literature, the larger organisations have a wider margin of error and can survive ERP failures (Levenburg et al., 2006; Yap, 1990), with an overall reportedly ERP failure rate greater than 50 percent (Barker and Frolick, 2003; Chen, 2001; Davenport, 1998; Donker and Patniak, 2014; Gargeya and Brady, 2005), and other studies such as Kraemer (2012) and Kwahk and Lee (2008), going to the extent of claiming that between 55 and 75 percent of implemented ERP systems fail to meet the original expectations. The participant SMEs in this research all agreed that their margin of error is thin, and unlike their bigger counterparts, they need to get it right at the first go. For these SMEs, adopting best industry practice was key, also to increase the possibilities of ERP success and achieve the expected objectives, thereby better of to modify their existing business processes and organisation structure to fit the new system rather than vice versa (Jarrar et al., 2000; Markus and Tanis, 2000; Newman and Zhao,…