Implementation of Cloud ERP

Moderating Effect of Compliance on the Organizational Factors

Shivam Gupta and Subhas C.

Misra

Department of Industrial and Management Engineering, Indian Institute of Technology Kanpur, Uttar Pradesh, India

Keywords: Cloud ERP, Compliance, Critical Success Factors (CSF).

Abstract: Cloud ERP has changed the way business can be done for Small and Medium Enterprises (SMEs). The two

important benefits offered by Cloud ERP are: (a) SMEs can log into the internet from any place to access

applications and data services at any point in the time. (b) Pay for the services that are used or needed.

Although Cloud ERP has taken the IT world by storm and with all the advancement that has taken place so

far, there are still issues and challenges that require to be addressed. This paper relates issues pertaining to

Compliance with Organizational factors for successful implementation of Cloud ERP.

1 INTRODUCTION

Cloud ERP is a buzz word in the IT world and with

all the advancement that has taken place so far, there

are still issues and challenges that require to be

addressed. Compliance issues need to be addressed

for Cloud ERP implementation. These are discussed

in detail.

2 CONCERN IN CLOUD ERP:

COMPLIANCE

Compliance plays a vital role in decision making

when any business process is moved into the cloud.

Companies are not sure about the location of the

data stored when it is on cloud. The data which

might be safe in one country may not be safe in

another country. In America, US Patriot Act gives

limitless powers to government and its agencies to

access any data. European Union (EU) has enforced

strict measures so that cloud service providers can

be tried in case of any data theft or breach of laws.

The compliance concerns by EU have led to the

creation US Safe Harbor Privacy Principles. This

insulates European companies from the laws in USA

that virtually gave unlimited powers to government

agencies to snoop on any data. The issues that

revolve around compliance are:

 Cloud based data archiving service should be

able to classify, index, search and retrieve data

in a security-rich manner and complying with

all government and industry regulations. If the

cloud provider is successful in achieving this,

then it helps control rising costs of data storage

with a utility priced cloud-based service. The

cloud user would at all times want to access,

search and retrieve data from the cloud. Not

able to do so can have an impact on decision

making process and operational efficiency

(IBM, 2011).

 Cloud based segregation of duties (SOD) can

minimalize error and fraud occurrences. Any

Individual should not have complete security

access to a series of transactions which could

allow him or her to engage in financial

misconduct. Individual can collude with a

vendor to (a) receive and pay for fictitious

goods or services or (b) pay for services with

company’s money to be used for personal gain.

SOD increases the compliance standards for

data and work handling issues but this can

negatively impact the business efficiency and

also increase costs and staffing requirements.

The mission critical elements of the business

and sensitive data should be brought under the

purview of SOD.

 Global compliance standards and regulations

vary from country to country. There is lack of

governmental regulations which can impose

varying compliance requirements and standards

on the industries. In Germany, it is not

permitted to relocate auditable information

194

Gupta S. and C. Misra S..

Implementation of Cloud ERP - Moderating Effect of Compliance on the Organizational Factors.

DOI: 10.5220/0005486701940198

In Proceedings of the 5th International Conference on Cloud Computing and Services Science (CLOSER-2015), pages 194-198

ISBN: 978-989-758-104-5

 2015 SCITEPRESS (Science and Technology Publications, Lda.)

which can be considered as critical data to a

server outside the country. This hosting of

information in the cloud outside Germany

violates the German laws (Seitz, 2010).

3 CRITICAL SUCCESS FACTORS

(CSFS) FOR CLOUD ERP:

ORGANIZATIONAL FACTORS

Nguyen (2011) has stated that identification of

CSF’s is important to attain the desired goals laid

down by the business. In relation to CSFs for ERP, it

can be explained as conditions that can lead to a

successful ERP adoption and implementation

(Finney and Corbett, 2007).

The success factors for Cloud ERP

implementation from an organizational point of view

are considered here. These success factors identified

by literature review can be better understood by

going through the existing theories which will

examine the relationship between CSFs and Cloud

ERP.

3.1 Contingency Theory

Suggests that organization culture should be

conducive for any change to take place effectively.

The manner in which any organization reacts to the

change can be critical for the successful adoption

and implementation of Cloud ERP. The employees

should be given adequate training and guidance so

that they do not offer much resistance in

transitioning to the usage of Cloud ERP. The

independent variable organization resistance is

better explained by this theory. Literature review

(LR) which supports this CSF are (Bingi et al., 1999;

Holland and Light, 1999; Ross and Vitale, 2000;

Mehrtens et al., 2001; Kumar et al., 2002; Zhang et

al., 2002; Abdinnour-Helm et al., 2003; Olson et al.,

2007; Saeed et al., 2011; Hasibuan and Dantes,

2012, Utzig et al., 2013).

3.2 Knowledge based View

Lays emphasis on the fact that knowledge can be

utilized to achieve competitive advantage. The

knowledge that is created over a period of time

within an organization acts as a repository which can

always be referred or even build upon any newer

strategy. Independent variables communication

(Kumar et al., 2002; Grant, 2003; Mabert et al.,

2003; Mandal and Gunasekaran, 2003; Somers and

Nelson, 2004; Yusuf et al., 2004; Nah and Delgado,

2006; Hasibuan and Dantes, 2012) and

implementation strategy belongs to this theory

(Bancroft et al., 1998; Davenport, 1998; Cliffe,

1999; Holland and Light, 1999; Trepper, 1999;

Davenport, 2000; Gupta, 2000; O’Leary, 2000; Scott

and Vessey, 2000; Motwani et al., 2002; Robey et

al., 2002; Mandal and Gunasekaran, 2003, Umble et

al., 2003).

3.3 Market based View

Determines the nature of any organization strategy

based on the trends of the industry’s environment.

Rivalry between competitors and threat of new

entrant are factors which shape up the nature of

strategies implemented by companies. A lot of this is

also dependent on the budget of the companies

which are doing business or wanting to enter the

market. Cloud ERP can offer the services at low

rates and this fits well within the financial

limitations for a SME. Project budget is the

independent variable that is best explained by this

theory (Bingi et al., 1999; Holland and Light, 1999;

Davenport, 2000; Al-Mudimigh et al., 2001; Willis

et al., 2001; Ribbers and Schoo, 2002; Trimmer et

al., 2002; Somers and Nelson, 2004; Ellis, 2010;

Hasibuan and Dantes, 2012).

3.4 Social Capital Theory

Stresses upon the various social capital that exists in

an organization like the values and goals. These

goals and values coupled with effective leadership

can lead to successful implementation of Cloud

ERP. Strategic goals and objectives as an

independent variable explains the importance for

successful implementation (Buckhout et al., 1999;

Akkermans and Helden, 2002; Al-Mashari et al.,

2003; Mandal and Gunasekaran, 2003; Somers and

Nelson, 2004; Calogero, 2000; Pabedinskaite, 2010,

Hasibuan and Dantes, 2012).

3.5 Strategic Choice Theory

Focuses that the people of an organization can shape

the environment around them. If the environment in

the organization is nurtured in a way where the

existing as well as new projects can we executed

without much delay, then the transition to a newer

ERP system and its implementation would never

pose any problem. For this, the company should be

comfortable in shaping up the existing processes in a

different manner. The independent variables

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considered here are Business Process Re-

engineering (BPR) (Bingi et al.,1999; Holland and

Light, 1999; Bernroider and Koch, 2000; Al-

Mudimigh et al., 2001; Kraemmergaard and Rose,

2002; Palaniswamy and Frank, 2002; Trimmer et al.,

2002; Zhang et al., 2002; Al-Mashari et al., 2003;

Mabert et al., 2003; Muscatello et al., 2003; Bajwa

et al., 2004; Hasibuan and Dantes, 2012) and

project management for successful Cloud ERP

implementation (Hoffer et al., 1998; Trepper, 1999;

Nah et al., 2003; Akkermans and Helden, 2002;

Zhang et al., 2002; Umble et al., 2003; Somers and

Nelson, 2004; Bhatti, 2005; Nah and Delgado, 2006;

Hasibuan and Dantes, 2012).

4 MEASURING SUCCESS

The biggest beneficiaries out of Cloud ERP

implementation will be cloud user. The cloud

provider aim will be to beat the competition and

generate more and more revenue. This can happen

by adding more clients to their existing user base

and also convincing companies who have never used

ERP solution to switch to an affordable service. But

this is directly related to the user acceptance and

usage of Cloud ERP services. While there can be

different viewpoints about the measure of success,

an a-priori framework is proposed which will

qualitatively address the research objective. This

framework is based on intuition and using

previously published literature on ERP and Cloud

ERP.

From the viewpoint of a project-manager; time,

cost, productivity, and customer satisfaction are the

main ingredients of any project’s successful

completion (Schwaber and Beedle, 2002; PMI,

2004; Parthasarathy, 2007).

Based on balanced scorecard terminology

(Kaplan and Norton, 1996), following are the

success criteria taken for this study:

 S1 Lower Implementation Cost

 S2 Ease of Use and Reporting

 S3 Lower wait time for consumer

 S4 Increase in Customer Retention

 S5 Increased Ability to meet with Current

User Requirements

 S6 Increased Flexibility to meet with

Changing User Requirements

These criteria form the constituents of the dependent

variable (“Success”) in this paper.

5 RESEARCH OBJECTIVE

 RO 1 Development of a framework with the

different determinants of compliance for the

successful implementation of Cloud ERP.

 RO 2 To establish and verify the role of

Compliance on the organizational factors for

successful implementation of Cloud ERP.

6 VARIABLES IN THE MODEL

 Independent Variable: Organizational Factors

 Moderating Variable: Compliance

 Dependent Variable: Cloud ERP Successful

Implementation

7 CONCEPTUAL MODEL

Moderating Effect of Compliance on the

Organizational Factors in Cloud ERP

Implementation can be seen below.

Successful

Implementation of

Cloud ERP

Organizational

Factors

Dependent

Variable

Moderating

Effect

I1*M1

Compliance

Independent

Variable

Moderating

Variable

Figure 1: A-Priori Conceptual Model.

8 CONCLUSIONS

This paper brings out a conceptual model based on

the literature review as well as various theories

which tries to establish the link between CSFs and

Cloud ERP implementation. This model can be

empirically tested so that it can be used as a tool for

assessing the implementation of Cloud ERP.

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