A Study on the Adoption of Software as a Service (SaaS) in Online Business SMEs in Sri Lanka

The purpose of this study is to investigate the factors that influence the adoption of Software as Service (SaaS) at Small Medium Enterprises (SMEs) that have adopted online business in Sri Lanka. Prior studies have shown that SMEs significantly benefit due to the adoption of SaaS. The research sough to explain the adoption of SaaS using Awareness, Trust, Cost, Top Management Support, Complexity and Relative advantage. Conceptualization of this researcher’s variables and their interrelationship have been supported by theory of Diffusion of Innovation (DOI) of Rogers’ (1962) and Technological Organizational and Environmental (TOE) Framework of Tornatzky and Fleisher (1990). The study was conducted among 250 randomly selected SMEs adopting online business using questionnaires addressed to managerial and ICT professionals who were capable of making ICT decision at SMEs under study. However only 224 questionnaires were returned with complete data required for the purpose of analysis. The study employed principal component analysis to reduce the data and employed Ordinary Least Square (OLS) to test the relationship between the variables. It is found that Cost (CT), Complexity (CX) and Relative Advantages (RA) are having significant impact on SaaS adoption in SMEs in Sri Lanka. This study extends the existing body of knowledge by providing empirical support for explaining SaaS adoption by SMEs in Sri Lanka. The finding will help various parties engaging in promoting the adoption of SaaS among SMEs with the view of SMEs’ development in Sri Lanka. On this basis, the researchers are able to recommend firstly, that SaaS is playing a significant role for the development of SMEs in this area of study and finally, that software vendors, policy makers, technological consultants and application developers intend to adopt SaaS should consider the validated model tested in this research study.