Exploring cloud enterprise resource planning and open innovation for small and medium enterprises: Insights from practitioners

Small and Medium Enterprises (SMEs) are vital to Malaysia’s economy, comprising a significant portion of all businesses. However, the COVID-19 pandemic exposed vulnerabilities in the SMEs’ digital readiness to operate remotely. To remain competitive, SMEs must adopt digital technologies to innovate and compete. The problem is despite government initiatives promoting digitalisation, the adoption of Cloud Enterprise Resource Planning (ERP) remains low. This study aims to explore how Cloud ERP can increase SME organisational performance and promote its adoption. The study uses a qualitative method and analyses the evidence from in-depth interviews with Cloud ERP practitioners, followed by sentiment and thematic analysis of the data. The findings suggest that the adoption of Cloud ERP systems could enhance the organisational performance of SMEs by having the right resources, capabilities, culture and competitive attributes. The resources needed are budget and knowledge, management support capabilities and a culture of mindset and commitment. The implications show SMEs can enhance agility through Cloud ERP and open innovation to promote external collaboration, reduce costs and accelerate innovation cycles. This research serves as a foundation for developing a framework for collaborative innovation between SMEs and external partners. The originality of this article lies in the specific barriers, resources and capabilities affecting Cloud ERP adoption among Malaysian SMEs from the perspective of Cloud ERP practitioners not widely explored in existing literature. Furthermore, it introduces a novel dimension by linking Cloud ERP adoption with open innovation, highlighting how SMEs can leverage external knowledge and partnerships to drive innovation and improve organisational performance.