A Structural Equation Model for the Evaluation of the Switching Costs of Information Communication Technology in SMEs

Abstract

Most evaluation methods for purchasing newer and enticing information and communication technology (ICT) in organisations are based on financial models, or are premised on the presumption that the new ICT is not replacing an existing ICT. However, the availability and constant proliferation of more powerful and functional ICT in most organisations today means that the models may need to recognise already existing ICTs in use. There is therefore a need for such a tool that can assist decision makers, particularly in Small to Medium Enterprises (SMEs). Using the Information Systems Success Model as the base model, the study developed a conceptual framework using financial and non‑financial models. Data collected from 222 SME owners using an online survey was analysed using Structural Equation Modelling (SEM). The key findings suggest that the psychological views of SME owners and the performance of the existing ICTs are important in the evaluation of existing ICTs. The study found that some features of the existing ICTs and SME surroundings do not matter, but the contentment of the SME owner with the existing ICTs does. This study is expected to assist SME owners with the creation of a handy tool to evaluate existing ICTs before considering newer enticing ICTs. The study recommends that SME owners should not base their decisions to continue using the existing ICTs on their personal experiences only. Future research, however, should consider other factors which may be relevant in the evaluation of existing ICTs.