An Analysis of the Perceived Benefits and Drawbacks of Cloud ERP Systems: A South African Study Brenda Scholtz, Denis Atukwase 1 Abstract Adopting a cloud ERP system instead of a traditional Enterprise Re- source Planning (ERP) system promises improved flexibility, improved business efficiency and reduced IT costs. However in spite of these benefits some companies are not adopting cloud ERP systems. In emerging markets such as Africa the adop- tion rates are much lower than the rest of the world. One reason for non-adoption of cloud ERP systems could be due to misperceptions regarding the benefits and drawbacks of cloud ERP systems. Whilst cloud computing can reduce the environ- mental impact of traditional ERP systems, the increased size of datacentres require high energy usage. The purpose of this paper is to propose a model of the perceived benefits and drawbacks of cloud ERP systems which is derived from an extensive review of the literature. The model is then verified by means of a survey of South African companies. The results show that security and strategic risks are the most frequently reported drawbacks of adopting a cloud ERP system whilst increased flexibility and collaboration are strong reasons or benefits for adopting them. A more in depth understanding of the perceptions of cloud ERP systems by organisa- tions in South Africa is obtained through this study. 1 Introduction To stay competitive businesses have to strategically manage their resources which can be done by the adoption of Enterprise Resource Planning (ERP) systems. ERP systems can be used as a strategic resource by companies to gain competitiveness through integration of business processes and optimisation of available resources (Maditinos et al. 2012). ERP systems work essentially at integrating inventory data with financial, sales, and human resources data, allowing organisations to price their products, produce financial statements, and manage effectively their resources of people, materials, and money (Turban et al. 2010). An ERP system can be hosted on site or in an offsite server in the cloud. For an ERP system hosted in the cloud, B. Scholtz, D. Atukwase Nelson Mandela Metropolitan University, Port Elizabeth, South Africa. e-mail: brenda.scholtz@nmmu.ac.za