Abstract: Small and Medium Sized Enterprises (SMEs) do pivotal role in economy of a country. SMEs adapt to change business environments to overcome challenges faster than larger enterprises. The use of information systems (ISs) is very important factor to adapt in changing business environment. The majority of SMEs in Sri Lanka do not use ISs due to various reasons. Therefore, objective of this study is to identify factors influence on usage of ISs in SMEs. The research model was developed using independent variables of Manager Characteristics, Firm Characteristics, Cost, Infrastructure, External Pressure, Legal & Regulations and dependent variable of Use of ISs in SMEs.