Abstract: The rapid development of informatio technology in either hardware or software had affected the behavior of people’s life especialy in big size company or small company like home industry. Information technology has been used by the businessman to process the company’s data and to do the administration job. Information technology development has reached a stage where internet has been used and change the objectives of the businessman to promote their products or event their services from using a conventional way such as using a newspaper and audio visual media to using internet to promote their products. The purpose of this research is to formulate the factors that affected Small and Medium Enterprises (SME’s) in adopting e-commerce. The factors that used in this research are compatibility, top management support, organizational readiness, eksternal support and the benefits of the e-commerce. Other than that for SME’s that has adopted e-commerce we also need to see weather the adoption of e-commerce in those company has increase the performance of the SME’s. E-commerce performance evaluation is done by measuring the SME’s performance than can be seen from three ways which are efficiency, coordination and business. This research use a quantitative study with the data source from the SME’s that have adopted e-commerce in Palembang. To collect the data the researcher send the questioner to SME’s managers and owners. The data will be processed using Structural equation model to see the correlation among the variables. The result shows that the compatibility, top management support and the benefits do not have a significant influence to e-commerce adopt in SME’s. meanwhile the organizational readiness and external support gave a significant influence to e-commerce adoption in SME’s. the result also shows that the e-commerce adoption influence the SME’s performance. That shows the e-commerce as one of the technology that can be used by organization to increase the performance.