Abstract: The number of Small and Medium Enterprises in Bangalore have increased tremendously over the years. They have played a profound role in providing employment to the population besides growing the Bangalore economy. Cloud computing is a new entrant to the technology arena which in form of Platform as a Service, Software as a Service and Infrastructure as a Service promises profound reduction in cost of operations in a business. It offers immense benefits as the business enterprise utilizes the pay per use model availed by the cloud service providers as per the needs of the business enterprise. This eliminates the need to purchase expensive software, development platforms and setting up complex ICT infrastructure. This is akin to renting what they need instead
of purchasing and owning it. However, the SMEs in Bangalore have not taken up the cloud computing benefits to maximize their competitive advantage. This research focuses on the factors that affect the adoption of cloud computing by SMEs in Bangalore. The research process involves a descriptive research design. The research findings have shown that technological, organizational and environmental factors have affected the adoption of cloud technologies.
1. INTRODUCTION
Due to severe market competition and dramatically changing business environment, firms have been prompted to adopt various Information Technologies to improve their business operations.
In modern technology arena, cloud computing has cut a great and specific niche in businesses. The use of information and communication technologies can improve business competitiveness and has provided genuine advantages for small and medium sized enterprises. (SMEs firms with one to 250 employees (DTI, 2004)), enabling them to compete with large firms (Swash, 1998; Bayo-Moriones and Lera-Lopez,2007). In Bangalore SMEs forms the largest block of employers.
They provide the necessary and critical base for economic development. Competition for market share and great profit margins is cut throat. The growth of SMEs is compounded by their agility and adaptability to changing business models.
Cloud computing lowers IT costs and provides organizations with the people and expertise to create an integrated suite of software applications. Some of the promised benefits from cloud computing can be Very appealing to SMEs, which need to maximize the return on their investment and still remaining competitive in an ever demanding business environment.
The benefits of cloud computing adoption in developing countries have not been thoroughly exploited. If the SMEs adopt the robust services offered by cloud computing, they will have lowered the costs of operation because they would
access business application software at a low cost. In view of this the research paper main objective is to contribute to a growing body of research on cloud computing by studying the determinants of cloud computing adoption by SMEs in Bangalore.
The findings of this research will influence the uptake of cloud services which could effectively and efficiently deliver services which could have otherwise been only accessible by large blue chips corporations and multinationals. If SMEs have access to scalable technologies they could potentially deliver products and services that in the past only large enterprises could deliver hence flatten the competition
Arena.
While cloud computing has come up as a new technology development that can provide several advantages both strategic and operational to its adopters the cloud
Computing adoption rate is not growing as fast as expected.
The SME sector in Bangalore has been selected for this study because they are the largest providers of direct and indirect employment hence play a major role in the economic growth of the country.
CLOUD COMPUTING
The National Institute of Standards and Technology (NIST) Information technology Laboratory, cloud computing is defined as follows: Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models . Essential Characteristics
‘ On-demand self-service. A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service’s provider.
‘ Broad network access. Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, laptops, and PDAs).
‘ Resource pooling. The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, network bandwidth, and virtual machines.
‘ Rapid elasticity. Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.
‘ Measured Service. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported providing transparency for both the provider and consumer of the utilized service.
SERVICE MODELS:
‘ Cloud Software as a Service (SaaS). The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (e.g., web-based email). The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings.
‘ Cloud Platform as a Service (PaaS). The capability provided to the consumer is to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages and tools supported by the provider. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has control over the deployed applications and possibly application hosting environment configurations.
‘ Cloud Infrastructure as a Service (IaaS). The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, deployed applications, and possibly limited control of select networking components (e.g., host firewalls).
Deployment Models:
o Private cloud. The cloud infrastructure is operated solely for an organization. It may be managed by the organization or a third party and may exist on premise or off premise.
o Community cloud. The cloud infrastructure is shared by several organizations and supports a specific community that has shared concerns (e.g., mission, security requirements, policy, and compliance considerations). It may be managed by the organizations or a third party and may exist on premise or off premise.
o Public cloud. The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services.
o Hybrid cloud. The cloud infrastructure is a composition of two or more clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (e.g., cloud bursting for load-balancing between clouds).
Towards cloud adoption
Before any organization can use cloud computing, it must be aware of existence of such a technology, what it is used for and where it can be applied. The CEOs of various SMEs in Bangalore have adequate awareness of the benefits of technology in their organizations. However, only a few know the benefits of cloud computing beyond the basic description.
According to Larry Ellison (co-founder and chief executive officer of Oracle Corporation), the concept of cloud computing has aroused interest in the enterprise but it is also clear that businesses are testing their options to decide whether they will adopt this technology.
Though there has been increased awareness by cloud services providers on organizational benefits of cloud computing, the rate of adoption is significantly low. A survey conducted by Daniel (2010) titled Mobile Technology and Business’ in the United States revealed that 95% of the respondents were generally aware of the cloud computing concept and believe that its role and significance will increase in the next five years. There are various worries from the SMEs about cloud services adoption which contribute to the slow adoption in Bangalore.
There has been inadequate research on utilization of technology for business advantage by SMEs in Bangalore; various managers expressed concerns of security as a major drawback to the cloud services adoption.
How ready are SMEs to adopt cloud computing?
‘Computing services on-demand’ is gradually modifying the way information system services are developed, scaled, maintained and paid for. (Yazn et al, 2013).The SMEs readiness to adopt new technology is a determinant of how
they will adopt various forms of technology.
They more often have a strong clinch to their former and current existing technologies such that adopting new ones may be difficult decision to make. This is partly due to the perceived losses of existing technology.
From a study carried out in India( Tripathi,2009)with the aim of finding out whether organizations are willing to adopt the technology, the results revealed that cloud computing has not gone past the awareness phase. The research showed that
many decision makers are not aware of IaaS, PaaS and SaaS and their differences between public, private and hybrid clouds.
Many SMEs do not want to try new technology which they are not knowledgeable of due to presumed cost of acquisition and perceived cost of failure. Most of the research and surveys on cloud computing have largely been done in the developed world other than Africa. Hence, the SMEs have scanty references whenever they may need relevant information concerning utilization of cloud services and the rate of success in Africa.
TOE FRAMEWORK
The TOE is an organizational level theory that provides a framework for technology adoption by an enterprise. It is a theoretical model for cloud computing diffusion needs to consider the weakness in the adoption and diffusion
technological innovation which are caused by the specific technological, organizational and environment contexts of the firm. (Chinyao and Mingchang 2011).
Technological context represents the internal and external technologies related to the organization. The technologies may involve equipment or practice. Organizational context is related to the resources and the characteristics of the
enterprise. Environment context refers to the area in which a firm conducts its business which can be related to surrounding elements such as presence of related businesses, competition and availability of other technologies. All the three contexts present both constraints and opportunities for technological
innovation and adoption. (Tornatzky and Fleischer, 1990) which influence the technology adoption by firms.
The TOE studies have shown that the following three features influence cloud computing adoption. Technological context(relative advantage, complexity and
compatibility);Organizational context(top management support, firm size and technological readiness) and Environmental context(competitive and trading partner pressures).Therefore, TOE provides a clear theoretical basis
and a consistent empirical support and the likely outcome of new technology adoption in a firm(Khan and Chau,2001;Zhuet al,2004;Shirish and Teo,2010).Since new technology adoption is a complex issue for many SMEs, this research utilizes the TOE framework as framework that determines the factors that affect cloud computing adoption by SMEs in Bangalore.
Analysis
Awareness
70% of the responds accepted that they have basic knowledge about cloud computing
Q.What is your degree of awareness of cloud computing
2% of the responds said they have very less aware of cloud computing.
17% of the responds said they have little aware of cloud computing .
70% of the responds said they are aware of basic cloud computing.
6% of the responds said they are well aware of cloud computing
5% of the responds said they have very high knowledge of cloud computing
Awareness on cloud computing advantages
Cost
80% of the respondent say cloud computing is cost effective
Security
92% of the respondent ranked 3 out of 5
Data theft concern
35% of the repondant agreed that storing data in cloud may lead to data theft
Technological readiness
47% of the respondent says their isn’t sufficient technological readiness
Compatibility
72% of the respondent says cloud computing is compatibile
Complex process
Q.Do you think storing data in cloud is complex process
93% of the respondent says storing data in cloud computing is easy task
Internet speed
Q.Do you think there is sufficient internet speed for the data to be stored in cloud ?
45% of the respondent says there is sufficient internet speed to use cloud computing
42% of the respondent says there isn’t sufficient internet speed to use cloud computing
Awareness of saas,paas and Iaas
80% of the respondent says they have a fair idea about cloud computing
Preference for adoption among saas,paas and Iaas
68% of the respondent says they prefer saas
Availability
68% of the respondent says Cloud server isn’t available