the usage and adoption of cloud computing by small and medium

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    International Journal of Information Management 33 (2013) 861 874

    Contents lists available at ScienceDirect

    International Journal of Information Management

    j ourna l ho me pa ge: www.elsev ier .com/ locate / i j in fomgt

    he usage and adoption of cloud computing by small and mediumusinesses

    rashant Guptaa, A. Seetharamana, John Rudolph Rajb,

    S P Jain School of Global Management, 10, Hyderabad Road, Singapore 119579, SingaporeFaculty of Management, Multimedia University, Persiaran Multimedia, 63000 Cyberjaya, Selangor Darul Ehsan, Malaysia

    r t i c l e i n f o

    rticle history:vailable online 17 August 2013

    eywords:loud computingoftware-as-a-Service (SaaS)

    a b s t r a c t

    Cloud computing has become the buzzword in the industry today. Though, it is not an entirely newconcept but in todays digital age, it has become ubiquitous due to the proliferation of Internet, broadband,mobile devices, better bandwidth and mobility requirements for end-users (be it consumers, SMEs orenterprises). In this paper, the focus is on the perceived inclination of micro and small businesses (SMEsor SMBs) toward cloud computing and the benefits reaped by them. This paper presents five factorslatform-as-a-Service (PaaS)nfrastructure-as-a-Service (IaaS)mall and medium enterprises (SMEs)mall and medium businesses (SMBs)

    influencing the cloud usage by this business community, whose needs and business requirements arevery different from large enterprises. Firstly, ease of use and convenience is the biggest favorable factorfollowed by security and privacy and then comes the cost reduction. The fourth factor reliability is ignoredas SMEs do not consider cloud as reliable. Lastly but not the least, SMEs do not want to use cloud forsharing and collaboration and prefer their old conventional methods for sharing and collaborating with

    their stakeholders.

    . Introduction

    Cloud computing has created the same paradigm shift as whatas analogous to replacement of individual generators by the cen-

    ralized electricity grid (Etro, 2011; Li, Wang, Wu, Li, & Wang, 2011).his is exactly how cloud differs from typical IT/IS, wherein the pro-ucers and consumers (of information) do not necessarily resideithin the same physical proximity. Large enterprises have quickly

    dopted this cloud computing bandwagon (Klie, 2011; Li et al.,011; Mahesh, Landry, Sridhar, & Walsh, 2011). However, manyicro businesses and SMBs are still sitting on the fence and are

    ontemplating whether to move to or not to move to the cloud com-uting trend, as highlighted by mindSHIFT (USA based company).

    n this research study, an attempt has been made to bring clarityo this paradigm shift affecting the local environment in Asia pre-ominantly. With respect to the local Singapore context, SPRINGingapore is the statutory board in charge of promoting the growthf SMEs in Singapore. Maybank Singapore and SPRING Singaporeefine micro business (registered and incorporated in Singapore) as

    business with 10 or less employees or annual sales not exceeding1 million and a minimum 30% equity (local shareholding). SPRING

    ingapore defines SMEs as businesses with annual sales turnoverf not more than $100 million or employing no more than 200taff. As per this definition, there are 154,000 SMEs in Singapore,

    Corresponding author. Tel.: +60 3 8312 5681; fax: +60 3 8312 5590.E-mail address: (J.R. Raj).

    268-4012/$ see front matter 2013 Elsevier Ltd. All rights reserved.ttp:// 2013 Elsevier Ltd. All rights reserved.

    which means that 99.3% enterprises in Singapore are SMEs. Theycontribute 46% to Singapores GDP (Gross Domestic Product) andemploy 63% of the workforce (Low, 2005; Yeo, 2007). In OECDcountries (Organization for Economic Cooperation and Develop-ment, Paris) more than 95% of the enterprises are SMEs. These SMEsprovide 6070% of jobs. Two thirds of all the EU (European Union)jobs are provided by SMEs. They provide 78% of the jobs in Japan(Bernroider, 2002). India has about 3 million SMEs accounting for50% of its industrial output. SMEs are the 2nd largest employer afteragriculture and contribute to 40% of exports. Indian governmentinitiatives include setting up of MSMEs (Micro Small and MediumEnterprises) Development Act 2006.

    For the purpose of this study, Micro businesses are defined asSOHO (Small Office Home Office) SMBs having 110 employees andSmall businesses are defined as SMBs having 1199 employees.Medium businesses are defined as SMEs having 100200 employ-ees.

    The literature review reveals that many studies were (and cur-rently are being) conducted on the use of cloud computing bylarge scale enterprises primarily on their perceptions about costreduction, ease of use and convenience, reliability, sharing andcollaboration and lastly but not the least, security and privacy.The major contribution of this paper is to identify new factors aswell as to develop a sense of the relative weight of existing fac-

    tors like cost reduction, ease of use and convenience, reliability,sharing and collaboration, security and privacy on SMEs approachtoward usage and adoption of cloud computing for their busi-nesses.

  • 862 P. Gupta et al. / International Journal of Information Management 33 (2013) 861 874

    Table 1Comparison of empirical studies on the usage and adoption of cloud computing by SMEs or SMBs.

    Literature details inchronological order

    Inference on SMEsadoption of cloudcomputing

    Importance of cloud computingparameters on SMEs adoption

    Detailed discussion on featuresof each parameter

    Expectations of SMEs fromfuture usage and adoption ofcloud computing

    Rising above the din(Ferguson, 2008)

    Alternate ways andSaaS model forrevenues by DELL,focusing on providingservices to SMBs, anuntapped market

    Software and services needs ofSMBs to help manage their emails,licensing of software, other assetsetc.

    No Not analyzed

    Small businessesmoving to cloudcomputing services(King, 2008)

    Availability of securedIT infrastructure,minimal up-frontinvestment, disasterrecovery, softwareupgrades

    Cost reduction, avoiding naturaldisaster mishaps, better securitybut lack of reliability in using cloudcomputing are the most importantparameters

    Yes emphasized on SMEscomfort with cloud computing

    SMEs are showing positiveinclination toward cloud

    SMEs can benefit mostfrom the cloud(Clark, 2009)

    Security, reliability,trust, cost reduction,online collaborationare the majorinfluences for cloudcomputing usage

    Trust in cloud providers,incremental cost and reliability arethe most important parameters

    Yes the success of the cloudcomputing adoption and itsimage in the mind of SMEsdiscussed in detail

    SMEs can explore cloudcomputing with relatively littlerisk

    Untitled (Grant, 2009) DELL launched threecloud based servicesfor SMEs

    30% IT cost reduction for SMEs,customized services like storageand minimizing their email outage,security breaches and servicedisruption are the most importantfactors

    No Major inclination toward SMEsby a big corporate like DELL,offering cloud services

    Should You Move YourBusiness to theCloud? (Martin,2010)

    Security and privacyare top concerns of 51%SMBs, availabilityversus suddendowntime, migrationacross cloud services

    The importance of moving to cloudstep by step is recommended usingcouple of tips for SMEs. Moving tocloud is emphasized

    Yes with specific focus onprivacy, availability, data loss,data mobility and ownership,tool robustness

    Strongly emphasized for smallbusinesses

    Untitled (Grant, 2011) SMEs prefer to buyfrom a local cloudprovider and arewilling to pay

    Collaboration, data storage,backup, scalable, pay as you go arethe primary factors

    No Awareness, acceptance, usageand adoption of cloud by SMEsis on the rise

    This research paper Core variables havebeen focused andstudied in detail

    SMEs have shown stronginclination for three out of the fivecore variables for using andadopting cloud, as per this research

    Yes future recommendationsfor the remaining twoparameters have beendiscussed in detail that wouldhelp in designing the cloudframework for improved usage

    Five existing core factors andfew new factors are identifiedand inference is drawn, usingextensive quantitative surveyacross the APAC region usingstructural equation modeling





    In addition, very limited research or literature has been foundet on this research topic in any developed country as well as inPAC (Asia-Pacific) region.

    This research study reveals the perceptions as well as the inten-ions of the SMEs toward factors like cost reduction, ease of use,eliability, sharing and collaboration, security and privacy in auantitative manner, which are quite different as perceived by theorldwide cloud community especially in large enterprises. This

    esearch captured the actual decisions taken by the respondentsather than merely the eagerness and intention to adopt cloudomputing.

    For practical reasons, this study focuses on the micro and smallusinesses (SMEs or SMBs) in Singapo


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