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International Journal of Scientific and Research Publications, Volume 5, Issue 6, June 2015
ISSN 2250-3153
1
Cloud Computing For Micro, Small & Medium Scale
Enterprises (MSMEs) In India
Narendra Bhende*, Dr. (Col) Kunal Bhattacharya**
*
**
Research Scholar, Global Business School & Research Centre, Dr. D. Y. Patil Vidyapeeth, Pune, India
Professor, Research and Collaboration, Global Business School & Research Centre, Dr. D. Y. Patil Vidyapeeth, Pune, India
Abstract- The micro, small and medium scale organizations in
India are still in nascent state as far as use of IT systems is
concerned, though they play a pivotal role in the overall
industrial economy of the country. Further analysis of this
problem reveals that there are number of barriers which come in
the way of MSMEs adopting to new IT systems. They also lack
the financial power required to adopt latest information
technology and so cannot grow beyond a certain point. This
paper analyses these barriers and discusses possibility of using
Cloud Computing as a one stop solution. The barriers faced by
MSMEs in adopting latest IT systems are actually enablers for
adoption of cloud computing. But then there are other barriers
faced by MSMEs in adopting to cloud computing. One main
reason for MSMEs to ignore recent developments in information
technology is lack of awareness. This paper critically analyzes
enablers and barriers in adoption of cloud computing by MSMEs.
It also attempts to create awareness, answering many concerns
about cloud computing that can be used by MSMEs. It suggests
use of cloud computing by MSMEs in India thereby reducing
upfront investments, costs and improving efficiency and
flexibility.
Index TermsTechnology
Cloud
computing,
MSMEs,
Information
I. INTRODUCTION
M
icro, Small and Medium Scale Enterprises are defined by
the Reserve Bank of India (Reserve Bank of India, 200607) as follows–
For Enterprises engaged in the manufacture or production,
processing or preservation of goods - “A micro enterprise is an
enterprise where investment in plant and machinery does not
exceed Rs 25 lakh; A small enterprise is an enterprise where the
investment in plant and machinery is more than Rs. 25 lakh but
does not exceed Rs. 5 crore; and A medium enterprise is an
enterprise where the investment in plant and machinery is more
than Rs.5 crore but does not exceed Rs.10 crore. “
For Enterprises engaged in providing or rendering of
services – “A micro enterprise is an enterprise where the
investment in equipment does not exceed Rs. 10 lakh; A small
enterprise is an enterprise where the investment in equipment is
more than Rs.10 lakh but does not exceed Rs. 2 crore; and A
medium enterprise is an enterprise where the investment in
equipment is more than Rs. 2 crore but does not exceed Rs. 5
crore.”
Cloud computing is computing using shared resources that
are delivered as service over internet and charged based on
usage. The resources can be infrastructure as a service (IaaS),
software as a service (SaaS) or platform as a service (PaaS).
Users can access the services using thin clients or even mobile
devices. Infrastructure as a service delivers infrastructure in
terms of servers, firewalls, switches, routers and other hardware/
networking components including virtualization. Software as a
service provides software like ERPs, E-commerce and CRMs.
Platform as a service allows organizations to select their IT
platform – mostly the operating system (MS-Windows, Unix,
Linux etc.) and environments (like Java, .Net etc.).
II. RESEARCH ELABORATION
2.1 Statement of the problem and Objectives:
2.1.1 Statement of the problem:
All organizations in today’s world should adopt the latest in
information technology to be competitive for sustainability and
growth.
However, adoption of the latest in information technology
by MSMEs in India is low. It is affected by a number of enablers
and barriers. The barriers are outweighing the enablers resulting
in limited penetration of such systems in MSME sector.
Cloud computing offers a solution to this problem as most
of the barriers are eliminated but this also gives rise to a new set
of barriers.
The enablers and barriers for adoption of the cloud
computing by MSMEs in India needs to be critically analyzed.
This will help the industry to decide the way forward towards
adopting the cloud computing and thereby availing the latest in
information technology.
2.1.2
Objectives:
2.1.2.1 Critically analyze the enablers faced by MSMEs in
adoption of cloud computing in India.
2.1.2.2 Critically analyze the barriers faced by MSMEs in
adoption of cloud computing in India.
2.2 Conceptual Framework
For adoption of IT systems, as per traditional approach, the
organizations need to go through huge efforts as explained in the
following paragraphs.
The organizations must have their own servers. This
requires a specialized server room (also called data center) to
commission the servers. The servers need to have a platform for
it to work. The platforms are mainly the operating systems – it
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International Journal of Scientific and Research Publications, Volume 5, Issue 6, June 2015
ISSN 2250-3153
can be MS Windows, UNIX, Linux, Solaris or any other
operating system. Apart from this, it requires a software
development environment like Java or .Net. This platform and
the environment are of no use unless there are applications
running on the same. So the organizations need to conduct a
requirement analysis and decide applications. The applications
can range from a simple e-mailing solution or a financial package
to complex ERPs and E-commerce systems. Even after
organization deploying all this, the users need to be able to
access the applications and so the organizations require IT
networking done.
At this stage, users can access applications and the
organization can be said to have adopted information technology.
But then, there are still uncertainties and risks in terms of high
maintenance and chances of failure. By now, the organizations
must have spent huge amount of money, time and efforts without
getting substantial benefits from the same. This can be easily
managed by large organizations with sufficient IT budgets on
hand. But the micro, small and medium scale organizations
cannot afford to invest heavily into the information technology.
Also they cannot sustain the higher maintenance costs or failures.
Cloud computing is computing using shared resources that
are delivered as service over internet and charged based on
usage. This means MSMEs can avoid upfront huge capital
investments. This is a great relief to them. The systems are
readily available on cloud thereby saving implementation time.
Cost is based on ‘Pay per usage’ so organizations can have a
great control over costs without worrying about maintenance
costs. This does not require skilled resources or expertise as the
cloud service provider takes care of the same. The risk of failure
is minimized as there is no huge capital investment which would
go waste in case of failures. The MSME can easily switch the
service provider if the requirements are not met.
So conceptually, Cloud-computing dissolves all the barriers
in adoption of latest information technology by MSMEs. In fact,
those can be considered as enablers for adoption of cloud
computing by MSMEs. But then, there are some barriers still
existing.
This paper critically analyzes enablers and barriers for
adoption of cloud computing by MSMEs in India.
2.3 Literature review
According to Miller Michael [7], if you are using even the
web based e-mail applications like Gmail or Hotmail, you are
already computing in the cloud. That changes the way you work
and collaborate online. Compare this with the desktop based email program (MS-Outlook) to understand the difference.
OECD, United Nations. Economic Commission for Latin
America and the Caribbean [10] in the book ‘Latin American
Economic Outlook 2013 SME Policies for Structural Change’
mention that cloud computing is an opportunity for SMEs, since
it significantly reduces the weight of ICTs in their cost structures.
Cloud computing gives SMEs the opportunity to access low-cost,
standardized, configurable online computer services. These
services include computing, storage, software and data
management using shared physical and virtual resources
(networks, servers and applications).
According to Zaigham Mahmood [6], SMEs across
geographies and industries are making major changes to their
2
business models to be able to compete with larger firms by
utilizing cloud services to improve operations and become more
efficient. The adoption of cloud by SMEs initially have been
driven by internal user demand and horizontal application
development (e.g. Dropbox and cloud e-mail), where a trusted
partner does add a value component to the implementation.
Masaaki Kurosu [4] has pointed out that, in recent years,
many SMEs adopted various ERP packages from different ERP
vendors, there is a new technology/ concepts available in ERP
adoption for SMEs called cloud computing. Comparing to ERP,
cloud computing seems like intangible because both hardware
and software are not under control by the business who adopted
this technology. Therefore, the key factors that impact
acceptance of this technology by business will be a good research
question. This is the area where this paper is contributing some
insights.
Pang Chuan et. al, [2] have mentioned that with emergence
of cloud concept, it can bring a great benefit to an enterprise
especially for SMEs in terms of IT infrastructure. However,
there are some risks and issues that need to be considered and
explored when applying cloud computing. The adoption of ebusiness and cloud computing technologies and it’s development
could lead to main changes in enterprises and it’s competitive
space. These changes may create many opportunities for the
enterprises to apply cloud computing successfully.
Sanjay Mohapatra & Laxmikant Lokhande [9] have
mentioned a quote by Sharad Sanghi, CEO, Netmagic – ‘You
should be able to increase and decrease IT infrastructure and you
should be able to pay for only what you use’. This described the
cloud computing very well. They further add, with cloud
computing, IT costs can be adjusted on demand. Thus, there is a
business case for cloud computing. Cloud computing reduces the
cost of investment and increases operational efficiency; this
happens because the firms can engage it’s human resources to its
core business areas. As a result, small and medium enterprises
can get a head start in their business operations.
Alina Lonea et. al. [5] in their paper mentions the following
- Small and medium-sized enterprises (SMEs) were the initial
focus for cloud services and they are susceptible to a continuous
adoption of cloud computing services, because of it’s strong
advantages of accessing data from any place in the world over
internet without concerning about the infrastructure used and the
problems involved by the installation and maintenance processes,
in order to assure an efficient expertise.
Reza Sahandi et. al. in their paper [11] mentioned about the
survey of SMEs in UK that they conducted, which shows SMEs
interests in exploiting the cloud computing services but there are
still some concerns with regard to security and vendor lock-in.
This could have affected the speed of cloud computing being
adopted. Cloud computing is still a new technological venture for
SMEs, but it takes good business sense and appropriate steps to
fully reap it’s benefits. Whenever security, data privacy,
interpretability, and portability standards ameliorate, cloud
computing adoption will proliferate.
Carolyn Begg and Tom Caira [1] in their paper believe that
the lack of attention given to SMEs by the data governance
community is unwise given the significant contribution this
sector makes to economies worldwide. In addition, SMEs need to
recognize the value of their data and importance of data
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International Journal of Scientific and Research Publications, Volume 5, Issue 6, June 2015
ISSN 2250-3153
governance for their own survival in an increasingly digital
business environment. It is likely that SMEs will continue to
increase their use of IT, and e-business systems in particular, and
this will bring growing amounts of data that requires governance.
Richard Millham [8] in his paper points out that cloud
computing is particularly advantageous to small-to-medium sized
enterprises (SME’s) because they have access to enterprise
systems at a fraction of the cost without requiring the resources
or expertise to host these systems in-house. The paper further
focuses on enabling legacy systems to adapt to new technology;
in particular, demonstrating methods, such as wrapping of these
systems, to enable legacy systems to migrate to the cloud
paradigm. However this is only one part. Legacy systems in their
original or their migrated paradigm must be able to adapt to
business changes that their legacy system model as well.
2.4 Research Methodology
The study is based on analytical, qualitative, applied,
Empirical and one time Field research. It is descriptive and
exploratory research based on data collected during October
2014 to March 2015 from MSMEs in Navi Mumbai region.
Main methods of data collection are
i.
Primary Data a. Interviews of management of MSMEs
b. Discussion with IT industry practitioners
ii.
Secondary Data a. Annual reports of companies
b. Reports published by government agencies
c. Industrial data publications by various industry bodies
d. Journals, research papers, white papers & articles
e. Internet and print media
f. Relevant case studies
The Universe size of the data was 2292 MSME units in
Navi Mumbai. Using Krejcie and Morgan table, the sample size
derived was 330. Total data from 341 samples was collected
using random sampling. The data collection was done through
questionnaire using personal interviews and schedules.
2.5 Research Model
2.5.1 Hypothesis testing
i.
The researcher identified ten factors affecting positively
(Enablers) for adoption of cloud computing by MSMEs.
Based on this, following hypothesis was constituted.
H1 => Willingness to adopt cloud computing is a function of
following enablers:
i.
Low cost
ii.
Low time
iii.
Improves Company Image
iv.
Low risk of failure
v.
Improves Information availability
vi.
Improves overall quality of information
vii.
Low resources requirement
viii.
Improves customer satisfaction & sales
ix.
Keep up with competition
x.
Low Complexities
This hypothesis was tested using the descriptive analysis.
3
Each of the enablers was considered as an independent variable
and with willingness to adopt cloud computing as a dependent
variable, correlation was found. Further the regression analysis
was performed to estimate the relationship among enablers.
ii.
The researcher identified ten factors affecting negatively
(barriers) to the adoption of cloud computing by MSMEs.
Based on this, following hypothesis was constituted.
H2 => Willingness to adopt cloud computing is a function of
following barriers:
i.
High Operative Cost
ii.
Awareness not available
iii.
Data Security concerns
iv.
Dependency on service providers
v.
Dependency on internet speed
vi.
Compulsory upgrades to latest technology
vii.
Minimum fixed cost irrespective of usage
viii.
Legal & compliance issues
ix.
Increasing costs every year
x.
Flexibility issues
This hypothesis was tested using the descriptive analysis.
Each of the barriers was considered as an independent variable
and with willingness to adopt cloud computing as a dependent
variable, correlation was found. Further the regression analysis
was performed to estimate the relationship among barriers.
III. RESULTS & FINDINGS
3.1 Results, Findings and Discussion
3.1.1 Results of testing hypothesis H1: Correlation
between Positive Factors (Enablers) and willingness to adopt
cloud computing:
Based on analysis of the data, the following results are
obtained. The findings are discussed below:
3.1.1.1 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Low cost
r = 0.813.
p-value = 0.000
This indicates the strong positive correlation between
willingness to adopt cloud computing and ‘low cost’ as enabler.
This is the only factor having strong positive correlation
with willingness to adopt cloud computing. This finding further
stresses that cost is the most important parameter for decision
making of SMEs. In other words, the biggest advantage of
adoption of cloud computing for SMEs is the low cost
3.1.1.2 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Low time
r = 0.502
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘low time’ as enabler.
This clearly indicates that MSMEs are not much concerned
about time to implement cloud computing. This is contrary to
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International Journal of Scientific and Research Publications, Volume 5, Issue 6, June 2015
ISSN 2250-3153
researcher’s observation of large organizations for whom the
time to implement the cloud computing matters a lot. This is due
to the perceived impact of implementing cloud computing on the
overall business which differs between MSMEs and large scale
organizations.
3.1.1.3 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Improves Company
Image
r = 0.590
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘improves company
image’ as enabler.
This result is expected as the MSMEs considered for this
study are industrial units rather than service oriented
organizations. Cloud computing is more beneficial for improving
internal processes for industrial MSMEs though they do consider
cloud computing as a factor in improving company image.
3.1.1.4 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Low risk of failure
r = 0.650
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘low risk of failure’ as
enabler.
Most of the MSMEs do not have their own IT systems or
have minimum required computerization. In such cases, the risk
of failure due to adoption of cloud computing is low. This is as
against the case of large organizations who have huge IT systems
running their core business functions and adoption of cloud
computing may disrupt the normal functioning.
3.1.1.5 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Improves Information
availability
r = 0.741
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘improves information
availability’ as enabler.
MSMEs do agree that adoption of cloud computing will
improve information availability. This is due to multiple reasons.
The cloud computing can be accessed from almost anywhere and
anytime with availability of client and internet. This enables
users to access IT systems on the go from their laptops or mobile
devices. The systems are available 24x7 improving information
availability.
3.1.1.6 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Improves overall
quality of information
r = 0.670
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘improves overall
quality of information’ as enabler.
4
The cloud services make the information available in
different formats due to availability of various software and tools
which may be free or paid based on the service provider. This
includes data analysis, business intelligence, data warehousing
and social media enablement. This improves quality of
information available from cloud computing.
3.1.1.7 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Low resources
requirement
r= 0.441
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘low resource
requirement’ as enabler
MSMEs are mainly concerned about costs and resource
cost is an important parameter in MSME business management.
Availability of expert resources is a main concern and so is the
cost to retain them. Cloud computing frees MSMEs from this
problem as the service providers take care of most of the
technology issues. MSMEs just need to specify their requirement
and start accessing the systems. This results in low resource
requirement by adoption of cloud computing.
3.1.1.8 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Improves customer
satisfaction,
r = 0.473
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘improves customer
satisfaction’ as enabler.
Customers expect 24x7 system availability with quality
information and ease of access. This was till now only possible
for large organizations with high IT budgets. With availability of
cloud computing, now MSMEs can also make the high
availability and feature rich customer facing systems and
improve customer satisfaction.
3.1.1.9 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Keep up with
competition
r = 0.638
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘keep up with
competition’ as enabler
Large organizations adopt the latest information technology
and maintain their market positions. It is extremely difficult for
MSMEs to compete with them. With advent of cloud computing,
it is now possible for MSMEs to utilize similar systems at much
lower costs. Also some of the MSMEs have already adopted
cloud computing and getting benefited from the same. In order to
keep up with competition, remaining MSMEs need to adopt
cloud computing as soon as possible.
3.1.1.10 Correlation between willingness to adopt cloud
computing and Positive Factor (Enabler): Low Complexities
r= 0.457
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ISSN 2250-3153
p-value = 0.000
This indicates the moderately positive correlation between
willingness to adopt cloud computing and ‘low complexities’ as
enabler
Every business is supposed to have core expertise in their
business but to avail benefits of modern information
technologies; they are forced to spend their efforts on
information technology which are complex for them considering
that is not their field of expertise. With cloud computing, as the
service provider takes care of complexities of information
technology, MSMEs can focus on their core business.
3.1.2 Regression analysis for positive factors (Enablers)
Table 1: Analysis of variance for enablers for adoption of
cloud computing by MSMEs
Source
DF
Regression
Low cost
Low time
Improves Company Image
Low risk of failure
Improves Information availability
Improves overall quality of information
Low resources requirement
Improves customer satisfaction
Keep up with competition
Low Complexities
Error
Lack-of-Fit
Pure Error
Total
10
1
1
1
1
1
1
1
1
1
1
330
80
250
340
Adj SS
Adj MS
F-Value P-Value
386.778 38.6778
75.39
0
50.665 50.6651
98.75
0
1.94
1.9404
3.78
0.053
0.226
0.2264
0.44
0.507
1.209
1.2092
2.36
0.126
7.945
7.9451
15.49
0
0.12
0.1199
0.23
0.629
7.489
7.4893
14.6
0
0.003
0.0025
0
0.944
1.145
1.1448
2.23
0.136
0.886
0.8862
1.73
0.19
169.31
0.5131
54.082
0.676
1.47
0.014
115.228
0.4609
556.088
Table 2: Model Summary for enablers for adoption of cloud
computing by MSMEs
S
0.716282
R-sq
69.55%
R-sq(adj)
68.63%
R-sq(pred)
67.51%
Table 3: Coefficients for enablers for adoption of cloud
computing by MSMEs
Term
Constant
Low cost
Low time
Improves Company Image
Low risk of failure
Improves Information availabili
Improves overall quality of inf
Low resources requirement
Improves customer satisfaction
Keep up with competition
Low Complexities
Coef
SE Coef T-Value P-Value VIF
0.309
0.325
0.95
0.342
0.4976
0.0501
9.94
0
4.02
-0.1795
0.0923
-1.94
0.053
2.61
-0.038
0.0572
-0.66
0.507
3.77
-0.1031
0.0672
-1.54
0.126
10.84
0.3162
0.0804
3.94
0
6.12
-0.055
0.115
-0.48
0.629
10.03
0.391
0.102
3.82
0
1.35
0.008
0.115
0.07
0.944
2.95
0.1033
0.0691
1.49
0.136
11.49
0.0513
0.039
1.31
0.19
2.17
Regression Equation
Willingness to adopt cloud computing =
+ 0.309 + 0.4976 Low cost
- 0.1795 Low time
- 0.0380 Improves Company Image
- 0.1031 Low risk of failure
+ 0.3162 Improves Information availability
- 0.055 Improves overall quality of information
+ 0.391 Low resources requirement
+ 0.008 Improves customer satisfaction
+ 0.1033 Keep up with competition
+ 0.0513 Low Complexities
5
3.2 Effect of Negative Factors (Barriers)
3.2.1 Correlation between Negative Factors (Barriers)
and willingness to adopt cloud computing
3.2.1.1 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): High Operative Cost
r = -0.669
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘high operative costs’
as barrier.
Cloud computing saves MSMEs from initial high capital
investments but it also results into high operative costs. This high
operative costs are relative and change from unit to unit based on
usage patterns. But overall, high operative cost is a concern for
MSMEs.
3.2.1.2 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Awareness not
available
r = -0.714
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘awareness not
available’ as a barrier.
The researcher has observed that the MSMEs are really
interested in adoption of latest information technology. But they
do not have sufficient information or guidance about the ways to
adopt cloud computing. The consulting firms and IT services
firms are mainly interested in large organizations as their clients
and MSMEs also cannot afford their charges.
3.2.1.3 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Data Security concerns
r = -0.828
P-Value = 0.000
This indicates the strong negative correlation between
willingness to adopt cloud computing and ‘data security
concerns’ as barrier.
Data security concerns is the most important factor in
decision making for cloud computing. Organizations always feel
the data is secured when stored on the computers in their own
data centers with all sorts of physical security measures. But they
forget that in today’s networked world, physical security cannot
secure the data. In fact, the data in the computers of the cloud
service providers is much safer considering the latest security
technologies they maintain and the legal agreements supporting
data security.
3.2.1.4 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Dependency on service
providers
r = -0.608
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘dependency on
service provider’ as barrier
The MSMEs perceive that cloud computing is provided by
the cloud service provider thereby there will be dependency on
the service provider. This is correct but the services provided are
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International Journal of Scientific and Research Publications, Volume 5, Issue 6, June 2015
ISSN 2250-3153
governed by the legal agreement between the service provider
and the client organization. There are stringent SLAs on the
service provider and client organization can demand adequate
compensations in case of any breaches. This makes the
organizations safe. Also in case the client organization is still not
satisfied with the performance of the service provider, they can
switch to another cloud service provider. Considering stiff
completion among the cloud service providers, switching is no
more a problem.
3.2.1.5 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Dependency on
internet speed
r = -0.491
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘dependency on
internet speed’ as barrier
Dependency on internet speed is a real concern as the cloud
services are provided on internet. MSME organizations adopting
to cloud computing need to select a suitable internet service
provider for their staff to avail cloud based solutions. They can
even select multiple internet service providers so that there can
be uninterrupted services in case one of those fails. There are still
concerns in the remote areas where internet is not available and
in such cases, cloud computing cannot be utilized. Hence
MSMEs need to consider this factor carefully.
3.2.1.6 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Compulsory upgrades
to latest technology
r = -0.568
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘compulsory upgrade
to latest technology’ as barrier.
Cloud service providers typically provide latest OS
versions and environments with up to date service packs and
patches installed as recommended by the product vendors. This is
in fact a useful feature. But this requires the software version
upgrade as the existing software used by organization may not
work in the upgraded environment. This results in additional
costs and change management.
3.2.1.7 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Minimum fixed cost
irrespective of usage
r = -0.713
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘minimum fixed cost
irrespective of usage’ as barrier
The cloud service providers have different payment
models. The basis of payment in most cases is ‘pay per usage’.
But there are some hidden fixed costs just to maintain the data
and accounts with service provider. This is inevitable and the
costs are minimal comparing with maintaining own data center.
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3.2.1.8 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Legal & compliance
issues
r = -0.563
P-Value = 0.000
This indicates the moderately negative correlation between
willingness to adopt cloud computing and ‘legal and compliance
issues’ as barrier
MSMEs and for that matter all the business organizations
are busy with their core business and need not spend time and
efforts of non-core areas. Cloud service providers host
company’s sensitive data and business critical systems and so
insists on signing legal agreements. Also the organizations
compliance policies may not be accepted by cloud service
providers and need to be diluted. For e.g. some of the cloud
service providers do not allow site inspection of their server
facilities.
3.2.1.9 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Increasing costs every
year
r = -0.564
P-Value = 0.000
It is very obvious that the costs of services go on increasing
every year due to inflation based on monetary indices. But the
concern here is that the cloud service providers provide cloud
services at highly discounted rates to their clients in the
beginning to grab a new client. But from the next year, they start
charging higher amounts with huge mark-ups and hidden costs.
This practice causes the organizations to think that the operative
costs are too high in subsequent years and so this factor becomes
a barrier in adoption of cloud computing.
3.2.1.10 Correlation between willingness to adopt cloud
computing and Negative Factor (Barrier): Flexibility issues
r = -0.514
P-Value = 0.000
Cloud computing provides high amount of technical
flexibility. It can provide higher computing power, storage space
and other technology areas very easily but this flexibility is
restricted by the scope of services as defined in the legal
agreement. So some specific requests of the client organization
can be denied by the cloud service provider. Also the usage of
cloud computing is restricted and the service provider can object
for certain activities performed by client organization.
3.2.2 Regression analysis for negative factors (Barriers)
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International Journal of Scientific and Research Publications, Volume 5, Issue 6, June 2015
ISSN 2250-3153
Table 4: Analysis of variance for barriers in adoption of
cloud computing by MSMEs
Source
Regression
High Operative Cost
Awareness not available
Data Security concerns
Dependency on service providers
Dependency on internet speed
Compulsory upgrades to latest technology
Minimum fixed cost irrespective
Legal & compliance issues
Increasing costs every year
Flexibility issues
Error
Lack-of-Fit
Pure Error
Total
DF
10
1
1
1
1
1
1
1
1
1
1
330
131
199
340
Adj SS
Adj MS
F-Value P-Value
490.707 49.0707
118.21
0
1.608
1.6082
3.87
0.05
1.395
1.3948
3.36
0.068
70.659 70.6588
170.21
0
0.872
0.8722
2.1
0.148
0.305
0.3045
0.73
0.392
3.976
3.9763
9.58
0.002
3.372
3.3722
8.12
0.005
0.512
0.5117
1.23
0.268
0.4
0.4003
0.96
0.327
0.027
0.0272
0.07
0.798
136.994
0.4151
97.294
0.7427
3.72
0
39.7
0.1995
627.701
7
The MSME management can consider this study as a
viewpoint and can take steps towards adoption of cloud
computing in their units. A step by step approach is
recommended for MSMEs for venturing into the world of cloud
computing rather than a big bang approach.
ACKNOWLEDGMENT
I would like to thank the association of MSMEs and their
office bearers for making the relevant information available and
support provided on this study. I also thank my seniors and
colleagues at Dr. D. Y. Patil Vidyapeeth for providing immense
help in my work. Last but not the least; I would like to thank my
spouse, Vidya and son, Jay for their support in this work.
Table 5: Model Summary for barriers in adoption of cloud
computing by MSMEs
REFERENCES
S
0.644307
R-sq
0.7818
R-sq(adj) R-sq(pred)
0.7751
0.7652
Table 6: Coefficients for barriers in adoption of cloud
computing by MSMEs
Term
Constant
High Operative Cost
Awareness not available
Data Security concerns
Dependency on service providers
Dependency on internet speed
Compulsory upgrades to latest technology
Minimum fixed cost irrespective
Legal & compliance issues
Increasing costs every year
Flexibility issues
Coef
SE Coef
T-Value
P-Value VIF
6.592
0.12
54.96
0
-0.0713
0.0362
-1.97
0.05
2.29
-0.0868
0.0474
-1.83
0.068
3.55
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0.0435
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2.34
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0.0406
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2.14
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0.0426
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2.83
-0.0449
0.0405
-1.11
0.268
2.02
-0.0367
0.0374
-0.98
0.327
2.09
0.0086
0.0335
0.26
0.798
1.7
[1]
[2]
[3]
[4]
[5]
Regression Equation:
[6]
Willingness to adopt cloud computing =
6.592 - 0.0713 High Operative Cost
- 0.0868 Awareness not available
- 0.5674 Data Security concerns
- 0.0588 Dependency on service providers
- 0.0329 Dependency on internet speed
- 0.1152 Compulsory upgrades to latest t
- 0.1213 Minimum fixed cost irrespective
- 0.0449 Legal & compliance issues
- 0.0367 Increasing costs every year
+ 0.0086 Flexibility issues
[7]
[8]
[9]
[10]
[11]
[12]
IV. CONCLUSIONS
4.1 Conclusions
The MSMEs should adopt the cloud computing which will
enable them to utilize the latest information technology.
The willingness to adopt cloud computing in MSME sector
is function of multiple enablers and barriers. The main enabler is
the low cost followed by information availability. The main
barrier is concern about the data security followed by awareness.
4.2 Scope for further research
Each of the enablers and barriers considered in this study
can be further studied in depth from multiple dimensions.
4.3 Managerial implications
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AUTHORS
First Author – Narendra Bhende, B.E., M.B.A., Ph.D. Scholar
at Global Business School & Research Centre, Dr. D. Y. Patil
Vidyapeeth, Pune, India
Second Author – Dr. (Col) Kunal Bhattacharya, Professor,
Research and Collaboration, Global Business School & Research
Centre, Dr. D. Y. Patil Vidyapeeth, Pune, India
Correspondence Author – Narendra Bhende,
Email address: Narendra.bhende@gmail.com,
Alternate email address: narendrab_in@hotmail.com
Contact Number +919324070146
www.ijsrp.org
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