The Benefits of Cloud Computing – INTRODUCTION
Many people have prefigured the advent of cloud computing and the digital revolution as the new era of virtual business. The rapid increase in digital resources has made technology accessible to an ever-growing user audience worldwide. New technologies persistently pop up, promising the organizations to reduce costs, improve work effectiveness all while being smarter, faster and smaller and increase efficiency (Marston et al. 2011). According to Aljabre (2012), cloud computing has been utilized by several firms to enhance their performance. However, not all firms use this technology. The utilization of cloud computing depends on the size and the environment where the company operates (Aljabre, 2012). Cloud computing is mostly used by large enterprises which operate in the competitive market environment. This is because these firms have the capacity to acquire competent talents and sustain the technology in the long run as compared to small businesses. Cloud computing is defined by the National Institute of Standards and Technology (NIST) as a model that allows access to computing services efficiently. This can be done without necessarily having to seek assistance from managers and service providers (Mell & Grance, 2011). This definition has been embraced by other authors. Cloud computing requires one to use applications over an available network. The user has no obligation to buy IT hardware (Smith & Sommerville, 2010). Cloud computing provides the user with facilities that allow the business to gain a competitive advantage in the market (Anjomshoaa and Tjoa, 2011). Data and other applications can be made available if the connection is provided. The connection allows these applications to avail data and other applications on the Internet or over other networks (Conway, 2011). Many research concerning the importance and barriers of cloud computing has been done. However, much of the research is done on the large businesses as opposed to small ones. As such, there is limited information concerning the importance and barriers of using cloud computing on small firms. The value of cloud computing in small businesses is still unknown since most research has been carried out on large companies only. Therefore, this study is of great significance since it provides a theoretical literature that will make most people understand the business value of cloud computing in small business context. This study provides a theoretical framework concerning the business value of IT in small firms. This section describes the literature concerning the benefits and requirements of cloud computing. It also provides a broad overview of the literature concerning the theoretical framework and business value of cloud computing. The paper also discusses the research methodology and analysis of the result. The last section of this paper discusses the recommendations and conclusion of the research. Small firms find it difficult to choose the best digital tool to use in their operations. This results from rising concern over data security and business ownership. Therefore, cloud computing is the most convenient digital tool that the owners of small businesses can easily access (Marston et al., 2011). Today, technology is the major inspiration that dictates the activities of small business organizations. Technology enables small business organizations to gain a competitive advantage in the market. Small business organizations can obtain a competitive advantage by an adopting cloud computing. This is because cloud computing allows small firms to become more effective and efficient over their opponents (Marston et al., 2011).
Cloud computing has been used in the past years to provide solutions in the field of IT. It allows companies to outsource data and use electronic mail. Besides, business organizations can also access other applications on the virtual platforms. This is made possible by using the servers connected to the company. The servers enable the user to access information at any time regardless of the physical location. The benefits presented by cloud computing makes it difficult for small firms to ignore it since it requires only an internet connection. Cloud computing enhances the performance of any organization globally and locally. This is because it makes it possible to modify their internal structure especially the IT department (Ilie, 2015).
Cloud computing is revolutionizing the way business activities are being conducted. It enables firms to employ new methods to modify their business operations. Today, most companies are using cloud computing to back up data and other useful information. Cloud computing enables users to access data and information through the internet as opposed to the traditional form where data was stored on a hard drive (Ilie, 2015). Through cloud computing, the stored data can be accessed anywhere at any time over the internet provided there is a connection (Ilie, 2015).
Also Study: Drawbacks and Advantages of Cloud Computing
Cloud computing uses the internet to allow the management to efficiently monitor the activities of the workers within their small businesses. The management can easily access their staff and monitor their operations. The giant technological companies such as Amazon, SAP, and Microsft have embraced cloud services. They are also at the forefront of pushing other business organizations to integrate cloud computing into their operations. This is because these firms have made a significant contribution towards technological modernization (Marston et al., 2011).
Therefore, cloud computing can enable small businesses to improve their prospects. It is of significance to small firms since it enhances their business value. Cloud computing enables small businesses to improve the economy and cover a wider market niche. Moreover, small businesses can reduce their operating costs especially those operating in competitive environments. It also contributes to job satisfaction, increased profitability, and client satisfaction (Kondapalli, 2016)
1.1 Background of Study
We are familiar with the fact that technology has reached a critical level and play a vital part in our organizations. Nowadays, small businesses also use the internet to improve operations. In this era, most of the people utilize the internet to perform different tasks of their business. Small firms that are already functional in the market are trying to advance their performance, by embracing new technologies that are available in the market and they are also planning to integrate them into the goals of the companies (Aljabre, 2012).
Cloud computing has enabled small businesses to enhance their economic value. This is because they can access different technologies that allow them to reduce operational costs. In this case, they can compete effectively in the market with both the small firms and medium business organizations. Cloud computing has enabled small companies to gain competitive over large enterprises in the market (Aljabre, 2012)
It is less expensive to use the applications that are available on the cloud than to purchase new ones. Consequently, the cost required for installing and fixing an application will be cut down, and the corporation will save money thus bringing economic uplift for the small businesses. Moreover, there will be no cost for upgrading the infrastructure as cloud computing is frequently updated by the providers thus, making it a way of cutting the expenses for the small businesses largely. Another possibility that can suffice all the needs of the small businesses is to use one multi-application cloud service (Dimitrov & Osman, 2012).
Since the API helps in finding the application, which is best suited to the goals of the small businesses, the applications that are available on the cloud will integrate seamlessly within the company. Cloud computing is an advanced technology to run businesses where the applications run on a shared multi-tenant in spite of running them on a LAN or a PC. It is based on the concept of the self-service whereby to use any application that runs in the cloud; one just needs to log in, tailor it according to its need, and start reaping its benefits (Devasena, 2014).
Nowadays, more and more organizations are running almost all kinds of applications in the cloud, like accounting, HR, CRM, Sales force and custom-built applications. Cloud computing does not require the customer to pay for all the facilities that are used including the software and hardware devices. Small business organizations are also not required to pay for the configuration and maintenance of the technology. As such, small businesses can quickly acquire it since it is cheap. Cloud computing, therefore, contributes to the increase in the business value of small firms and economic growth (Devasena, 2014).
Cloud computing offers more reliable, more secure and more scalable service for the small businesses. Furthermore, upgrades are intermittently accomplished by cloud providers to facilitate security, new features, and performance improvements automatically. Cloud computing has a significant impact on small businesses though it is a modest idea (Devasena, 2014).
However, Adaptation of Cloud Technology and cloud applications, do not consume the valuable information technology resources of small businesses whereas adopting the Cloud, lets the small business owner concentrate on deploying new projects, more applications, and innovation and as a result reaping economic growth and business value.(Devasena, 2014).
Requirements of Cloud Computing
Cloud computing models are required to meet particular requirements (Arasaratnam, 2011). These requirements include broad network accessibility, scalability, abstraction, economics, elasticity, and multi-tenancy. Elasticity enables cloud computing to adjust depending on the user requirements. Elasticity allows cloud computing to decrease or expand the resources that the user requires to interact with the other users (Leymann Fritsch, 2009). In this case, the cloud computing may be provided at the right quantity when needed and can be disposed of by the user when he/she no longer needs it (Durkee, 2010). Scalability is a cloud computing requirement that enables the technology utilized to operate under various load sizes (Buyya, Ranjan & Rodrigo, 2009). Cloud computing is used by most firms to enhance the scalability of the services that they provide. Besides, they use it to meet the resource requirements or demand (Leymann Fritsch, 2009). Scalability enables firms to manage resources and allows the system to operate continuously despite the rising number of those who intend to use the system (Hayes, 2008). Multi-tenancy refers to how resources are shared among different users (Dillon, Wu & Chang, 2010). Multi-tenancy enables the firm to deploy and upgrade resources quickly especially in cases where a small number of applications are used (Bezemer & Zaidman, 2010). Multi-tenancy is the major contributing of economic benefits associated with cloud computing (Arasaratnam, 2011). Firms which embrace multi-tenant environments can shift to operating expenditure models from the capital expenditure models. The shift usually depends on the level of computing power (Creeger, 2009). Abstraction enables the firm to separate how the users access the application and the requirements that are used to maintain the low-level hardware and software devices (Franklin, 2009). Abstraction is the major vital change that is provided by cloud computing. It insulates the software devices from the consumers (Arasaratnam, 2011). The broad network enables firms to use cloud computing to deliver standardized devices over the available applications or the internet (Mell & Grance, 2011).
The Benefits of Cloud Computing
The benefits that cloud computing offer have been discussed in different articles (Lovell, 2011). Some of the significant benefits associated with cloud computing include increased chances of innovation, reduced operational costs, efficient utilization of resources, green computing, enhanced scalability and organizational flexibility. Cloud computing allows firms to develop and administer centers where large-scale data can be stored cheaply (Mell & Grance, 2011). Cloud computing allows companies o achieve economies of scale since they can utilize the operational and technical resources and distribute the computing power effectively and efficiently. Scalability and flexibility which are the primary requirements of cloud computing enable organizations to eliminate resources that can be over marshaled when installing a new IT system (Hayes, 2008). This is made possible in cases where the firm intends to support organic growth demanded by the computing power. Cloud computing enables businesses to reduce the time required to market their products (Leena & Jain, 2010). According to Hayes (2008), firms that utilize cloud computing can quickly deploy their resources and business services. This enables them to penetrate other market segments. Cloud computing also increases the mobility of a firm and remote accessibility (Conway, 2011). Cloud computing allows users to access data information regardless of physical location. It is also cheap to install cloud computing services since the user is not required to pay for hardware and software devices that are used. Besides, it does not require substantial capital and human resources to operate (Vaughan, 2006). Cloud computing promotes virtualization since the management can use a single computer to run multiple systems simultaneously. In this case, a single computer is made to carry out various tasks (Vaughan, 2006).
1.2 Problem Statement
Small businesses, nowadays, are trending towards growing their scope larger which is not only related to the increase in the number of employees, but also in the type of employees and number of departments. Along with this the cost of obtaining, implementing, and keeping a reliable and robust IT infrastructure is very much high and has led many small businesses all over the world to lag behind in technological advancements in comparison to those used by other small businesses in the world (Dimitrov & Osman, 2012).
It has been observed that some small business owners that do not adopt cloud computing for their organization might not get the benefits of cost saving and universal accessibility. There are various problems associated with the use of on-site structures in comparison to the use of Cloud based services. Small business who do not adopt cloud computing and its economic benefits may result in a loss of competitiveness that might threaten their growth and revenue.
Therefore, there is a need to adopt such an infrastructure, which helps the small businesses in every respect such as cost, ease of use, security, relative advantages and provides business and economic value. Before that, small businesses need to carefully consider the value, benefits, and risks of cloud computing to decide on whether to adopt and use cloud computing as Small businesses find themselves reluctant when it comes to adopting Cloud computing technology that can bring competitive advantages to them. The primary problem of this study is a small business slow embrace of the cloud computing innovation for greater economic and societal contribution. Also, the lacks of awareness by small business on the values that cloud computing contribute to the economic growth of small business, the limited adoption of cloud computing innovation by small business to greater economic values. According to Truong 2010, Adapting a resource-based view of IT to cloud computing reported that less than 2% of small businesses had employed a limited form of newly emerging cloud computing and further recognized the need to understand small businesses’ potential use of cloud-computing technology.
1.3 Purpose of Study
This thesis will discuss how cloud-computing technology concentrates on providing true value to the small business and the economic benefits associated with it.Constructs are measuring the perceived attributes of cloud computing, which included the independent variables as well as the dependent variable purpose to use cloud computing, to address the problem statement and to achieve the objectives of this study’s purpose, given the small business volatility and economic importance, the overarching research questions. The correlation between every one of the independent variables composing the perceived attributes of cloud computing innovation and the dependent variable intent to use cloud-computing technology will be addressed by the following specific research questions. The following research questions will be considered to attain the very purpose of the study:
- What is the impact of cloud computing on the small businesses?
- What are the cost benefits of the cloud computing for small businesses and are there any savings in this regard?
- What factors should be kept in mind before adopting this IT infrastructure for the small businesses?
- What are the other relative advantages it can bring to the small businesses?
- What are the security and privacy benefits of the cloud computing for small businesses?
- To what extent this IT infrastructure would be convenient for the small businesses regarding utilization?
1.4 Nature of the Study
This research project intends to explore and understand the value and the importance of cloud computing for small businesses. A systematic review is a piece of research by its nature and in its right that is capable of addressing extensive questions than single empirical studies ever can., Since systematic reviews have the potential to offer the most significant practical implications, therefore, it is above all other research methods at the top of the hierarchy of evidence (Baumeister,2013).
In this regard, a systematic review of published articles will be employed to answer the research questions and support the hypotheses established in this research, as this research methodology is exploratory in nature. For this purpose, multiple research papers or studies will be collected, and critical analysis would be made using statistical methods to analyze the findings consequently.
Along with the extensive literature review, this research methodology will consider relevant core variables that already exist that are mainly economic benefits, business value and cost savings for small businesses. Therefore, a direct relationship of these fundamental variables has been used to produce the research model to understand the importance and value of cloud computing for small businesses.
However, this research project is undertaken during a particular period in which it has to be completed thus it has a significant risk of time constraint. Furthermore, there is no significant time for data collection and analysis, which is another potential risk. The validation of this research methodology would be done by gathering the responses retrieved from the web, and literature review with the use of the statistical method to analyze and draw the conclusion and recommendation from the research findings.
The following hypotheses are relevant to the research questions that are undertaken in this study and are based on the research study.
For small businesses, cost reduction has a positive impact when it comes to convenience and ease of use which is due to the absence of physical hardware and scalability of resources.
For small businesses, cost reduction achieved using digital documents and file that is delivered online by using cloud has a positive outcome regarding collaboration and easier sharing.
For small businesses, cost saving or cost reduction obtained by using cloud has a progressive effect on the adoption and usage of cloud computing as the company has to pay only for what is required.
Convenience and ease of use in using the cloud infrastructure for small businesses are directly related to improved collaboration and sharing.
Convenience and ease of use regarding cloud solutions have a significant effect on the adoption and use of cloud computing for small businesses thus, making them more efficient and productive.
Privacy and Security improvements are directly related to cost savings or cost reduction by small businesses.
Privacy protected and better-secured cloud solution has positive impacts on the ease of use and provides greater convenience for the small businesses as they can adopt and use this technology without worrying.
1.5 Significance and Objective of the Study
The rise of the Internet and the rise of the computing technologies have caused changes throughout the businesses, bringing an inclination for those who fail to adopt these new technologies early enough to suffer and to be left behind eventually. The cloud technology is revolutionizing the basis of employee productivity whereby leaving no enterprise untouched. In a rapidly changing and hyper-connected business world, it is becoming evident that businesses that do not incorporate cloud computing are missing opportunities to reveal new sources of performance improvement, productivity and IT flexibility (King, 2008). 2008 is outdated.
Cloud computing facilitates businesses to obtain the access to software and hardware that is externally hosted and maintained rather than spending money on hiring the IT staff to install and maintain hardware and software infrastructure and its functionality. Cloud computing also facilitates employees to work more easily and collaborate more effectively while at traveling or at home. A company lets its employees make more time for strategic innovation and initiatives by outsourcing its technological infrastructure to the cloud. Furthermore, by shifting the burden of lower-value activities, the company can attain more resources to devote to value-creating activities (Miller, 2008) is outdated.
It is important to highlight the value of cloud computing for the small businesses as in comparison to the pre-cloud environment. Energy savings can be achieved through the deployment of cloud technology, companies can consume resources on demand, efficient server utilization is obtained and services can be provisioned speedily, due to the elasticity and scalability of cloud services. We cannot ignore the importance of cloud computing which is why people have tremendously shifted to the Cloud technology. This is due to an increase in environmental concerns related to carbon emissions, maturity of virtualization technology and the growth of employee mobility through the devices such as smartphones and tablets (Garg & Buyya, 2012)
The growth of cloud technology is also because line-of-business managers are taking control of IT environments and capacity management has become more challenging than before. Moreover, studies have shown cloud computing provides their business with quantifiable benefits, such as reduced IT expenses, reduced IT maintenance costs, improved process efficiency and reduced operational costs (Devasena, 2014).
Right across the organization, a properly implemented cloud computing strategy can have noteworthy business benefits which present organizations with potential business benefits that could considerably affect every department. Therefore, keeping this significance of the cloud computing in mind, the aim of this research is to monitor the emergence of cloud computing from the viewpoint of the value of the small businesses mainly regarding economic growth and other relevant advantages, rather than from the perspective of the IT department.
2.0 Review of Academic and Professional Literature
Printed book publications were included in the literature review; the primary literature search was conducted via electronic databases, primarily EBSCO Host’s 41 Computers and Applied Sciences Complete and Business Source Complete/Premier, Pro Quest’s ABI/INFORM Complete and Business Dissertations and Theses, and Emerald Management Journals.
A total of 100 resources were found relevant, eight of them were books, two of them were dissertations, seven of them were government publications, and two of them were online references. The remainder was peer-reviewed journal articles. An understanding of the importance of small businesses in the United States and to the global economy was developed based on the literature review.
BUSINESS VALUE OF CLOUD COMPUTING
Review of Academic Literature
Cloud computing is an important area of study. It has drawn the attention of different research professionals in the recent years (Marthandan & Tang, 2012). Most of the studies carried out in this field concern the value of cloud computing in the business. Most business organizations have raised questions to justify the need to spend on IT (Schryen, 2010). However, various articles describe different reasons why companies should spend on IT. The availability of several articles has justified the need for many research on the value of cloud computing. There is substantial evidence that a lot of studies have been in conducted in this area of study. However, several variances still exist. Such variances include findings, terminologies and the methods used (Kohli & Grover, 2008). The studies that have been performed by these researchers were not based on a particular theoretical framework. This has led to the development of varying opinions concerning the evaluation of the real worth of IT in business (Schryen, 2010). Therefore, conducting research concerning the business value of IT has become very complicated (Marthandan & Tang, 2012).
Buyya et al. (2010) assert that cloud computing is of great significance to business organizations. It allows firms to direct their efforts towards innovation. In this case, the businesses will increase their value and improve the quality of the services provided. This is achieved by developing software and hardware infrastructures that support the operations of the business organizations (Buyya et al., 2009). According to the study conducted by Rimal et al. (2009), cloud computing enhances business value since the firm can easily modify or change its methods of operation. Besides, virtualization which is an aspect of cloud computing that enables firms to come up with new hardware resources that allow them to enhance the business value. It is evident that cloud computing allows business organizations to direct their efforts towards innovation (Hartman & Beck, 2011). According to Boss et al. (2007), the firms will not concentrate much on issues concerning logistics. As such, they will provide resources that enhance the process of innovation (Jaekel & Luhn, 2009). Cloud computing also enables companies to develop effective communication strategies with their business partners including customers and suppliers among others (Hartman & Beck 2011). Cloud computing also allows business organizations to respond effectively to uncertainties.
Cloud computing determines the business value of a firm depends on the level of technology utilized by the enterprise to carry out its operations. Cloud computing is of great significance to companies since they are not required to invest heavily in business operations. The reduced cost of investment allows business organizations to increase their benefits and enter new markets quickly (Jaekel & Luhn, 2009). According to Melville et al. (2004), there are firms which have gained a competitive advantage as a result of using a resource-based view (RBV). Business organizations which are capable of exploiting their RBV can produce unique products that enable it to penetrate other markets. Melville et al. (2004) have developed an IT business model that integrates the research elements and a theoretical framework that summarizes the value of using IT in the business and the knowledge accumulated.
According to Melville et al. (2004), the framework is based on three domains. Such domains include the macro environment, focal firm, and competitive environment. The macro environment consists of external factors that affect the implementation of IT in business operations. The competitive environment comprises of the businesses that operate in the industry and the different partners. The focal firm refers to the company that provides and invests in the IT resources.
- Adam, I. O., & Musah, A. (2014). Small and Medium Enterprises (SMEs) in the Cloud in Developing Countries: A Synthesis of the Literature and Future Research Directions.
- Aljabre, A. (2012). Cloud computing for increased business value. International Journal of Business and Social Science, Vol. 3 No. 1; January 2012
- Baumeister, R. F. (2013). Writing a literature review. In The Portable Mentor (pp. 119-132). Springer New York.
- Devasena, C. L. (2014). Impact study of cloud computing on business development. Operations Research and Applications: An International Journal (ORAJ), 1(1), 1-7.
- Dimitrov, M., & Osman, I. (2012). The Impact of Cloud Computing on Organizations in Regard to Cost and Security.
- Ilie, S. (2015). Cloud computing – impact on business (Master Thesis). Aalborg University Copenhagen.
- Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. (2011). Cloud computing—The business perspective. Decision support systems, 51(1), 176-189.
- Truong, D. (2010). How Cloud Computing enhances competitive advantages: A research model for small businesses. The Business Review, Cambridge, 15(1), 59-65.
- Johnston et al. Business Value of Cloud Computing in South Africa. The African Journal of Information Systems, Volume 8, Issue 2, Article 1 6