adoption trends of cloud computing amongst the smes of united kingdom

Adoption trend of cloud computing amongst the SMEs

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FACULTY OF BUSINESS AND LAW

MSc IT Consultancy Services Management

Dissertation 2012/13

Name: SOMYA GULATI KU ID: K1162314


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Kingston University London

Faculty of Business and Law

Adoption Trend of Cloud Computing amongst the Small and medium sized businesses Author Somya Gulati Supervisor Anthony Sims

Submitted in support of the degree of: MSc IT Consultancy


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Declaration

I confirm that this dissertation is submitted for examination for the award of MSc in IT

Consultancy at Kingston University 2012 is my own work and has not been taken from

the work of others. The work that has been used as a reference has been cited using the

Harvard Referencing System and collated in the Bibliography.

Moreover, the work reported on in this dissertation is in accordance with the principles

and the requirements of the University’s guidelines for ethics in research.

Signed.

Name.

Date.


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Acknowledgements

I owe my sincere gratitude to my supervisor, Anthony Sims who guided and corrected

me throughout the course of my dissertation. He made me understand my theme from a

practical and a business perspective.

I would also like to thank Daniel Scott, founder of a small business called ‘your business

works”. He relentlessly helped me with my research, especially with my data collection.

I would also like to extend my gratitude to Crown Agents, London, in particular to my

boss, Susie Horne and Leo Adekoya. They supported me with my research through out

and helped me out with my data collection. Both of them are extremely inspiring and

strongly believe in me. There is a lot that I learnt in just 3 months from them.

I also want to thank Mino Trombetta, my colleague and a friend. He continuously

motivated me for the research and believed that I would come up with amazing results.

In the end, I would like to express gratitude and appreciation to my family and friends

and all those who have offered me moral support and guidance during the course of this

dissertation.


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Abstract

The emergence of cloud computing in recent years has sparked an interest from

different organizations, institutions and users to take advantage of the web applications.

The cloud computing business model has promised a shift from a traditional IT model to

a cloud model where the organization can buy or rent resources that are managed by a

cloud provider, and pay per use. An organization wouldn’t have to invest heavily for

limited IT resources that are internally managed because the cloud computing also

promises scalability of resources and on-‐demand availability of resources.

The adoption of cloud computing has promised a range of benefits to an organization.

However, a proper understanding of the technology is essential for an organization to

attain a successful adoption. Presently, not enough study has been done on the adoption

trend of cloud computing from the perception of the small medium businesses. Also,

there is not enough study that has been done on the challenges that are faced by the

small medium businesses after implementing the cloud solutions. This dissertation aims

to look further and examine the reasons for the adoption of cloud technology and the

business challenges that the SMEs face.

The findings of this dissertation show some contradictions with the previous studies.

This dissertation has explicitly highlighted the various contradictions and has

conducted an in-‐depth analysis on them. The previous studies have highlighted that

saving money or cost-‐control is the driving factor for the organizations to adopt the

cloud, however, the findings of this research illustrate that cost maybe the secondary

benefit of the adoption of the cloud but is not a driving factor for the SMEs. There are

other factors that motivate the SMEs to adopt cloud such as flexibility.


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Furthermore, this dissertation looks at cloud computing from a business rather than an

IT perspective and therefore certain recommendations have been made with an

assumption that by adhering to those propositions, the SMEs will have a better vision of

the challenges that they might face after the implementation of the technology and

might have a chance of making the cloud computing adoption, a profitable and an

efficient experience.


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Table of Contents Declaration ...................................................................................................................................................... 3

Acknowledgements ...................................................................................................................................... 4

Abstract ............................................................................................................................................................. 5

CHAPTER 1 .................................................................................................................................................... 10 INTRODUCTION AND AIM ........................................................................................................................ 10 1.1 Introduction ..................................................................................................................................................................... 10 1.2 Aim of the research ....................................................................................................................................................... 12

CHAPTER 2 .................................................................................................................................................... 13 LITERATURE REVIEW ............................................................................................................................... 13 2.1 Introduction ..................................................................................................................................................................... 13 2.2 Background of cloud computing ............................................................................................................................. 15 2.3 Drivers of adoption and the benefits of Cloud Computing ........................................................................... 18 2.5 Limitations of Cloud Computing ............................................................................................................................. 21 2.6 Adoption Trends of the cloud computing technology by the SMEs. ......................................................... 23 2.6 Summary of the Literature Review ........................................................................................................................ 31

CHAPTER 3 .................................................................................................................................................... 33 RESEARCH OBJECTIVES ............................................................................................................................ 33 3.1 Objectives .......................................................................................................................................................................... 33 3.2 Hypothesis ......................................................................................................................................................................... 34

CHAPTER 4 .................................................................................................................................................... 35 RESEARCH METHODOLOGY .................................................................................................................... 35 4.1 Introduction ..................................................................................................................................................................... 35 4.2 Research Approach ....................................................................................................................................................... 36 4.3 Data collection method ............................................................................................................................................... 38 4.4 Data Analysis Method .................................................................................................................................................. 40 4.5 Sampling strategy ......................................................................................................................................................... 41 4.6 Research Question ......................................................................................................................................................... 43 4.7 Limitations of the Research ...................................................................................................................................... 44


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CHAPTER 5 .................................................................................................................................................... 45 RESEARCH FINDINGS AND THE ANALYSES ........................................................................................ 45 5.1 Introduction ..................................................................................................................................................................... 45 5.2 Findings .............................................................................................................................................................................. 46 5.3 Discussion and Analyses ............................................................................................................................................. 59 5.3.1 Primary Drivers .......................................................................................................................................................... 59 5.3.2 Business Challenges .................................................................................................................................................. 63 5.4 Limitations of the findings and the analyses ..................................................................................................... 67

CHAPTER 6 .................................................................................................................................................... 68 CONCLUSION AND PERSONAL RECOMMENDATIONS ...................................................................... 68 6.1 Conclusion ......................................................................................................................................................................... 68 6.2 Personal Recommendations ...................................................................................................................................... 70

BIBLIOGRAPHY ............................................................................................................................................ 74

APPENDIX A .................................................................................................................................................. 77 Definitions of Cloud Computing ...................................................................................................................................... 77

APPENDIX B .................................................................................................................................................. 79 Cloud Service Models Framework .................................................................................................................................. 79

APPENDIX C .................................................................................................................................................. 80 Transcribed Interviews ....................................................................................................................................................... 80

APPENDIX D .................................................................................................................................................. 88 The research sample ............................................................................................................................................................ 88

APPENDIX E .................................................................................................................................................. 89 Coding Table ........................................................................................................................................................................... 89

APPENDIX F .................................................................................................................................................. 94 The Research proposal .................................................................................................................................. 94


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LIST OF FIGURES Figure 1: Perceived benefits of cloud computing 2010 (Easynet Connect, 2010) ___________________ 25 Figure 2: Perceived benefits of cloud computing 2011(Cloud Industry Forum, 2011) ______________ 26 Figure 3: Perceived benefits of cloud computing, 2012 (Microsoft , Operator Channels, 2012) ____ 27 Figure 4: Perceived Challenges of cloud computing, 2010 (Easynet Connect, 2010) _______________ 28 Figure 5: Perceived challenges of cloud computing, 2011 (Cloud Industry Forum, 2011) _________ 29 Figure 6: Perception of cloud computing (Outsourcery, 2011) ______________________________________ 47 Figure 7: Primary drivers of adoption of the cloud (The Cloud Circle, 2011; Cloud Industry Forum, 2012) ____________________________________________________________________________________________________ 51 Figure 8: Challenges of cloud computing (Outsourcery, 2011) ______________________________________ 54 Figure 9: Proposed Cloud Adoption Strategy (Author, 2012) ________________________________________ 70


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CHAPTER 1

INTRODUCTION AND AIM

1.1 Introduction

“Cloud computing” has long ceased to be an emerging technology. The anomalous hype

that the cloud has enjoyed over the past five years is now settled and cloud computing

has been established as a growing business model. You can hardly open any technology

or business journal, website, or newspaper today and not hear any commentary on

cloud computing—what it is and how it will change IT and business. Cloud computing’s

impact will continue to be felt for many years regardless of how it all comes together in

the end. One thing is for sure and that is-‐ the cloud is here to stay. The cloud represents

a new model for creating and delivering IT resources and services. It offers elasticity to

surmount the dubious workloads. It provides the scalability to handle the exponential

growth and it has transformed the way businesses communicate and collaborate. Cloud

computing has now made it possible for businesses to make those innovative decisions

which weren’t feasible before.

On the other hand, no single definition of cloud computing exists or is being talked

about, planned, and even implemented in today’s enterprise networks.

Nevertheless, the furore surrounding the opportunity of Cloud Computing shows no

signs of abating in the near future, at least in the UK. Cloud computing represents not a

revolution but an evolution of existing enterprise computing architectures, dating back

to the first instance of networked computing. The difference is that today there are vast

advances in virtualization in nearly every aspect of the data center.


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A survey was conducted by PeoplePerHour.com in 2011 which illustrated that 74% of

the British SMEs don’t use Cloud Computing at all and out of which 43% didn’t know

what cloud computing actually is. On the other hand, a recent survey conducted by

VMware found that 48% of the British SMEs had adopted Cloud in their businesses

model in some way or the other.

Adoption remains healthy, both in terms of the number of new user organizations as

well as increased penetration by existing users. (Cloud Industry Forum, 2012). As Cloud

computing continues to gain in mindshare and adoption rates, organizations begin to

investigate how to best leverage these new deployment models.

A research conducted by the cloud forum has depicted that in the UK today, over 60 per

cent of organizations have formally availed at least one Cloud Service and the

satisfaction levels relating to that experience sit at an astonishing 92 per cent. In terms

of future adoption, three out of four of those who have already purchased a Cloud

Service are convinced that they would purchase further services for their organization

within the next year. Of those that have yet to adopt their first Cloud Service, 26 per cent

expect to do so in 2012, and a further 13 per cent of UK businesses intend to within the

next three years. (Cloud Industry Forum, 2012)

With this level of adoption, it is not appropriate to identify cloud computing as just

another hype or an issue of pure technology, but as one of business process change,

supply chain change, project management and IT delivery change. (Cloud Industry

Forum, 2012)


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1.2 Aim of the research

The aim of this research is to understand the adoption trend of cloud computing or the

cloud based services for the small medium businesses within United Kingdom. The term

“adoption trends” refers to the reasons that enable the small businesses to adopt the

cloud technology. There is a study that shows that 54% of businesses in the UK adopt

the cloud technology to save money. (Microsoft , Operator Channels, 2012). However,

for this dissertation, a hypothetical adoption model is created which states that cost-‐

control or saving money is one of the business needs that lead to the cloud adoption.

This research aims at validating the hypothesis by exploring the ways the SMEs adopt

the cloud-‐based services into their business. Secondly, the research also aims at listing

out the challenges that these SMEs face whilst or after the implementation of the

technology.


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CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

A couple of years ago, cloud computing was rare. Although it was discussed by the IT

professionals over a considerable period, but the topic started gaining popularity only

in the dawn of 2009. It is argued by Luis Vaquero and his fellow researchers that there

is an absence of an all-‐encompassing, single definition of cloud computing. It is

therefore very important to identify that integrated definition in order to delimit the

scope of study plus to highlight the prospective benefits to a business. There is lack of a

well-‐recognized definition of cloud computing in literature and it is seldom confused

with other associated techniques like grid computing and many more. There are several

cloud computing definitions which are oversimplified and do not embrace the complete

character of this phenomenon. ( Vaquero, Merino, Caceres, & Lindner, 2009)

For a more comprehensive understanding of the term cloud computing, the two words

can be first understood separately. The expression cloud is an allegory for the term

Internet, telephone or more recently the computer network diagrams, where this cloud

symbol represents the fundamental structure of networks, is the origin of this word.

The term computing is used to refer to the activities of making use of computer

technology. (Knorr & Gruman, n.d)

Cloud Computing’s most comprehensive, and globally accepted definition was given by

Mell and Grance, of the National Institute of Standards and Technology, USA, in the year

2009. They stated that cloud computing is a model to facilitate network access to a joint


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collection of computer resources like servers, applications, networks and storage on

demand and in a convenient manner which can be quickly retrieved with minimum

service provider interaction and efforts from management. (Cleveland & Khannan,

2012)

Various consultancy as well as research firms are also publishing their trademark

definitions. Gartner, a famous IT research and consultancy firm has provided its own

definition which states that Cloud computing is a type of system which delivers flexible

and IT capable solutions to the ordinary customers using internet as a platform.

Although a wide range of definitions on cloud computing are present, and they attempt

at covering the infrastructure, application, driving forces and other outlooks, yet it is a

very challenging task to incorporate a more precise and clear definition. This paradigm

is still in its initial stage of development as it improves with the advancement in

technology. The definition of this phenomenon has undergone a number of refinements

and this process will continue in the coming years as well. (Curtis+Cartwright, 2010)

Multiple organizations and IT professionals have defined cloud in multiple ways and

this clearly shows that cloud computing does not have one standard and an accepted

definition but various perceptions and frameworks. (See appendix A)


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2.2 Background of cloud computing Cloud computing is not a very new concept because the first attempt at cloud computing

was made in 1999 when Marc Andreesen founded a company knows as LoudCloud

which was aimed to “build the web’s next power play: custom-‐designed, infinitely

scalable sites that blast off the virtual assembly line” (Sheff, 2003). It was the first

company to offer services that are now called Software as a Service (SaaS) using an

Infrastructure as a Service model (IaaS) (Sheff, 2003). The company does not exist

today. Later in 2000, Microsoft launched web services as SaaS offering and IBM in 2001

launched their Autonomic Computing Manifesto. (Kephart & Chess, 2003) . And finally

in 2007 IBM and Google collaborated to launch a research on cloud computing. (Lohr,

2007)

Therefore it can be said that the term cloud computing and its emergence might be

fairly new but the concept has been there for several years now.

Cloud Service Models

As said by Gartner, "Cloud is a style of computing where feasible IT-‐related abilities are

delivered as a service to external customers using Internet technologies." There are three

main terms used in the business context and are explained below. (For more details,

refer to Appendix B)

1. SAAS (Software as a Service): This is a kind of cloud computing which provides a

single application with help of a browser to a number of clients making use of

multitenant architecture. This implies that the clients do not have to make any

direct investments for acquiring software licenses. Likewise the service provider


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has to maintain only a single application that cuts down the costs as well. One of the

most popular examples of this is Salesforce.com. In addition to this, SaaS is also

becoming popular for Human Resource based applications and is now progressing

towards ERP. (Knorr & Gruman, n.d)

2. PAAS (Platform as a Service): PaaS is also a type of cloud computing service model

in which the consumer utilizes the tools provided by the service vendor that creates

software. The clients also control the configuration settings and the development of

software. Only the service provider gives the server, network and other services.

This service also makes use of multi tenant architecture. With help of PaaS,

applications can be used without incurring unnecessary costs and avoiding

complexities. Some other services offered by this model are facilities for application

design, development, trial, utilization along with collaboration of team, integration

of database, storage, security etc. (Jamsa, 2012)

3. IAAS (Infrastructure as a service): This layer in the cloud computing stack serves as

the base layer for the implementation of the above two layers. A very apt example of

IaaS is Amazon EC2. In this there is execution of the application on a virtual

computer. (Wang, Ranjan, Chen, & Benatallah, 2012). This service model is most

appropriate for situations when the demand is quite unpredictable, for upcoming

organizations that don’t have sufficient capital to purchase hardware and where a

company is under pressure to cut down cost


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Cloud Deployment Models

Cloud deployment models basically refer to the cloud environment that is chosen by the

enterprise to place their workloads. There are 3 models for cloud computing service

deployments that are explained below. (Stratecast, Frost and Sullivan, 2012)

Public Cloud: It is a hosted environment in which the server and the network

infrastructure are shared among the enterprise subscribers. (Stratecast, Frost and

Sullivan, 2012) In other words, the cloud infrastructure is accessible to general public

and shared in a pay as you go model of payment. The first and most used type of this

offering is the Amazon Web Services EC2. (Amrhein, Andrade, Armstrong, Barlett,

Bruklis, & Cameron, 2010)

Private Cloud: It is an externally hosted environment in which the server hardware is

dedicated to a specific enterprise. (Stratecast, Frost and Sullivan, 2012) In this model

the unknown third parties do not share the cloud resources as they maybe within the

client organization premises or offsite. (Amrhein, Andrade, Armstrong, Barlett, Bruklis,

& Cameron, 2010)

Hybrid Cloud: As the name implies, this cloud deployment model is a combination of

multiple IT environments, i.e. public and private. In hybrid configuration, an enterprise

is able to use a service or an application across other hosted environments. (Stratecast,

Frost and Sullivan, 2012)


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2.3 Drivers of adoption and the benefits of Cloud Computing

According to 460 senior decision makers, 38% of the organizations in UK are

implementing cloud-‐computing technology and many of them also believe and claim

that they will be implementing more upgraded versions in the future. These statistics

clearly depict the fact that majority of the organizations are investing in this domain. It

is clearly evident that cloud computing is not merely a theoretical suggestion, but it is a

differentiating proposition that provides a competitive advantage to these

organizations. There are several benefits of cloud computing that are discussed in detail

below.

Minimizes capital investment in hardware and IT-‐ Cloud computing technology has

promised to reduce the capital investment in the information technology. The small

medium enterprises have historically been lagging behind in the IT because of the

upfront investment that is required. However, the cloud computing does not require

any in-‐house servers, the software costs are minimized and also the staff requirement

falls down by a higher degree. This is because the concept of Cloud computing is based

on a monthly subscription model that automatically makes it easier for the SMEs to

adopt the cloud. (Stratecast, Frost and Sullivan, 2012)

Increased Storage – According to the 9th issue of Nokia Siemens magazine, “When we

talk about cloud, sky is the limit”. From this, it is evident that, it enables organizations to

store a large amount of data as compared to the other traditional modes.


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Maximizes the scalability-‐ Cloud computing has made it easier for the enterprises to

scale their services. (Stratecast, Frost and Sullivan, 2012) Many organizational

workloads are dynamic and because the computing resources are managed through

software, they can be deployed very fast as new requirement arise. In fact, cloud

computing can easily and very dynamically upscale or downscale the resources.

(Martson, Bandyopadhyay, Zhang, & Ghalsasi, 2010)

Improved Collaboration – With help of cloud computing, collaboration among various

organizations increases and thereby it minimizes the time required for marketing and

other new product development activities. This creates an environment to share and to

collaborate the data and the information not only among enterprises but among

government and other private companies as well. (Kurt, Rana, & Altmann, 2012)

Reduced lead time for launching new applications-‐ To remain competitive, the small

and medium size enterprises must be nimble, flexible and must be able to respond

quickly to the opportunities and changes in the market. The cloud-‐computing model is

dynamic and supports the heavy workloads. Furthermore, when a cloud deployment

platform is integrated with the infrastructure services, enterprise developers can use

the tolls to avoid repetitive tasks and quickly develop, test, tweak and roll out the new

applications. (Stratecast, Frost and Sullivan, 2012)


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Higher level of customization – A variety of applications can be redesigned and

modified and the new ones can also be created, as a platform for this is provided by

cloud technology to cater to a wide range of challenges and tasks. Particular processes

can be conveniently amended to meet the diverse needs of several agencies owing to

the inherent agility of this technology. This becomes all the more convenient, as a mere

change in configuration can alter these processes and an overall restructuring starting

from the scratch is not required. (Franklin, 2009)

Optimum utilization and maximization of resources – Cloud computing enables

Information technology department to focus on more important issues as fostering

innovation and flexibility and can shift its concentration from comparatively routine

computing issues and server updates. This is especially advantageous for firms that

suffer from a lack of qualified IT professionals.

Reduced environmental impact – The environmental impact caused by cloud

computing technology is considerably low and this improves the overall image of the

organization by enhancing its green computing credentials. (Josyula, Orr, & Page, 2011)


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2.5 Limitations of Cloud Computing

Although wide arrays of benefits are presented by Cloud computing software, there are

certain concerns that are raised by many enterprises. These concerns are severe enough

to keep the many enterprises from engaging with the cloud solutions.

Data Protection and security – A research conducted by the Deutsche Bank, states

that for the complete agreement between organizations regarding collaboration for

data and information sharing, apart from service quality, data protection and security

aspects are also very important. In practice, Companies as big as Sony and Google have

also faced the problem of compromise of user data and hacking of services. There are

various clouds like public, private and hybrid. In public clouds, there is no control over

the data files and important consumer information. There is an absence of an effective

cloud computing security model. To counter this issue purchasing the services should

be made from creditworthy vendors. (Juneja, 2011)

Transition and the cost of transition – Although a number of cost benefits are offered

by cloud computing solutions, but there are several additional and hidden costs also

involved. One of the main costs is the cost of transition i.e. movement from an existing

traditional architecture to a new architecture in cloud computing. It is often not feasible

for small and medium organizations to incur this cost when they are not able to

examine the long-‐term benefits of implementing this. (Stratecast, Frost and Sullivan,

2012) To solve this problem small and medium business must be made more aware of

the benefits of cloud computing. (Martson, Bandyopadhyay, Zhang, & Ghalsasi, 2010)


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Reliability – There is always an impending risk of leakage or loss of data and valuable

information. This poses considerable challenge to the organizations. Since the

encrypted passkeys are not under the ownership of the firm and since the companies

share infrastructure, chances are high that data could be lost or leaked. This tarnishes

the image of the companies. To counter this problem, implementation of effective API

access controls is required. (Profitt, 2012)

Another reliability issues that may arise are loss of Internet connection, equipment

failure, loss of power or network denial of service attacks that may strike the data

center. (Stratecast, Frost and Sullivan, 2012)

Performance – Vendors who provide infrastructure as a service generally provide

services by sharing infrastructure. (Nikos & Gillam, 2010). Multi-‐tenant architectures

are not enabled to use strong isolation properties, as this will affect the functions of

other tenants who use the same cloud service provider. To solve this problem, all the

unauthorized activities need to be closely monitored. (Stratecast, Frost and Sullivan,

2012)


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2.6 Adoption Trends of the cloud computing technology by the SMEs.

When large business organizations move towards cloud technology, it makes headlines

but when a small or medium business adopts this technology, it goes unnoticed. But in

practice, the number of SMBs adopting cloud in their business models has increased

tremendously. As per CDW’s Cloud Computing Tracking Poll, 84% of companies are

incorporating at least one cloud model and over 76% of SMBs claim to have reduced the

overall costs of application and their IT budgets by moving towards this technology.

With greater affordability of technology and limitations on budgets are becoming more

relaxed, the quantum of SMEs adopting cloud technology is likely to increase two folds

in the coming years (IDC Exchange, 2012).

Going back in time, 2 years or so ago, the term ‘cloud computing’ was by no means

mainstream. It was the most favourite topic among the IT professionals and they even

called it “the next big thing” in the technology that could spur a whole new decade of

growth. It was in 2008 when the small businesses had begun to take a note of cloud

computing, but it wasn’t certain of how seriously were they taking it? It is one thing to

be aware and excited about the technology but it is another thing to run your business

on it.

Easy Net Connect conducted a research to determine how seriously the small medium

businesses were taking the cloud at the end of 2008. (Easynet Connect, 2010)

According to the research conducted by Easynet Connect, the cloud computing

technology was penetrating the industry of SMEs but not as quickly as the suppliers

expected. There was a steady interest in cloud computing but still 53% said that they

would not adopt the cloud. However, the interest in the cloud continued to grow

throughout 2009 and Easynet Connect conducted the follow up research to see if the


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attitudes and the adoption trends have altered for the SMEs in the course of 15 months

or not. (Easynet Connect, 2010)

It was only in the dawn of 2010 that was identified that over half the SMEs in the United

Kingdom were using this new technology. This was a total turn around to the theory

that “cloud computing would never be adopted” (Baun, Kunze, Nimis, & Tai, 2011)

On the other hand, CompTIS Third Annual Small and Medium Business Technology

conducted a survey on the Adoption Trends and the report discovered that 31% of

SMEs were using one form or the other of cloud computing in 2010 and 35% had plans

to use it in 2011. Further, 56% of SMEs had the full understanding of the cloud

computing as compared to the 27% in 2010. (April & Robinson, 2011)

Perceived benefits or the primary driving factors that lead the SMEs to adopt the cloud

computing have also been under the research for several years now.


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In 2010, the perceived benefits or the driving factors of the cloud computing for the

SMEs were as follows:

Figure 1: Perceived benefits of cloud computing 2010 (Easynet Connect, 2010)

51% of the SMEs believed that cloud computing would help them save money and 43%

believed that SMEs would enable the staff to work from home and the aspect of Mobility

would become popular.


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In 2011, the perceived benefits or the driving factors shifted and the main reason the

SMEs were adopting cloud was because of Flexibility.

Figure 2: Perceived benefits of cloud computing 2011(Cloud Industry Forum, 2011)

53% of the businesses believed that with cloud computing, the businesses would attain

more operational flexibility and only 16% adopted cloud because of cost savings, unlike

the 51% in 2010.


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Moving further, in 2012, the perceived benefits or the driving factors were as follows

Figure 3: Perceived benefits of cloud computing, 2012 (Microsoft , Operator Channels, 2012)

54% perceived that they would be able to save money and only 40% believed to attain

flexibility in their business. This research finding contradicts to the one that was

conducted in 2011.

Needless to say that the figures and the reasons the small medium businesses adopt the

cloud would change every year and so does the attitude of the small businesses towards

the cloud computing. Moreover, as the perceived benefits shift from year to year, so

does the perceived challenges or the concerns that SMEs have towards cloud computing

adoption.


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In 2010, the small businesses had certain concerns that were as follows:

Figure 4: Perceived Challenges of cloud computing, 2010 (Easynet Connect, 2010)

Negative perceptions of the cloud was low an only 13% of the SMEs claimed that cloud

wasn’t secure enough and 9% said that it wasn’t reliable.


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In 2011, the concerns or the challenges were as follows:

Figure 5: Perceived challenges of cloud computing, 2011 (Cloud Industry Forum, 2011)

More than 60% of the businesses had data security and data privacy issue, followed by

the issue of connectivity or the dependency upon the Internet access.

However moving further, in 2012 it was identified that the small medium businesses

had different concerns about moving to the cloud.

Ø 44% of the SMEs still believe that cloud services are unproven and therefore it is too

risky to adopt it into the business model. (Microsoft , Operator Channels, 2012)

Ø 70% of the SMEs called in unreliable, as they didn’t know where their data was being

stored. (Microsoft , Operator Channels, 2012)

Ø 51% of the SMEs had security and the privacy issue that caused them hesitation in

adopting the cloud technology. (Microsoft , Operator Channels, 2012)

Ø The research also illustrated that 1/3rd of the SMEs believe that the long run costs of

cloud computing will be much higher than that of the traditional computing. (Microsoft ,

Operator Channels, 2012)


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From these changing patterns of adoption of cloud computing amongst the small

medium businesses one thing can be inferred that the SMEs will continue to adopt the

cloud technology in the future at a much higher adoption rate. The reasons or the

driving factors might differ and so may the concerns or challenges, but the adoption will

continue to rise.

The above stated comment can be backed up with the research findings of a study that

encapsulate that almost all the SMBs that have incorporated cloud applications are

satisfied with its services. 97% of such users stated that moving towards cloud has

given them desired outcomes such as flexibility and reduced costs. It has also been

found out by the survey that 70% of SMEs are expected to rise their spending on

Information technology in the coming year in addition to increasing the IT budget.

(Talbot, 2011)

Moving further from the changing cloud adoption patterns, another factor that must be

acknowledged is that small and medium sized businesses are risk averse and hesitant to

innovate. There is a vast amount of literature on this fact that states the same.

Moreover, a study was conducted on this very aspect and it was identified that the two

main barriers for the SMEs to innovate are: Cost factors and Knowledge factors. (BIS,

2010). It is reasonable to state that the investment required in the IT projects is a lot

and cost is a great barrier. It also justifiable to state that SMEs don’t always understand

the usage of the technology well and therefore they oscillate when it is about adoption.

On the other hand, a study that was conducted by Accenture and London school of

economics states that cloud computing offers immense flexibility in the services,

business processes and infrastructures. Therefore it is also capable of driving significant

innovation. (Willcocks, Venters, Whitley, & Accenture, 2011)


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2.6 Summary of the Literature Review

There are 4.5 million SMEs in the United Kingdom and account for 99% of the total

enterprises of the UK. This clearly means that SMEs are fundamental to the economy

and to the economic growth. Therefore it is vital for the SMEs to flourish and grow.

There are various drivers for business growth but the 2 main drivers are: Technology

and Innovation.

From the literature, it can be stated that technology has not been successful with the

SMEs. The IT projects are expensive, risky and SMEs cannot afford it. Therefore the

SMEs have usually lagged behind in the IT industry. On the other hand, with the barriers

such as Cost and lack of knowledge, SMEs hesitate to make any innovation or come up

with new ideas.

Having said that, the emerged new technology such as cloud computing has promised to

overcome certain barriers such as cost and enable the businesses to be more flexible

and innovative. The technology is on the rise and as compared to the earlier times, the

number of SMEs incorporating this technology has increased and this has now become a

new trend.

The major benefits of cloud computing to the SMEs are reduction of cost, availability of

the latest information, increased storage, mobility, accessibility, scalability,

collaboration and customization. However, this concept is not completely free from

limitations. The major risks witnessed on using cloud platforms are risk of

concentration, data loss and leakage, transition cost, reliability and several other issues

related to sharing of information and data. . All in all it can be said that cloud computing

is the latest breakthrough in Information technology.


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As aforementioned, cloud computing is a relatively new field of study and various

researches have been conducted to comprehend its importance, usefulness and

influence on working processes.

As the technology is in the limelight, several companies and IT professionals are

conducting a lot of research over it. However, the research or the literature on the

adoption trends of cloud computing from the perception of the SME is very limited.

Over and above that, the previous studies have shown that the adoption pattern of

cloud for the SMEs has drastically changed over the period of time. Keeping all these

attributes in mind, this dissertation aims at examining the various driving factors that

motivate the small and medium sized businesses to adopt the cloud solutions into their

business model.

Furthermore, this dissertation also aims at identifying the various challenges that are

faced by the SMEs whilst or after the implementation of the cloud based solutions.


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CHAPTER 3

RESEARCH OBJECTIVES

3.1 Objectives

It is a requisite to list out the research objectives and aims and back it up with an

appropriate methodology. A research objective does not only include the various aims

intended to be attained at the end of the research, it also takes into account a research

problem that will be tackled or a hypothesis that will be tested and validated.

The prime objective of this research is to understand the adoption trend of the cloud

computing technology among the small businesses of the United Kingdom and how it

fits with the SMEs that intend to innovate.

The purpose of this research is to procure narrative and descriptive responses from the

respondents and to avoid “closed” yes/no responses. The interviewee must have the full

opportunity and the ground to fully express his views and opinions on cloud computing

applications.

The research is focused on the users of cloud computing services and aims at identifying

the key driving factor that lead the small businesses to adopt the technology.

Also, the research also aims at listing out the various challenges that were faced by the

small medium enterprises whilst or after the implementation of the cloud computing

model into their organization.

Another aim of this study is to validate the hypotheses along with attaining the above

stated research objectives.


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3.2 Hypothesis

Based on the aforementioned 2 key cloud computing models and ComTia’s recent

Survey (CompTIA EMEA, 2011) by Seth Robinson and IBM’s Saul Berman videos (IBM,

2011), 2 hypothesis or assumptions can be drawn for the research.

Hypothesis #1: ‘Cost-‐control’ is not the only factor that drives the small medium

businesses to adopt the cloud computing technology into their business. Other factors

also play an important and equal role as business enablers.

Hypothesis #2: ‘Security’ is still the main concern, even for the small medium business

about cloud computing technology.

Driving factors

Mobility

Easy access to the data

Cost control scalability

Innovation


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CHAPTER 4

RESEARCH METHODOLOGY

4.1 Introduction

Redman and Mory has defined research as a “systematized effort to gain new

knowledge” (Redman & Mory, 1923). On the other hand, D. Slesinger and M. Stephenson

in the Encyclopedia of Social Sciences has defined research as “the manipulation of

things, concepts or symbols for the purpose of generalizing to extend, correct or verify

knowledge, whether that knowledge aids in construction of theory or in the practice of

an art.” (Macmillan, 2007)

Keeping the aforementioned definitions in mind, this chapter explains the approach that

was deployed for the research. It also elucidates the method that is used to obtain data

for the research. Moreover, it also sheds light on the sampling strategy that comprises of

the focus group and the number of people who will be interviewed for the research.

This chapter is also composed of the interview design and the forecasted limitations of

the research.


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4.2 Research Approach

There are various approaches to a research. The two basic forms are the qualitative

approach and the quantitative approach. The former approach is based on the

measurement of quantity or amount and comprises of various statistical figures. The

latter approach is concerned with the qualitative phenomenon, i.e. phenomena relating

to or involving quality or kind. (Hair, Jr. , Money, Samouel, & Page, 2003)

For this particular research, the proposed method is to apply the qualitative method.

4.2.1 Qualitative Method

As mentioned above, the qualitative method is concerned or involves quality. According

to Denizen and Lincoln, the word qualitative implies an emphasis on processes and

meanings that are not rigorously examined or measured (if measured at all) in terms of

quantity, amount, intensity and frequency”. (Denzin, & Lincoln, 1994) Therefore

according to these authors, the aims of qualitative research methods are to establish the

socially constructed nature of reality, to stress the relationship between the researcher

and the objective of study, as well as to emphasize the value-‐laden nature of inquiry.

The reason that the qualitative approach is voted for over quantitative, can be linked to

the primary purpose of the research, which is to understand the adoption trend of the

cloud computing model for the small businesses. The term ‘adoption trend’ also

comprises the attitude and the behavior of the small businesses towards the cloud

computing technology. This research revolves around how small businesses perceive

and use the cloud computing applications and are they satisfied with the technology so

far.


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It also comprises of the various driving factors for the small businesses that led to the

adaption of the cloud technology in the first place and the benefits or the challenges

encountered so far.

The other important reason to employ the qualitative approach instead of quantitative

was that a lot of quantitative analysis for the adoption trend of the cloud-‐based

applications has already been done by many companies for the small businesses but

none of the research has covered the qualitative aspect of it.

Furthermore, the sample size required to carry out a quantitative analysis is quite large

and therefore it was proposed to carry the research out on a small sample size because

of the time constraint.

Narrative Research

The qualitative method of the research also has various forms. The form, which has

been picked out is the narrative research. According to Randolph (2007) narrative

research is the study of a single individual and his or her life experiences. In narrative

research, individuals are asked to provide stories detailing their life experiences

The stories can reveal the insights about their feelings, sentiments, emotions, desires,

thoughts and meanings. (Baxter & Jack, 2008)

This method fits well with this research because, as mentioned above, this research

covers the aspects such as behavior and attitude of a cloud application user and there is

no better way than by a story itself.


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4.3 Data collection method

This section illuminates the method that was incorporated to acquire the data for the

research. It is as follows:

4.3.1 In-‐depth interviews

For this research, in-‐depth interviews were conducted. An in-‐depth interview is an

unstructured one-‐to-‐one discussion between the interviewer and the respondent. (Hair,

Jr. , Money, Samouel, & Page, 2003)

For this kind of an interview the respondents are chosen carefully on the terms and

assumptions that they have some specialized insight or knowledge. For the research,

those respondents or small businesses were interviewed who have recently adapted the

cloud technology in their business process or the business model.

For the interviews, a set of guidelines was prepared which included the aspects the

interviewer wanted to talk about with the respondent. However, no structured

questionnaire was prepared. Furthermore, the technique that was used in the

interviews was probing1. This technique enabled the interviewer to gain more insight

and possibly understand the reasons for a particular behavior of the respondent.

The personal interviews involved a lot of in-‐depth questioning to the users about their

experience with the cloud application services. This approach seemed extremely

beneficial because when the respondent comes up with something interesting regarding

the topic, he can be asked to elaborate and talk more about it instead of pushing him to

another question. This approach minimizes the interference of the interviewer with the

respondent’s own thoughts and ideas.

1 Probing means that a researcher delves deeply into a response to identify the reasons for a particular behavior or an answer. The ‘why, why, why’ (asking ‘why’ several times) technique is a popular probing technique.


39

Over and above that, this form of data collection seemed to fit perfectly with the chosen

form of research: narrative research, because the narrative research is about listening

to the stories of the respondents and their experience. Every interview seemed like it.

Before commencing the interview, the interviewer took the permission to tape record

the interview from the respondent, as it is easy to record and transcribe later instead of

taking detailed notes during the discussion.

The interview usually lasted from 60 minutes to 90 minutes. (Refer to appendix C and

appendix D)


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4.4 Data Analysis Method

There are various methods that are used to analyze the qualitative data, however for

this research the data analyses method that is used is coding.

4.4.1 Coding:

Coding is an interpretive technique that organizes the data and also provides a means to

introduce the interpretations of it. Most coding requires the analyst to read the

transcribed data, which are in-‐depth interviews for this research, and demarcate

segments within it. Each segment is labeled with a "code" – usually a word or short

phrase that suggests how the associated data segments inform the research objectives.

(Hay, 2005)

Contemporary qualitative data analyses are sometimes supported by computer

programs or Qualitative Data Analysis Software. These programs do not supplant the

interpretive nature of coding but rather are aimed at enhancing the analyst’s efficiency

at data storage/retrieval and at applying the codes to the data. (Hay, 2005) For this

research, the software that was used to code the interviews and enabled in analyzing

the data is MAXQDA 10. (See Appendix E)


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4.5 Sampling strategy

A sampling strategy is a plan that is set forth for the research. It is vital that the research

has a defined sampling strategy. There are various forms or methods of the sampling

strategy but the strategy that is used for this research is the non-‐probability sampling.

Non-‐Probability Sampling

There are two different kinds of sampling that is ‘probability sampling’ and the ‘non-‐

probability sampling’ and the difference between the two is that the latter does not

involve random selection of the respondents for the interview. (Trochim, 2006)

This research comprises of the interviews of the non-‐random respondents. The reason

for the ‘non-‐random selection’ can be coupled with the paramount purpose of the

research that is to analyze the adoption trend of cloud computing model among the

small medium businesses, which involves: analyzing the behavior and the attitude of the

respondents who use cloud computing technology. The interview would be of little or

no interest if the respondent did not know about the concept in the first place.

Therefore, the participants were very carefully selected for the research.

Sample Frame

Sample frame is the list or the category of the people that would be interviewed for the

research. [Lecture slides] For this piece of research, the small or medium sized

businesses will be interviewed.


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Sample Size

The sample size refers to the number of people that will be interviewed. [Lecture slides]

For this research, minimum 10 small or medium businesses will be a part of an in-‐depth

interviewing. Those interviews will be tape-‐recorded and the recordings will be made

available on request. (Refer to appendix D)


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4.6 Research Question

As mentioned earlier, the aim of the research is to examine the reasons that motivate

the SMEs to adopt the cloud computing technology into their business models.

Furthermore the research also intends to identify the challenges that are faced by the

SMEs during or after the implementation of the technology.

Therefore the research is intended to answer the 2 following questions and also aspires

to validate the hypothesis that have been created for this research.

1. What is the main reason(s) that motivates the SME to adopt the cloud computing

technology into their business model?

2. What are the main obstacles or the challenges that are faced by the SMEs during

or after the adoption of the cloud computing solutions?


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4.7 Limitations of the Research

Lack of Knowledge

Cloud computing is a new concept and is still evolving. There are still many people who

aren’t aware of its functionality in a broader spectrum. Even though the research is

inclined towards non-‐probability sampling, one main limitation could be that the

participants aren’t aware enough about cloud computing technology and are unable to

touch the various attributes of the interview that are set in the interview guidelines.

Time Constraint

The other limitation will be that of time constraint. Firstly, the sample size that is

chosen for this research is very small and therefore will be difficult to generalize it. If at

all, time wouldn’t be a problem; this limitation wouldn’t arise at all.

Secondly, it will be extremely hard to convince at least 10 SMEs to take part in the

research by contributing 60-‐90 minutes of their time. It is a tough call to persuade SMEs

to arrange for an interview because they are supremely busy with their daily work and

it is extremely hard for them to take 60 minutes out.

Reproducibility

The previous studies have shown that the SMEs’ adoption pattern has drastically

changed over the period of time. On the other hand, the technology also changes with

the same speed. Therefore, there no indemnity that the research findings will be

appropriate and valid if this dissertation is reproduced in the future.


45

CHAPTER 5

RESEARCH FINDINGS AND THE ANALYSES

5.1 Introduction

This section incorporates the responses of the participants who were interviewed for

the research. The interview began by asking the participants as to how they perceive

the cloud computing. The findings of the 10 in-‐depth interviews are classified into 3

categories.

Furthermore, this research has also tried to study the experience and the behavior of

the respondents when it comes to benefits and the challenges of cloud computing and if

they are keen on using cloud computing technology in future for other purposes.

The findings are classified into 5 sub sets that are as follows:

• Perception of the cloud computing technology

• Adoption of cloud computing technology

• Challenges of the cloud computing technology


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5.2 Findings

The interview with the participants was an unstructured one but as mentioned in the

research design, it aimed to cover three main aspects of the research. The first question

covers the various definitions or in other words, it comprises of the different

perceptions of the cloud computing amongst the small medium businesses. It also

covered the aspect of knowledge of cloud computing amongst these small businesses.

The second question embodies the several driving factors or the business need to adopt

the cloud computing technology.

The third segment of the research illustrates the various challenges that were faced by

the respondents after or during the adoption of the cloud technology.

5.2.1 in your perception, what is cloud computing?

This question aimed at epitomizing the attitude and the perception the small businesses

have towards cloud computing technology. As per the literature review, a survey was

conducted on 1300 SMEs of UK by PeopleperHour.com where it was found that even

though the adoption level is on the rise, 43% of the SMEs didn’t know what the term

cloud-‐computing meant. This section of the research also aims at finding if the SMEs

know about the technology or are they simply adopting it into their businesses to

remain in the trend.

Referring back to the literature review section 3, and according to the “Cloud Attitude

Survey 2011” (Outsourcery, 2011) the participants gave the following response.


47

Figure 6: Perception of cloud computing (Outsourcery, 2011)

According to this graph, more than 40% of the respondents have agreed that cloud is

the delivery method for technology. On the other hand, approximately 20%

respondents strongly agree and about 40% agree that cloud is a way to save costs. To

this, less than 10% respondents have strongly disagreed.

Moreover, a very small percentage of the respondents, less than 10% agree that cloud

can be a threat to the internal roles. To add on, more than 50% respondents have

disagreed that cloud can be a threat to the internal role. What can be deduced from this

graph is that fewer respondents perceive cloud as a threat but then again the response

varies from person to person.


48

A total of 10 managers or the directors of the small medium businesses were

interviewed and each of them stated a different definition of the cloud computing. For

example, Mr. and Mrs. Seth of Stir and fry food business said, “For us cloud is about

mobility and flexibility and being able to access your calendars, contacts and emails at all

times.” This couple has recently incorporated Google App for business into their small

food business and are extremely happy, enthusiastic and immensely satisfied with the

cloud services. Similarly, Mr. A was interviewed from Zone Entertainment studios. This

company develops applications for mobile devices and he answered, “Cloud is all about

instant agility and broad interoperability”. Mr. A was also extremely enthusiastic and

satisfied with the adoption. On the other hand, Oliver Turnbull from Incite Business

said, “In my perception cloud is more than just a word. It is the next big thing. You can

create and store documents online, you can access them from anywhere, and you can

upscale or down scale your utility of cloud and much more at a much-‐reduced price. That

is what I think cloud is.”

As stated above, the perceptions and the definitions varied from person to person and

yet shared a similar theme. The quantitative study that was conducted last year by

Outsourcery (figure 6) illustrates that nearly 40% of the businesses define and perceive

cloud as a way to save costs. However, this result does not coincide with the qualitative

research that is conducted. “Way to save costs” is seen as a benefit after the adoption

and implementation but 8 out of 10 respondents did not use the term in their the

definition or in the scope of cloud computing for their businesses.

The terms that were used to define cloud computing was such as: Mobility, Flexibility,

Easy access or Instant agility. “Cost Control or Cost effectiveness or saving money”

were the terms which were used when the respondents spoke about the benefits of

cloud computing.


49

What can be deduced from this segment is that Cost Control is a driving factor but not a

very heavy weighted driving factor of cloud adoption. Many users of cloud computing

perceive it as a benefit of the adoption instead of driving factor that leads to the

adoption of the technology.

Moving further with the knowledge of cloud computing it was found that 7 out of 10

cloud services users had spent months into the research and had accurate knowledge of

the technology prior to adopting it into their business. These people had educated

themselves well enough and had done their research on the cloud vendors before they

started using the services. Therefore, they knew what they were talking about instead of

just replicating other’s statement.

It is clearly evident that the businesses cultivate and edify themselves and their

customers thoroughly before they adopt the cloud technology. It is absolutely fair and

necessary to do so because as Cloud is a new paradigm and not many people are fully

aware of the technology and therefore it becomes mandatory to invest time in

understanding it before adopting it into the business model.


50

5.2.2 what were the driving factors that enabled you to adopt cloud computing

technology?

This section illuminates the driving factors for the small businesses to adopt cloud-‐

computing technology.

The recent quantitative study on the adoption trend of cloud by the SMEs, conducted by

the cloud circle industry portrays that 56% of the small businesses have adopted the

technology to save up on the money and improve the flexibility/agility in the business.

(The Cloud Circle, 2011)

On the other hand, the cloud industry forum also carried out 2 pieces of research in 10

months’ apart that have illustrated that the prime reason for businesses to adopt cloud

technology was flexibility in 2011 which has now got outstripped by cost savings as

the primary driving factor of the cloud adoption.


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Figure 7: Primary drivers of adoption of the cloud (The Cloud Circle, 2011; Cloud Industry Forum, 2012)

The above figure portrays that the two main objectives to adopt cloud are to save

money and improve the flexibility and agility in the business. The factors such as

effective collaboration, scalability, and back up are lateral or secondary to it.

Despite the stated result, the research findings are that flexibility and mobility are the

key driving factors for the initial adoption of the cloud-‐based services, followed by

scalability. 2 out of the 10 respondents adopted cloud because of saving money but for

the majority of the respondents, saving money was the outcome of adoption but not the

driving factor for the initial adoption. Therefore the survey results do not totally

coincide with the findings of this research.

As mentioned in 5.2.1, the participants used the term cost control or saving money

while the discussion was on the benefits of the cloud computing technology for their

0%

10%

20%

30%

40%

50%

60%

Primary objectives in adopting the cloud

Primary objectives in adopting the cloud


52

business. However, as stated above 2 out of 10 respondents adopted cloud to save

initial start-‐up cost. Daniel Scott from Your business works responded, “I did not have an

office when I started the business. Cloud offered me and my staff that flexibility of working

anywhere at any time on any internet device.”

Hugh Scantlebury from Aqilla said in the interview, “I have incorporated cloud into my

business model for the reason that it provides me with a lot of flexibility in terms of pricing

and accessibility. I pay for the services I use and this payment is monthly. Therefore I don’t

have to worry about cost. Secondly, I can use any Internet device to access my files. All my

devices are synchronized and the whole equation works well for me, especially when I am

travelling”

Daniel and Hugh have adopted Cloud for various reasons where one of the prime reasons

was Cost Control, however this didn’t hold true with the other respondents.

The companies that were interviewed had adopted the cloud technology because of

certain business needs or because of recurring problems in their traditional IT system.

For example, Mr. A from Zone Entertainment Studios said, “If you are asking us what was

the challenge in our company that drove us to adopt the cloud then to that I must tell you

that we had a very acute business need. As I have told you that we develop applications for

the mobile devices. We wanted to be able to support our customers anywhere in the world

and this meant that we needed vast computing capacity and the flexibility to scale up or

down to meet the demand. This definitely meant a lot of money that would be invested. It

would easy cost us hundreds and thousands of dollars to build an on-‐premise

infrastructure that would support this business model”

He also added, “The Company needed an environment that would interoperate seamlessly

with multiple mobile technologies, development standards and content types and that is


53

why we did a lot of research and study and decided to adopt Azure as we thought it suited

well with our business needs”

Zone entertainment studios only adopted cloud into their business model because of the

problem of computing capacity and the heavy investment they would have to make to

build an on-‐premise infrastructure. Cloud was a solution that met all their challenges.

A very similar response was captured from the interview with Oliver and Josh Turnbull

of the Incite Business. Oliver made the statement, “we had continual problems-‐ massive

spam, loss of service and the major problem was that if the internet connection went

down, we would be completely losing email or getting them days later when email services

decided to re deliver” Josh added, “These problems were recurring and that is when we

realized that we needed a concrete solution of successful communication. We needed a

reliable and a cost effective way of keeping the communications running as well as

providing an email system that would be easy to use and adaptable to its business needs.

We did a lot of research and consulted our friends and other people and decided to take

Google App for business.”

What can be inferred from such responses is that the companies were interested to

adopt cloud-‐computing technology into their business model because of a problem or a

business need. They did not adopt the technology just because it was the BUZZWORD.

The other thing that can be inferred from this section is that the key-‐driving factor for

cloud computing adoption are Flexibility and Mobility, followed by Scalability. On the

other hand, Cost-‐Control or saving money is seen as a benefit of the adoption and not a

prime-‐driving factor that leads to the initial adoption.


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5.2.3 what are the challenges you faced whilst or after the adoption of the cloud

computing technology?

This section elucidates the challenges that the small and medium business faced whilst

adopting the technology or after the implementation. As cloud computing is still a new

paradigm, the small businesses would have definitely faced certain barriers, challenges

or other issues of adoption such as security or data loss. This section also highlights on

what the small medium business think and feel about the security issue in particular.

The figure below is an illustration of a survey that was conducted by Outsourcery in

December 2011.

Figure 8: Challenges of cloud computing (Outsourcery, 2011)


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According to figure 8, for more than 25% of the people, security is the greatest barrier,

followed by connectivity and quality of service. On the other hand, the internal attitude

issue is only 5% and is ranked least in the list.

During each interview, long and lengthy discussion took place that was based on cloud

adoption issues. Surprisingly, none of the small medium businesses that were

interviewed faced any major adoption issue. However, they did face certain mitigating

factors whilst or after the adoption. There was also a discussion on the Security and the

fear of losing data. To put it in one statement, 9 out of 10 respondents did not consider

security a major threat or an issue. Daniel Scott from Your business works said in the

interview, “Security is a concern for everyone. But if we look at it closely, if your data has

to get leaked or lost, it can even if it is in your company’ server. However, I am playing safe.

I do not put any sensitive data onto the cloud. I don’t put my accounts onto the cloud. So if

tomorrow my account gets hacked or my data is published online, I will not feel that bad”

Katrina from IQinIT said, “Everyone is concerned about security. Some are even paranoid

about it. We, on the other hand take extra precautions. We make sure that we do our thing

right from the very beginning and we make sure that we get it right at the end. We haven’t

faced any security issue and neither have our customers faced it. Also, we are only dealing

with SMEs and not government or larger organizations. They generally have more issues

when it comes to security and not the SMEs.”

There were similar responses from other participants illustrating that Security is a

concern but they’d like to play safe. None of the small medium businesses keep any

sensitive data on the cloud and therefore have nothing to fear or lose if their data gets

leaked or gets published online.


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It can be theorized that security is not the prime concern of the small medium businesses

when it is about cloud computing because they don’t put their sensitive data on the

cloud.

However, on the other hand, there are still other concerns and issues or mitigating

factors in adoption that they face. One of those challenges is that of “Change

Management”

Katrina from IQinIT said, “Cloud computing can prove to be highly beneficial only if the

staff explores and uses it. There have been cases where we sold our service to companies

but the team couldn’t accept it. The companies need to conduct complete training for the

staff or whoever is entitled to use the cloud based service. Initially it is really difficult to

accept the change but very soon you become accustomed to it and it will prove to be

fruitful”

Apart from the concern of Change Management, the other concern that was emphasized

on was of “Migrating the data”. The data migration can take a while and is not really

seen as an issue but as one the mitigating factor in the adoption. Andrew Latham from

Go Evolve underlined, “Migrating the data can be difficult, it depends upon the volume

but it can take a lot of time. For example, migrating mailboxes of 10-‐15 people can be

really time consuming, and we are talking only about mailboxes here”

The other concern of 6 out of 10 respondents is that of “Connectivity/Bandwidth”.

According to the graph 4, close to 25% people face the challenge of Quality of service/

connectivity. On the other hand, a lot more than 25% have this issue with cloud

computing.

It is a very genuine concern because the concept of cloud computing is based on the

Internet and if the connectivity is low, there is no point of storing data online. Daniel

Scott from your business works claimed, “I have recently started my small company and I


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started it with cloud computing. No matter what it is brilliant. But I do have plans to

expand my business. Sometimes I wonder if I have to go to place like Somalia or Libya

where there is no or very little Internet Connectivity, I will simply have no access to my

emails, documents, calendars, and contacts. What is the use of cloud then?”

This clearly demonstrates the concern of reliability, quality of service or connectivity. It

becomes a very important concern and something that must be further researched upon

because these small medium businesses are now functioning absolutely through the

cloud model or the cloud computing technology. This means that if they loose the

connection or the bandwidth, they won’t be able to access the cloud and wouldn’t be

able to carry out their business operations.

Secondly, cloud might be becoming extremely popular but as Daniel Scott has pointed

out, what is the use of cloud in countries where there very low Internet connectivity.


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Summary

As mentioned in the section 5.1, the interviews were conducted to understand the

perception of the SMEs about cloud computing, the reason that the SMEs had adopted

the cloud and the challenges that were faced by them.

By and large, the findings have been informative and at the same time they even

contradict with the previous studies.

From this research, the key findings that are attained are as follows:

• There is no single definition of cloud computing. The SMEs have multiple

perceptions of cloud computing and each respondent had a different outlook

towards the cloud. This finding illustrates there is some kind of knowledge

barrier that exists amongst the SMEs. One of the researches, which were

previously conducted, had demonstrated that “Lack of knowledge” is a strong

barrier that prevails for the SMEs when it comes to adopting new technology and

innovation. (BIS, 2010)

• The second finding was that “Cost” or “Saving money” is not a reason for the

SMEs to adopt the cloud technology. This finding contradicts with the previous

researches that were conducted and have illustrated that SMEs adopt the cloud

to save money. (Microsoft , Operator Channels, 2012) (Easynet Connect, 2011)

• The previous studies have demonstrated that security is the main concern,

however, the findings of this research prove that security is NOT a concern or a

barrier anymore, in the adoption of cloud computing technology by the SMEs.

(Cloud Industry Forum, 2011)


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5.3 Discussion and Analyses

This section critically analyses the responses that were derived from the interviews. As

mentioned in Chapter 5, the method that is used to analyze the data is Coding. The data

was transcribed, segmented and coded. The data was then analyzed and recurring

codes/ coded data were then categorized under various themes that will be analyzed in

this chapter. Apart from critically analyzing the coded data (See Appendix E), this

section also aspires to validate the hypothesis that was created for the research in

chapter 4.

5.3.1 Primary Drivers

The flexibility of cloud-‐based services is the prime-‐driving factor for the adoption.

The first finding from this research states that the small medium businesses have

adopted the cloud-‐computing model into their organizations to attain operational

flexibility. Cost savings or cost control is secondary to it and most of the organizations

that were interviewed, perceive it as a benefit of the adoption of the technology.

Over the recent years, the cloud providers or cloud vendors have primarily focused on

cost savings when they try to persuade companies to migrate to the cloud (Cloud

Industry Forum, 2011), however this research indicates that for the businesses,

Flexibility and Mobility, followed by the Scalability are the primary drivers to adopt

cloud computing. Various studies have been conducted to analyze the adoption trends

of the organizations for cloud computing. One study that coincides with this research


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was conducted by the cloud industry forum, which states that 63% of the small medium

businesses have adopted the cloud technology because of Flexibility and Mobility

(Cloud Industry Forum, 2011).

Historically, there had been a huge gap between the IT resources that were available to

the small businesses and the larger enterprises. However, today, cloud computing has

made it possible for the small businesses to compete on an even playing field with much

bigger competitors (Think Grid, 2012). It is evident that the small and medium

companies are migrating to the cloud because it offers them the flexibility they need to

adapt to the ever-‐changing business climate. It can be deduced from the research

findings that the small and medium companies seek to compete in the wider market

without investing profoundly in the in-‐house technical resources and therefore they

have placed the greater value on operational flexibility. The cloud makes it possible for

the business to access, understand and adapt the technology quickly and to offer

solutions that they did not already have. With cloud, the employees of these SMEs can

access their data and documents from anywhere at any time. The additional bonus of

“mobility” is latent but it is a tempting reason that enables the small businesses to adopt

the cloud technology. Cloud has enabled the ‘remote working’ amongst the employees

that in return reduces the overhead costs.

Analyzing the results in another way, the small medium businesses that were

interviewed have incorporated the policy of BYOD, i.e. bring your own device. With this

this policy, Cloud computing allows the employees to be more flexible – both in and out

of the workplace. Employees can access files using their personal web-‐enabled devices

such as smartphones, laptops and notebooks, from anywhere. Cloud computing enables


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the use of mobile technology and in return creates a flexible working environment for

the organization.

Interestingly, the term flexibility also embraces the concept of pricing. The small

medium enterprises often find it difficult to invest a huge chunk of money in the IT

infrastructure of their companies. Cloud provides an immense flexibility in terms of

pricing because cloud offers a pay-‐as-‐you-‐ go model where the organizations pay for

what it needs and when it needs it (Berman, Kesterson, Marshall, & Srivathsa, 2012).

Also, it removes the need for the significant upfront capital investment. Arguably, this is

also one key aspect of flexibility that drives the small businesses to adopt the cloud

technology.

The other driving factor that leads to the adoption is scalability. Cloud computing

offers the advantage of increasing or decreasing the scalability/capacity on demand. It

allows the companies to react quickly to the changing IT needs (Think Grid, 2012).

From this research, one of the finding that was inferred was that small medium

businesses are adopting cloud to maximize scalability in their businesses. These SMEs

want to be dynamic and want to be able to react to their customers instantly. For

example, Mr. A from Zone entertainment studios mentioned in the interview that his

business need was to be able to upscale or downscale the computing capacity as per the

requirements of the users. Similarly, Mrs. Seth had mentioned that they wanted to be

able to react instantly to the feedback from their customers. These small businesses

have adopted cloud so that they can customize their computing capacity accordingly.

In a broader perception, it can be inferred that small medium businesses have their

strategic vision and goals intact when they adopt cloud.


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Summary

The earlier study indicates that 53% of respondents cited flexibility as their main driver

for moving to cloud services. In previous years, organizations looked to cloud

computing as a way of reducing costs, but only 16% of respondents in the latest survey

said price was the driving force behind their decision.

Therefore, it can be exemplified that flexibility and mobility are the principal drivers for

the early adopters of cloud and cost savings is the secondary benefit or the outcome of

the cloud computing adoption. Therefore, with these findings and analyses, the

hypothesis #1 is validated and is accepted that states, “Cost-‐control is not the only

factor that drives the small medium businesses to adopt the cloud computing technology

into their business. Other factors also play an important and equal role as business

enablers”


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5.3.2 Business Challenges

Security is not the prime concern or the business challenge for the small medium

enterprises.

The second finding of this research clearly states that the small businesses do not worry

about security that much anymore. For these businesses, security is the secondary

concern. There are other factors that mitigate the adoption of the cloud technology.

In February 2012, a research was conducted by Microsoft that demonstrated that 51%

of the SMEs had data security or data privacy concern and therefore hesitated to adopt

the cloud computing technology for their business models. (Microsoft , Operator

Channels, 2012). To add on, in 2011 a similar research was conducted by cloud industry

forum that depicted that more than 60% SMEs had data security and data privacy

concern when it was about adopting the cloud computing technology. (Cloud Industry

Forum, 2011)

Regardless of these statistics and figures, the findings of this research depicts that 9 out

of 10 SMEs do not have the security issue anymore. It is accurate that security is a

major concern and the companies, be it the larger organizations or the small medium

enterprises, everyone has the fear of losing their data and the privacy concern. Having

said that, the SMEs that were interviewed; do not perceive Security as a threat or a

barrier anymore when it is about adopting the cloud technology for their business

models.

Most of the respondents who were interviewed believe that putting the data onto a

datacenter is no different than putting it onto a company’s server. The breach of


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security and privacy can take place even if the data is in the company’s server or even if

it is on your private computer.

9 out of 10 respondents also portrayed the fact that they don’t upload any sensitive data

onto the cloud and therefore if anything goes wrong, they have nothing to lose. One

reason for this can be stated as “Trust”. The SMEs trust their cloud vendors and cloud

service providers and therefore they do not worry so much about the security. Leo

Adekoya from Crown Agency had stated in the interview that he had already worked

with the cloud service providers before and knew them and therefore he chose to work

with them again and use their services.

To add on, one key observation that was made was that the users of cloud services only

used the trusted platforms. Most of the interviewees were either using Google Platform

or Microsoft Azure. The brand name and the brand reputation of these platforms had

already created the trust amongst the small businesses and therefore they did not have

so much of security issue when they opted for the cloud services.

Another reason for this kind of attitude is also that the perceived benefits of the cloud

computing outweighed the concerns and the issues of the adoption. In other words, the

small businesses weighed the financial and the operational benefits more than the

security issue and therefore adopted the technology without much of a concern.

Nonetheless, these small businesses did state some after implementation issues of the

cloud computing. One issue that was stated by most of the respondents was that of

“Connectivity or low bandwidth”. The respondents have the fear of not being able to

use the cloud services if the Internet connection was poor. One respondent also pointed

out that he would not be able to use the services if he went to South African countries

such as Libya where the quality of the Internet is really poor.


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The justification for this concern is that the small businesses have changed their

business models and the working environment. They have adopted the new technology

that works only via the Internet. It is great but at the same time if the Internet

connection dies out, so will their business. Internet is vital for the cloud computing and

with poor connectivity, the business will not be able to function and operate well and

therefore “Low bandwidth” is a concern that is more appropriate than the concern for

the security.

The other concern that was underlined by the respondents was that of Change

Management, in other words, the concern to accepting the new technology. Some of the

SME that were interviewed stated that they did have some issues initially when they

adopted the cloud technology as their staff wasn’t very comfortable to work without a

CPU under the desk or without a server in the company. The concern is absolutely valid

because it does take a while for everyone to get used to something new, especially to

work with a new technology and a new concept all together.

In a broader perception, it can be summarized that the small and the medium

enterprises weigh the benefits of cloud computing more than the concerns or the

business challenges during the adoption.


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Summary

The studies and the research that has been done illustrates that security is the prime

concern and a barrier to the adoption of cloud computing technology, however this

research findings suggest that the small businesses outweigh the concern of security by

trusting the cloud service providers and the vendors.

Other than that, the respondents highlighted other concerns in the adoption such as

“change management” or users adaptability to the technology and low bandwidth or

poor Internet connection. These concerns have been explicitly discussed in the previous

section.

Furthermore, with these findings and the analyses, the hypothesis #2 becomes invalid

and is rejected as it stated, “Security is the prime concern, even for the small medium

enterprises during the adoption of the cloud computing technology.”


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5.4 Limitations of the findings and the analyses Certain limitations for this research were forecasted and were included in Chapter 4

under the section 4.7.

However, there were certain limitations that were observed during the analysis. This

section illuminates those limitations.

• The questions were understood and answered differently by each

respondent

The respondents perceived certain questions in a different manner. For instance,

when asked “what were the driving factors that motivated you to adopt the

cloud”, a set of answers were inclined towards the driving factors, and on the

other hand, a set of answers were inclined towards the benefits of the cloud-‐

computing. Therefore there was a lot of repetition in the discussion during the

interviews.

• A small sample size was chosen because of the time constraint

For this research, 10 SMEs were chosen to interview. The sample size is small

and with this small size, the research findings and the analyses cannot be

generalized. The limitation of the time was identified earlier in Chapter 4, section

4.7 as well.


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CHAPTER 6

CONCLUSION AND PERSONAL RECOMMENDATIONS

6.1 Conclusion

With cloud computing, the question is no longer of “should we do it” but of “how

aggressively do we make the move”. From the research, one thing is for sure that cloud

computing has demonstrated extreme proficiency and has been successful so far in

transforming the routine tactical activities of the organizational operations into more

innovative and strategic in order to gain more competitive advantage.

Technology has always had an effect on how the small medium businesses function. The

rate of adoption of cloud is increasing and so is the reliance of the SMEs on cloud

business applications. This tectonic shift demonstrates how IT is being maneuvered

today.

Keeping this in mind, this research was able to identify and analyze the adoption trend

of cloud computing technology among the small and medium size enterprises.

In this research, 3 questions were answered and the hypothesis was evaluated based on

the responses. The first question was based on how the small medium businesses

perceived and defined the cloud computing. The second question was based on the

primary driving factor that led the businesses to adopt the cloud computing technology

and the final question was about the business challenges that were encountered during

or after the implementation of the cloud computing technology.

The findings of the research demonstrate that the small businesses adopt cloud

computing because of their strategic vision and goals and not because cloud is the latest

trend. Furthermore, the findings of this research contradicts the study that was done by


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a company that illustrated that “Cost Savings” is the prime reason for the small

businesses to adopt the cloud, however, the research findings states that “flexibility and

mobility” are the driving factors and cost savings is a secondary benefit of adopting the

cloud. Another finding exhibits that “Security” is not an issue or a threat for adopting

the cloud computing.

Over and above that, this dissertation has highlighted all the findings of the research in

detail and has critically analyzed them and compared them with the previous studies.

Moreover, based on the secondary and the primary research, certain recommendations

have been made for the SMEs who intend to adopt the cloud computing technology into

their business model. (See section 6.2)


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6.2 Personal Recommendations

Based on secondary research and the findings and analyses of this dissertation, certain

recommendations have been made for the SMEs with an assumption that with these

propositions, the SMEs will have a better adoption experience.

• Planned adoption strategy drives better experience

The proposed framework below shows the cloud computing adoption roadmap or the

strategy that must be taken into account whilst the adoption. The roadmap proposes

five (5) phases in the adoption of cloud computing project that are:

Figure 9: Proposed Cloud Adoption Strategy (Author, 2012)

Analyses phase

planning phase

Adoption phase Migration phase

Management phase


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Analysis phase: The SMEs must analyze the both the traditional IT and cloud computing

and its impact on the organization structure and the culture. A proper rollout plan for

the cloud adoption must be fabricated in this phase.

Planning phase: This phase deals with benchmarking, choosing the platforms for

deployment, the cloud infrastructure, finance plan, security, legal and compliance plan

and the roll-‐out plan for the adoption project. This phase sets the objectives and the

direction for the adoption of cloud computing.

Adoption phase: The SMEs works with the cloud vendor on integrating the applications

with cloud platforms and infrastructure.

Migration phase: In this phase, it is ensured that application and data migration are

carried out as specified in the rollout plan that was developed in the planning phase.

Also, proper training and workshops on cloud must be conducted to impart the right

knowledge of cloud computing to the staff and the users.

Management phase: In this phase, the best practices and the lessons learnt about the

adoption and implementations of the cloud are documented, technical support is

ensured for continual support of the systems and users and a review of the whole

project is done.


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• Adequate training to the staff and the users will prove to be beneficial

A couple of recommendations can be made regarding the training for the staff. The

SMEs have listed that they generally face the issue of Change Management and therefore

it can be proposed that when a small company or a larger company plans to adopt the

cloud computing in their business model, it must conduct and provide a proper training

session and workshops to the staff. It is essential for the staff to know and understand

the technology because if the staff does not know the crux and the usage of the

technology, it simply adds up on the operational cost and the time. Moreover, the

benefits of the cloud will and cannot be realized completely.

• Data security standards

A set of compulsory minimum-‐security standards concerning data security and privacy

must be imposed; all the cloud vendors and providers must implement certain

measures in order to limit the risk of data loss. This way the cloud vendors will create a

relationship with their clients that will be based on trust and will diminish the fear of

security that prevails and is a barrier to the adoption of cloud computing technology.

To add on, the cloud vendors must be liable to pay certain amount of compensation to

the users of their services in the event of any kind of data loss or breach of security.

(Sharpe, 2011)


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• Reliable Internet Connection

The findings and the analyses demonstrate that the SMEs face the business challenge of

low bandwidth or poor connectivity. This clearly means that SMEs cannot just rely on a

home and neither on the other basic levels of connectivity. The SMEs must invest in the

network that would have sufficient bandwidth to support all the additional activities

and is robust enough to withstand any upscale in the activity and must be backed up by

a professional customer support. (Easynet Connect, 2011)

• Right vendor selection helps avoid pitfalls

The right vendor selection is the first and the most crucial step for the SME in the

adoption of the cloud computing technology. In the recent years the cloud computing

grew rapidly and therefore numerous cloud vendors have entered the market and each

cloud vendor has different expertise. This is a challenge for the SMEs as they find it

difficult to deal and manage multiple cloud providers.

Furthermore as mentioned in the analyses, the SMEs often go for the vendors who they

think are reliable and whom they can trust. (Techaisle, 2012)


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APPENDIX A

Definitions of Cloud Computing Multiple Definitions of cloud computing. ( Vaquero, Merino, Caceres, & Lindner, 2009)


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APPENDIX B

Cloud Service Models Framework


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APPENDIX C

Transcribed Interviews Transcriptions of the Interviews that were conducted for the research 1. Interview with Your business works

Interviewee: Daniel Scott, Founder Company Background: Your business works is newly started small business in the IT sector. They provide different cloud services to different small business across UK. The company is 18 months old, was started in 2010 by 2 people: Daniel Scott and David Summers. In 2012, the company hired 1 accountant and 1 sales manager. There are 4 people in total. Services used: Hosted email exchange 2010, SkyDrive (file sharing service), hosted telephony service (cipgate): this company sells these services to the customer or other businesses. Why did you choose these particular services? “Well, I went for these services mostly because I have worked with these businesses, I was aware of the brand and have used their other services so it made sense to use their cloud services for my business. I have been with these brands like cipgate and intermedia for around 5 years and I know how their products work” Benefits: “Cost is one major benefit. I didn’t have to spend so much for my company’s IT. But other than cost also there are several features. With cloud, you get some extra features. For example, the features I get with cloud services are: collaboration. I can share my calendars and the contact list with the other members or the staff. It is then also about Flexibility. I have 10 domain names for my business and I have the flexibility of how I use them. Also the Synchronization. I have 3-‐4 internet devices and all of them are synchronized via the cloud”. (MOBILITY) “I can keep a track of all the information and data in my company at all times. I can even use these services even when I am outside ok UK on any computer and have access to all my data. Previously, years ago, to buy this kind of services, one had a pay an enormous price but cloud makes it easier” Security: “security has always been a concern for some businesses and I did have some issues but then I don’t have any sensitive data on cloud. I don’t store my accounts on there so if my data gets exposed on a public domain, I will not be that upset. As I mentioned my vendors are highly trusted and I am not that worried about security that much as I thought I would be” In his perception, cloud is a very powerful tool but not many SMEs are aware of it and not many SMEs have the motivation to adapt it and use it in its business model. People have listed the issue of security way above the benefits such as effective collaboration, Mobility, flexibility and definitely cost efficiency. “For me the driving factor to adapt cloud was Flexibility and Scalability. I have spoken about flexibility before. Cloud uses a ‘subscription model’ which means one can easily upscale or downscale the cloud services as per the It requirement, as a when required. This kind of INNOVATION and easy investment motivated me. The other factor for me


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was that I did not have an office when I started the business. Cloud offered me that flexibility of working anywhere at any time on any internet device.” Issues faced: “Not really. I was really skilled and had done by homework. Plus, I had a skilled team and had consulted a specialist who had had helped me place my strategy in accordance with the new business process and therefore I didn’t face any issue. Luckily, the cloud services I bought for my business also worked well. However I would say that the issue rises in the adoption by the staff” This clearly means that it is more like change management/ ease of adoption issue. His staffs were skilled so we didn’t face that difficulty. How long did you take for your cloud adoption strategy? Cloud adoption and implementation is a big task. It is in steps such as assessing what kind of services does my organization need, then validating it by providing it with a business justification in terms of cost and competitive advantage, then to prepare a business case for all the identified cloud initiatives and finally to execute the formulated project. It took me 13 months in total, however the implementation or the execution is easy if you have everything in place. It took us 2 months to get started with the 3 services and to be honest it doesn’t take time to implement services; it only takes time to train the staff and make them adopt it. This goes back to the point of change management. “it is easy to set up but then bringing it into your business processes might take a while” Future usage: “by 2014, I do intend to adapt many more cloud apps. It totally depends on how my company grows. I don’t have much staff at the moment and the advantages of the cloud are not really permanent if you don’t have enough people to manage it. There is definitely room for more services!” From your personal knowledge, can you highlight other common cloud services widely being used by SMEs? “The other common used apps by the SMEs: SharePoint, web application in the cloud, amazon does it. I personally believe that 90% of SMEs knowingly or unknowingly have adopted cloud. Any company with a website already uses cloud. They don’t realize it and this is the case for 15 years now. Then again, these adoption rates differ from product to product. Other common service is business instant messaging, documentation, online backup”


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2. Interview with IQinIT

Interviewee: Katerine Damacova , managing director and Luke Whitelock, Technical Director Background of the company: Number of employees = 15. The company is now 4 years old. Was in traditional IT initially and for 2 years now has been in Cloud Computing. Business: Various cloud services such as Hosted desktop, cloud phone, cloud email, for the SMEs How do you define cloud computing for your business? “Cloud computing has millions of definitions, just one wouldn’t be appropriate. I would explain it to you via an analogy. Lets think about computers as old-‐fashioned water pump where you need to do a lot of manual pumping to get the service. What we are talking about here is manually applying the updates and installing software for the users. This is definitely time consuming and you might miss some things in that process. WE thought that wouldn’t it be easier that instead of pumping water out of a hand pump, the users could simply turn on the tap. This is what is cloud is. The principal of cloud is to transform the way people use IT, from something that requires a lot of work and pain, into a service that is as easy as turning on a tap. This is how we perceive cloud computing” You have been using cloud services for 2 years and you have successfully transformed from a traditional IT company. What are the significant changes/benefits for your company? “Well, to put it in simple words, cloud has made it easy to work and collaborate within the company. We can cater to the customer needs quicker that we would in a traditional working environment. The staff of this company can work from anywhere now. Cloud keeps all of connected. It has definitely made us cost efficient and lastly, I don’t know how other organizations perceive it but we feel more secure with cloud because we have our data backed up” What are the key driving factors for SMEs to adopt cloud? “Ease of accessibility. As I mentioned you have the access to your data from anywhere. The cost is spread out on a month-‐to-‐month basis so there is no heavy investment that is required. It automatically becomes cost efficient. So definitely subscription model is one key driving factor” Benefits realized so far? “The key benefits which I can point out are that cloud computing technology makes the businesses more profitable because as we said earlier that investments are not required. You pay for it just like you would pay your electricity bill. Secondly, there is more operational efficiency that is observed. This is obviously due to collaboration, integrated emails, synchronized calendars etc.” Issues faced? Security-‐ “ Every one is concerned about security. Some are even paranoid. We, on the other hand take extra precautions. We make sure that we do our thing right from the very beginning and we make sure that we get it right at the end. We haven’t faced any security issue because we are dealing only with the SMEs and not government or larger organizations. They generally have more issues when it comes to security, not the SMEs.” Other issues-‐ “we have had a couple of other minor issues such as Low bandwidth of internet connection in the local area. You can’t work properly over cloud if your


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Internet doesn’t work well. This is one issue we recently had. The other is the migration of the data. That, I would say is not an issue but it is a process that takes time. One issue that is faced by the SMEs after implementation of the technology is that change management issue. The SMEs adopt the technology but the people don’t successfully accept it or for some reason cannot understand. That is a main issue. We also provide training in those circumstances. Other than that, we haven’t come across any significant issues so far.” Do you think that your customers will extend their cloud usage over the period of time? “I think so they would. We renew their subscription every month and till date we have not lost any client or a customer. We have only increased the number. This is a good sign and I think our customers would definitely increase their future usage with us”


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3. Interview with Zone Entertainment studios

Interviewee: Mr. A, software engineer Company background: Zone Studios is a small media company situated in London. It was founded in 2009 by 3 people and now it employees 12 people. Zone studio develops education and entertainment applications for the mobile devices. In 2011, zone studios adopted cloud based services for its business and became partners with Microsoft. How do you define or how do you perceive cloud computing? The manager at Zone Studios said, “ For us, Cloud is all about instant agility and broad interoperability. We adopted windows Azure last year and we can now build applications that operate with many technologies and can work with a variety of companies and customers. It develops a momentum in the market. Also, we can instantly scale up or down the computing resources and storage in Azure instantly.” He also added, “Moreover, it provides a lot of flexibility in terms of pricing that wasn’t available before. So cloud for us is a package of all three attributes” What are the Cloud services or software that you use? The manager said, “We use the Windows Azure Platform-‐ SQL Azure and Azure and the Windows phone 7 and I must add that our life is a lot easier than thought” What were your key driving factors or key business enablers to adopt the cloud technology? The manager said, “If you are asking us what was the challenge in our company that drove us to adopt the cloud then to that I must tell you that we had a very acute business need. As I have told you that we develop applications for the mobile devices. We wanted to be able to support our customers anywhere in the world and this meant that we needed vast computing capacity and the flexibility to scale up or down to meet the demand. This definitely meant a lot of money that would be invested. It would easy cost us hundreds and thousands of dollars to build an on-‐premise infrastructure that would support this business model” He also added, “The company needed an environment that would interoperate seamlessly with multiple mobile technologies, development standards and content types and that is why we did a lot of research and study and decided to adopt Azure as we thought it suited well with our business needs” What are the benefits of the solution that you have incorporated in your company? The manager made a quick comment by saying, “Well, it is too early to define and list out the benefits of the solution as it was adopted only last year. But then what I can say is that we have been able to overcome the challenges that I mentioned earlier such as to attain Broad interoperability and instant agility. Other than that the benefits have been in terms of pricing as its extremely flexible. The windows Azure pricing is regular and predictable and we can easily set licencing fees that we know will be profitable. The other advantage is Scalability which was initially a business need” Did you face any challenges whilst or after the adoption of Azure? “No, in fact we got a lot of support from Microsoft. We participated in Microsoft BizSpark program and that really helped us.


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BizSpark program helps you to test different technologies, approaches and pricing structures with minimal investment and risk.” 4. Interview with Stir and Fry

Interviewee: Michelle Seth and Robin Seth, founders of the company Company Background: Stir and fry is a small business that was started in 2004 by a couple. Stir and fry is the food business that provides a range of soups and pies, which are sold throughout the London. The company growth rate was not as fast as it was predicted but it grew constantly because of the quality products and innovative marketing. Over a period of time, the employees number grew to 10 by 2012. In 2011, the company adopted Google App for its business because of certain business needs and challenges. How do you define or how do you perceive cloud computing? Mr Robin Seth and Mrs Michelle Seth are the couple who founded Stir and Fry and now they employee 10 staff in total. They grew with time and recently adopted the cloud technology and in their perception Cloud is about Mobility. Mr Seth said, “for us cloud is about mobility and being able to access your calendars, contacts and emails at all times. We are on a move all the time, making soups and pies and what we have got from this technology is brilliant” Mrs. Seth complimented him by saying, “He is right, we needed to have something that allowed us to be mobile and still not loose our orders and calls or emails even when we were on the wheels. So cloud for us is all about Mobility and flexibility” What cloud services are being used? Stir and Fry has adopted Google App services for the business in 2011. The services that are used extensively are Google Calendars, Contact list, Emails, and Google Docs. Mr Seth said something really interesting, “The magic of Google is that it really is simple and it really does work. As a business, we don’t really want to deal with IT issues, we want to make soup and pies and tell people about it. Google App for business has played an important part in allowing us to be as flexible, responsive and reliable as we can be” What were the key driving factors that enabled you to adopt this cloud technology? “Well there were several reasons why we adopted Google App for business but the key needs were that we are business without a real office. We work out of the van. We are a takeaway and a delivery service. While we are on the wheels, we miss out on many take away orders. Our small take away set up is in New Malden, Kingston upon Thames. It was really costing us a lot and then we looked at Google. Google App on the other hand gives us professional, supported, high quality access to our emails and documents on our laptops and on our black berries. It cuts off the majority of the spam email and we have not had any downtime with it yet and are experiencing a great service” Mrs Seth added, “we also like to share recipes with our customers along with a Thank you email once they have placed an order with us. We couldn’t do this before but now we have all our recipes and other documents on Google docs and now even when we are on wheels we can simply attach and send the email. It is really simple” She added, “we can react and respond immediately to our customers and to their feedback and the fact that we can do all this on our mobile phones is a huge bonus” What are benefits of using this cloud technology?


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The couple explained the benefits as Mobility in the earlier question and Mr Seth added, “ we are starting to realize the full impact and the potential benefits of this app now. One benefit is of flexibility of pricing. I pay monthly which has made it really easy for me and for the cash flow of my business. The other thing is that I have the access to all my documents now from everywhere” Mrs Seth said, “Its really amazing how we could do all this without the need of any IT staff, saving us a ton of money and hassle” Did you face any challenge whilst or after the adoption of Google App? “None as of now. In fact, it has made it a lot easier for the business. I have faced no issues or any difficulty at all” 5. Interview with Incite Business

Interviewee: Josh Turnbull and Oliver Turnbull, founders of the company Company Background: Incite business is a small marketing agency based in Kingston upon Thames, London. Turnbull brothers, Oliver Turnbull and Josh Turnbull, founded the company in 2006. This company now employees 20 people and has grown amazingly. How do you define or in your perception what is cloud computing? Oliver Turnbull answered, “In my perception cloud is more than just a word. It is the next big thing. You can create and store documents online, you can access them from anywhere, and you can up scale or down scale your utility of cloud and much more at a very reduced price. That is what I think cloud is.” Josh said, “Exactly, it is like doing so much on cloud and almost for free” What cloud services have you incorporated in your business? At the moment, we have Google App for business up and running in Incite. We use the email service, calendars, contacts, and Google drive/docs presently. What were the reasons to adopt the cloud technology? Oliver said, “we had continual problems-‐ massive spam, loss of service and the major problem was that if the internet connection went down, we would be completely losing email or getting them days later when email services decided to re deliver” Josh added, “These problems were recurring and that is when we realized that we needed a concrete solution of successful communication. We needed a reliable and a cost effective way of keeping the communications running as well as providing an email system that would be easy to use and adaptable to its business needs. We did a lot of research and consulted our friends and other people and decided to take Google App for business” Oliver added, “It was the best decision we ever made. To begin with, it was easy to get started with it and the entire staff was adaptable and because they had already used GMAIL as their personal email, they loved it even more” The brothers even shared a joke that was, “our internal email server broke on the day we signed up to Google Apps. It was a sign and we were up and running literally within minutes. We love it so much and we would even recommend any small business to use it” What are the key benefits with this technology?


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It is very cost effective. Second best thing about Google App is that you can use it on your PC, Laptop, and Mac or on your tablet or smartphone. It is accessible on all internet devices and mobile devices. You can work from home and all your information will be made available to you at all times. So Mobility and flexibility is great with Google App. Josh said, “Another key benefit is that we now have access to everyone’s calendar. We did not have this before and the staff keep their calendars updated which makes it easy to schedule a meeting or any event” Josh also said that, “My staff and I now work on documents or presentations together in real time. It is much more convenient. The second benefit is the feature of IM. The team sits just a few feet from each other but if they find something interesting on the web or anything in particular, they immediately update the other person with the link. It is great how the working environment has changed in Incite.” Oliver said, “and the great thing is that you Gmail saves your chats as well. The other day I was talking to one of our client over Google talk and I wanted to refer back to the chat and I found it in the email. It saved it as a transcript and this feature is also very useful” Did you face any challenges whilst or after the adoption of Cloud? Both of them agreed that there weren’t any issues at all that they faced. They didn’t come across any difficulty or any issues as of now.


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APPENDIX D

The research sample Name of the company

Size of the company

Name of the person interviewed

Role of the person interviewed

Your Business Works ltd.

4 employees Daniel Scott Founder and the managing director

Incite Business ltd. 20 employees Josh Turnbull and Oliver Turnbull

Founders of the company

Stir and Fry 10 employees Mr. and Mrs. Seth Founders and the directors of the company

Zone Entertainment studios

12 employees Mr. A Software engineer of the company

IQinIT 15 employees Katrina Damcova and Luke Whitelock

Managing director and Technical director of the company

Go Evolve 2 employees Andrew Latham Founder of the company

Aqilla

6 employees Hugh Scantlebury Managing director

Crown Agency 13 employees Leo Adekoya Technical Director

Hao2.eu 5 permanent employees

Andrew Norton Works with technology

Community upon Thames

6 employees Michael Stimson Managing Director


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APPENDIX E

Coding Table The interviews were coded based on certain inductive codes using the MAXQDA software. Inductive Categories Name of the Participant Participant’s responses Mobility Mr. and Mrs. Seth from stir

and fry Daniel Scott from your business works ltd. Hugh Scantlebury from Aqilla Leo Adekoya from Crown Agency Michael Stimson from community upon Thames

For us cloud is about mobility and flexibility and being able to access your calendars, contacts and emails at all times I did not have an office when I started the business. Cloud offered me and my staff that flexibility of working anywhere at any time on any internet device All my devices are synchronized and the whole equation works well for me, especially when I am travelling I travel a lot, usually for business purpose and cloud makes it possible for me not only to have an access to all my data while I am on my move but also keep a track of what is going on back at work. I would say, with cloud nothing is impossible Our company has a policy of BYOD for the employees. And with the cloud services we can synchronize all the devices. This means I can access my documents at my I pad, laptop, PC and my smartphone at all times. Its just marvelous too see how easy operations have become with the cloud


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computing Effective Collaboration

Andrew Norton from Hao2.eu Andrew Latham from Go evolve Michael Stimson from community upon Thames Hugh Scantlebury from Aqilla

I can now share my calendars and the contact list with the other members or the staff so easily. I couldn’t do this before I can work effectively with my colleagues now and not worry about emailing files anymore Google docs have this great advantage that you can work with your team on a document at the same time. More than that, I have stopped emailing files to others. I create them on Google docs and just tag whoever I need to onto the document My team creates or edits the reports in real time, makes presentations together even when some of them are maybe working from home, they don’t email every latest version of a document. The team doesn’t have to wait for hours and hours for a reply. We use instant messaging service and it has totally changed our working environment and definitely benefited all of us

Flexibility Mr. and Mrs. Seth from stir and fry Oliver Turnbull and Josh Turnbull from Incite Business

For us cloud is about mobility and flexibility and being able to access your calendars, contacts and emails at all times In my perception cloud is more than just a word. It is the next big thing. You can create and store documents


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Daniel Scott from your business works ltd. Hugh Scantlebury from Aqilla Mr. A from Zone Entertainment studios Michael Stimson from community upon Thames

online, you can access them from anywhere, and you can upscale or down scale your utility of cloud and much more at a much-‐reduced price. That is what I think cloud is I did not have an office when I started the business. Cloud offered me and my staff that flexibility of working anywhere at any time on any internet device I have incorporated cloud into my business model for the reason that it provides me with a lot of flexibility in terms of pricing and accessibility. I pay for the services I use and this payment is monthly We wanted to be able to support our customers anywhere in the world and this meant that we needed vast computing capacity and the flexibility to scale up or down to meet the demand Our company has a policy of BYOD for the employees. And with the cloud services we can synchronize all the devices. This means I can access my documents at my I pad, laptop, PC and my smartphone at all times. Its just marvelous too see how easy operations have become with the cloud computing

Innovation Oliver Turnbull and Josh Turnbull from Incite Business

One of those things that weren’t possible earlier is unified communications that keeps my mobile team connected. I call that innovation For me the cloud computing


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Mr. A from Zone Entertainment studios

as a concept is not innovative because I have been using emails and other web services for quite some time now. However the innovation that pleases me is the “pay-‐as-‐you-‐go” model. You pay for those cloud based services that you need and would use

Cost-‐Control Daniel Scott from your business works ltd. Hugh Scantlebury from Aqilla Oliver Turnbull and Josh Turnbull from Incite Business

I did not have an office when I started the business. Cloud offered me and my staff that flexibility of working anywhere at any time on any internet device I have incorporated cloud into my business model for the reason that it provides me with a lot of flexibility in terms of pricing and accessibility. I pay for the services I use and this payment is monthly We needed a reliable and a cost effective way of keeping the communications running

Scalability Oliver Turnbull and Josh Turnbull from Incite Business Mr. A from Zone Entertainment studios

… You can upscale or down scale your utility of cloud and much more at a much-‐reduced price. That is what I think cloud is We wanted to be able to support our customers anywhere in the world and this meant that we needed vast computing capacity and the flexibility to scale up or down to meet the demand

Security issue Daniel Scott from Your business works ltd.

I am playing safe. I do not put any sensitive data onto the cloud. I don’t put my


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Katerina Damacova and Luke Whitelock from IQinIT

accounts onto the cloud. So if tomorrow my account gets hacked or my data is published online, I will not feel that bad We, on the other hand take extra precautions. We make sure that we do our thing right from the very beginning and we make sure that we get it right at the end. We haven’t faced any security issue and neither have our customers faced


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APPENDIX F

THE RESEARCH PROPOSAL


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Introduction The term ‘cloud computing’ is sometimes used to refer to a new paradigm and sometimes to the next generation of computing. Sometimes it is even said that “It cannot save the universe”. Different authors and researchers have framed different outlooks for this new ‘evolving’ concept. Talking about evolving, one should bear in mind that “cloud computing” is relatively young IT service delivery model. In 2010, a study done by the outsourcing unit of London School of Economics for HFS research pointed out that business executives were far more likely than their IT counterparts to agree with the statement, “cloud might have a negative impact on the way business collaborate.” But a more recent study published by global consulting firm, Accenture, indicated that nearly one-‐half of business executives who were surveyed, felt that cloud computing was a way to gain access to “innovative, best-‐in-‐class applications with the potential to transform the business” The attitude towards cloud computing can be varied; however, the aim of this research is to understand the adoption trend of cloud computing in the small and medium businesses. Adoption trend refers to the rate at which the SMEs are adopting the cloud, the driving factors which are involved in the adoption and the issues or concerns related to the adoption, the different cloud applications or services that are adopted and the purpose of those particular adoptions and the cloud environment of the adoption. Adoption trend also comprises of the different cloud models which the business have adopted or are willing to adopt in the next couple of years. This research will also look at the different cloud computing models and how different businesses fit into these business models. Section 1.2 gives an overview of three key cloud business models. Talking about Cloud Model, the research will be aimed to substantiate a hypothesis which is clearly explained in section 2.1. Moreover, the hypothesis will be tackled along side with the research objectives.


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SECTION 1 1.1 Literature Review DEFINING CLOUD COMPUTING Larry Ellison (CEO of Oracle), made a statement at 2007s Analysts ‘conference “we have redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all these announcements. The computer industry is the only industry that is more fashion-‐ driven than a woman’s fashion”. [Fowler: 2009] Youseff and Butrico were among the first who tried to provide a comprehensive understanding of the cloud computing and all its relevant components. They regard cloud computing as a “collection of many old and few concepts in several research fields like service-‐oriented architectures (SOA), distributed and grid computing and virtualization” [Youseff: 2008]. According to Youseff “cloud computing can be considered a new computing paradigm that allows users to temporary utilize computing infrastructure over the network, supplied as a service by the cloud provider at possibly one or more levels of abstraction”. [Youseff: 2008] The majority of the definitions are however generated from cloud computing service providers, consulting firms and market research companies. The market research company, IDC, for example defines cloud computing as “an emerging IT development, deployment and delivery model, enabling real time delivery of products, services and solutions over the internet”[Gens:2008] Another example of market research Company’s declaration is Gartner’s definition of cloud computing as “a style of computing where massively scalable IT-‐enabled capabilities are delivered ‘as a service’ to external customers using internet technologies” [Plummer: 2008] The authors can have varied definitions on the concept of cloud computing. However, the different styles of definitions do try to cover the driving forces, the application and the infrastructure perspective. Therefore, we can summarise the cloud computing definition by saying “Cloud computing is an IT deployment model, based on virtualization, where resources, in terms of infrastructure, applications and data are deployed via the internet as the distributed service by one or several service providers. These services are scalable on demand and can be priced on a pay-‐per-‐use basis” [Bohm, Leimeister, Riedl, Krcmar: 2009]


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1.2 The Cloud Computing Models Recently a lot of vendors have started talking about “cloud computing” in their marketing materials. But the main question is whether the users are ready to give up on using the services on their local machines and shift to the cloud? Will the cloud serve the real needs of the business or is just a massive hype? In this section, various Cloud models have been discussed which propose how an organization can achieve sustainability by adopting a cloud model. In the current literature review, there are several business models, some of them are: (a) Cloud Cube Model proposed by Jericho’s Forum [JF: 2009] (b) Pay as you go model demonstrated by major vendors such as Amazon EC2 and S3 (c) Seven models proposed by Chou [Chou T: 2009] (d) Cloud OSS Business Model 3.0 presented by Lawson [Lawson: 2009] (e) Waterfall models proposed by Jeffery, Schubert and Neidecker-‐Lutz [Jeffery, Schubert and Neidecker-‐Lutz: 2010] (f) Linear Value Chain and Ecosystem Models proposed by Luhn and Jaekel. [Luhn, Jaekel: 2009] Some of these models are too expensive for a small business to adopt and some just look good in theory. This report tries to summarize a few basic or key models which can benefit a business and enable sustainability and profitability. The cloud cube model The Cloud Cube Model (CCM) proposed by the Jericho Forum (JF) is used to enable secure collaboration in the appropriate cloud formations best suited to the business needs. The JF points out that many cloud service providers claim to be able to deliver solutions, so cloud customers need help in selecting the right formation within CCM suiting their needs.[JF: 2009] Within CCM four distinct dimensions are identified:

• Internal and External This is the dimension which explains the type of business model to go for. Internal means private cloud and external means public cloud/G cloud

• Proprietary and Open Proprietary means paid services or contracts, on the other hand, open stands for free services or access. For example, Google app can be classified under “Open” source

• Perimeterised and De-‐perimeterised Perimeterised refers to Infrastructure as a service (IAAS) or platform as a service (PAAS). Whereas, de-‐perimeterised refers to Software as a service (SAAS)

• In-‐sourced and outsourced

In sourced means in-‐house development of clouds. Outsourced refers to letting contractors or service providers handle all requests, and most of cloud business models fall into this.


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How each business fits into Cloud Cube Model (CCM) In this section, how each business model fits in with the cloud computing model, has been explained. Please refer to table 1 (Appendix). The business models have been classified into the following eight categories:

• Service Provider and Service Orientation; • Support and Services Contracts; • In-‐House Private Clouds; • All-‐In-‐One Enterprise Cloud; • One-‐Stop Resources and Services; • Government funding; • Venture capitals • Entertainment and Social Networking

The strengths and weakness of each category is presented and based on that, each of these business models are classified under an appropriate Cloud Cube Model. For example, below is the diagram of “Service Provider/ Service orientation” Business model. This is the mainstream business model where there is stiff competition. There are many unexploited areas and scope of a lot of opportunities but at the same time, data privacy and security is the main concern. The companies or the organizations which have adopted this model to offer their services are Google, for Google docs, Dropbox, Salesforce for CRM, Facebook. [Chang, Wills, Roure : 2010]


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The hexagon model Victor Chang, Gary Wills, David De Roure, in 2010 at IEEE 3rd International Conference on Cloud Computing said that Cloud cube model is new and an emerging area. Moreover, one single model cannot suffice the best business models. According to the financial and economics reviews, 6 elements are necessary for business to successful over cloud. These key elements are:

• High volumes of confidence in the customers • Investors • Popularity or adoption • Market valuation • Innovation • Get the job done (GTJD)

Figure 2: The hexagon model [Chang, Wills, Roure :2010]

Talking about success, let us take at the example of Facebook where all the 6 key elements of success were at the peak. That was the reason enough that this organization managed to get 400 million users in 6 years. Or for that matter, even Apple adopted this model and therefore experienced a storming success. Please refer to figure 1 in appendix to see the hexagon model of Facebook and apple.


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Cloud value chain Many authors believe that these cloud based technologies hold the potential to revolutionize the internet [EC: 2003], however, actual adoption of cloud services in industry and business is still way under expectations. It seems that transition from traditional enterprise IT models to cloud based computing is still the biggest challenge in the businesses and the industry, despite all the advancements that supported this transition. [Mohammed, Altman, Hwang: 2009] This falls in line with what “Nariman Mirzaei, 2008” said, ‘it seems that Cloud computing cannot save the universe. Cloud computing cannot run for President. Cloud computing is a very specific type of computing that has very specific benefits. But it has specific negatives as well. And it does not serve the needs of real businesses to hear only the hype about cloud computing – both positive and negative”. Complexity in existing value structures and modes of attaining cost efficiency are the 2 main factors which contribute to the weak businesses, industry deployment, low adoption and missing sustainability. Therefore, it became significant to tackle and understand the questions such as what the structure of cloud is and what activities can lead to the value creation in the cloud. Based on the Michael Porter’s value chain theory, a reference model for cloud value chain was created. [Mohammed, Altman, Hwang: 2009] The Cloud value chain reference model Building on the foundations of Porter classical model, value networks, and “value grids”, the following Cloud value chain reference model was developed. The Model [Mohammed, Altman, Hwang: 2009] From the provider’s perspective, the proposed Cloud value chain model helps Cloud Service Providers (CSP) to realize where they stand in the Cloud market and how they relate to other CSP. In particular, it helps CSP to identify their needs, anticipate potential alliances and create new service provisioning scenarios. This would also facilitate new entrants understanding of potential markets, formulate their value model based on market needs and fully utilize existing services. From the consumer’s perspective, consumers will be able to identify the different potential costs for using and customizing the Cloud based on their business needs, and foresees diverse service scenarios from a strategic point of view. The model breaks activities (services) down into three main virtual layers. Within those layers, services are organized as independent sub-‐layers. Each layer border represents a profit and knowledge margin. Linkages between layers or independent services can take horizontal, vertical, and diagonal paths. Value is accumulated by flow of money and knowledge through these linkages. Through this organization, service packages can be created in a flexible and cost effective way. Figure 2 (Appendix) shows our proposed Cloud value chain reference model.


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1.3 Benefits of Cloud Computing Shifting to cloud can have both advantages and disadvantages for its users. Nevertheless, it may also have different level of importance for its different users. Cloud computing provides an online scalable environment which facilitates the ability to handle increased volumes of work without an impact on the performance of the system. Moreover, it also offers the economy of scale that might not otherwise be affordable for small medium enterprises (SMEs) who do not have the finance to invest into the IT infrastructure. [Raymond Choo: 2010]

• Costs The cloud technology promised to reduce the overall cost of acquiring, delivering and maintaining the computing power. The technology is paid incrementally (pay for what you need, instead of investing in expensive IT infrastructures). This enables the organizations to save up a lot of money in the short run which can be further used for other important resources. [Jhadwani: 2009] [Mirzae: 2008]

• Increased storage Nokia Siemens in its unit magazine, issue 9 said, “When we talk about cloud, sky is the limit”. This clearly means that organizations can store a lot of data than it could on private desktops or servers. [Mirzae: 2008]

• Access/ Mobility The cloud promises universal access to high powered computing for anyone with a network access device. By this, cloud computing facilitates telework initiatives and also bolsters an agency’s continuity of operations. [Jhadwani: 2009]

• Customization Cloud computing offers a platform of tremendous potential for creating and amending applications to address a diversity of tasks and challenges. Its inherent agility means that specific processes can be easily altered to meet shifting agency needs, since those processes are typically changeable by making a configuration change, and not by driving redevelopment from the back-‐end systems [Heyward and Rayport, 2009]

• Collaboration The cloud creates an environment which enables the users to create software based services which fosters collaboration and greater information sharing, not only the agencies but also among government and private entities. This also leads to the “shared services” of the cloud technology. [Jhadwani: 2009]

• Resource Maximization It is a different way to say that IT can divert its focus from constant server updates and other computing issues and concentrate on innovation. This is really beneficial for organizations that have shortage of IT professionals. [Jhadwani: 2009] [Mirzae: 2008]


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1.4 Limitations of the Cloud Computing

• Security The term security refers to privacy, confidentiality, integrity and availability of the company’s data. The company stores its data over the cloud in an encrypted format or encrypted keys; nevertheless, it does not own the encrypted keys.[ Andrei :2009]. There is always the “difficult to trust” factor. However, the cloud vendors do recognize these privacy and trust issues. The remedy for this is to buy the services or products from the vendors who are accredited and certified of “Impact level” (certification that verifies security over all networks) [Mirzae: 2008] [BT: 2012]

• Transition and the cost of transition Another major challenge is transition. Are the established businesses even ready to move from existing architecture of IT to the architecture in the clouds? Is it even feasible for them to incur this cost when they can’t even analyse the benefits of the long run? The remedy for this issue is to encourage and make the businesses, especially SMEs more aware of the cloud computing benefits. [Mirzae: 2008]

• Shared technology issues IAAS vendors (Infrastructure as a service) often deliver their services in a scalable way by sharing infrastructure. Strong isolation properties are not designed for multi-‐tenant architecture. This can impact the operations of other tenants using the same cloud provider. The remedy of this challenge is to constantly monitor for any unauthorized changes/activities. Also, cloud vendor can enforce service level agreements for patching and vulnerability remediation. [CSA: 2010]

• Data loss or leakage With cloud, data loss or leakage is a significant and a very crucial challenge. As the encrypted keys are not owned by the companies, and as infrastructure is shared, data can be lost, altered or leaked. This can create massive damage to the company’s brand or the reputation. The remedy for this is to implement strong API access controls. [CSA: 2010]


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SECTION 2 2.1 The Research Objectives It is very important to list out the research objectives and aims and back it up with an appropriate methodology. A research objective does not only include the various aims intended to be attained at the end of the research, it also includes a research problem which will be tackled or a hypothesis which will be tested. This particular research is aimed to understand the adoption trend of cloud business model for the SMEs. As aforementioned, adoption trend itself comprises of various attributes such as:

• To analyse the percentage or the rate at which the SMEs are adopting or are planning to adopt cloud computing or cloud business model.

• To define the various driving factors for the SMEs to adopt cloud. • To list out various concerns or issues that are faced or were faced by these small

medium businesses whilst the adoption. • To chalk out the various cloud applications or services which are being used by the

SMEs or which will be used in the next couple of years by small medium businesses. • To analyse the cloud environment of the adoption, as to whether the cloud adoption was

private, public or hybrid. • Finally to conduct a comparative study of the adoption trend of cloud model among the

SMEs from different industries.

Another aim of this study is to validate the hypothesis along with attaining the above research objectives. It should be borne in mind that the hypothesis is going to be the part of the second research objective which talks about the driving factors for the SMEs to adopt cloud. It should also be borne in mind that the aim of validating the hypothesis will be attained via the research on other objectives. The questionnaire or the interview will be framed or conducted in structured format so that it can cover all the required aspects. The hypothesis is explained in the following section.


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Hypothesis Based on the aforementioned 3 key cloud computing models and ComTia’s recent survey [CompTIA EMEA: 2011] by Seth Robinson and IBM’s Saul Berman videos [IBM: 2011], a hypothetical cloud computing business model can be created. This business model has 5 attributes. These 5 attributes or characteristics can also be defined as the key driving factors of an SME to adopt the cloud model. The hypothetical cloud business model is:

The research would aim to substantiate the aforementioned cloud model. According to the CompTia survey and the conference at EMEA, held on 9th November 2011, Seth Robinson [CompTIA EMEA: 2011] and Saul Berman [IBM: 2011] said that Innovation, Mobility in terms of tablets, Hyper-‐connectivity, Social media and Big data are the rising factors and the rising technological needs for SMEs. If the 3 key cloud models are integrated, and the recent study is incorporated, the outcome is the mentioned cloud model.

Cloud computing

Innovation

Mobility

Hyper connectivity Social media

Big Data


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2.2 The Research Methodology For this piece of research, the methodology that will be used will be a combination of both qualitative method or anti-‐positivist approach and quantitative method or a positivist approach. [Welman, krauger, Mitchell: 2005] As per the objectives which are listed above, few of them have to be analysed in terms of percentage and rates, and a few of them have to be described and listed down. Qualitative Method “The word qualitative implies an emphasis on processes and meanings that are not rigorously examined or measured (if measured at all) in terms of quantity, amount, intensity and frequency”. Therefore according to these authors, the aims of qualitative research methods are to establish the socially constructed nature of reality, to stress the relationship between the researcher and the objective of study, as well as to emphasize the value-‐laden nature of inquiry. [Denzin, Lincoln: 1994] As mentioned above, this research will incorporate the qualitative method of research to analyse and comprehend specific objectives such as:

• The factors which were or are involved in the cloud adoption • The issues which are or were faced whilst the adoption of cloud model • The various cloud services or applications that are or will be used by the SMEs

Apart from the aforementioned objectives, the qualitative research will also be aimed to understand the attitude, behaviour and perception of people who have and haven’t adopted cloud computing. Other co-‐existing factors like fear, cost, lack of awareness etc will be looked into via the mode of qualitative method or the anti positivist approach. Source of Qualitative Research

• Interviews: For this research, face to face or telephonic interviews will be conducted. The interviews are more likely to be formal and well structured; however, they can also be done via a normal conversation. For the formal interview, a questionnaire will be framed which would intend to cover every aspect of my research. Moreover, with the consent of the interviewee, the interviews will be recorded for the future reference and interpretations. [Lecture slides]

• Observations: Direct observations or participant observations will also be an important mode of research. It will act as a catalyst in interpreting and translating the information. Moreover, it may also substantiate and validate the hypothesis for this research. [Lecture slides]

Quantitative Method “Quantitative research methods do not involve the investigation of process but emphasize the measurement and analysis of casual relationships between variables within a value-‐free context” [Denzin, Lincoln: 1994] The purpose of quantitative research is to evaluate the objective data in terms of numbers and percentages. It is important to get a dynamic and changeable nature of


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reality via the qualitative research; however, it is vital to obtain stability and reliability along with it. [Welman, krauger, Mitchell: 2005] The research objectives which are mentioned above will be analysed and appropriately translated into numbers and other quantitative forms. The aim is to achieve the following results:

• The rate at which SMEs have or are undergoing the cloud adoption • The issues and concerns that are faced whilst the adoption of cloud model for different

SMEs • The driving factors of cloud adoption and a comparative study of each driving factor. • The different cloud applications and services that are or will be adopted and a

comparative study of each service/application.

Source of Quantitative Research Surveys: A well structured questionnaire will be prepared and the mode of survey will be via emails or by distributing handouts. Interviews: The interviews will be conducted as mentioned before, and will even be recorded, prior to the consent of the interviewee. These interviews will be analysed using the quantitative methods to translate the information into numbers and percentage. 2.2 Sampling Strategy Sampling frame: The sample frame would comprise of small medium businesses would are adopting cloud as their new business model or are willing to adopt it in near future. [Lecture Slides] Sampling size: Minimum 20 Small medium businesses will be contacted for face to face in depth interviews for qualitative analyses. 50-‐100 questionnaires will be sent out for surveys via post or internet. The expected return of feedback out of the 100 questionnaires sent out is approximately 20.[Lecture Slides] Sampling procedure: The small medium businesses will be from different industries in the United Kingdom such as information technology industry, telecommunications, fashion, retail etc. After getting back the feedback and after analysing the interviews, a comparative study will be done among the cloud adoption trend in the different industries of the UK market. [Lecture Slides]


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SECTION 3 Action Plan MONTHS TARGETS

June • Secondary Research • Reading articles/books • Frame a blueprint of the interview

July QUALITATIVE RESEARCH

• Finalize the interview with the guidance of my supervisor

• Shortlist the companies to be interviewed

• Conduct the interviews for the shortlisted companies

August QUANTITATIVE RESEARCH

• To wind up the interviews and work on the analyses of the research.

• Send out the Questionnaires for the quantitative research

• By 25th of August, data from both the research should be received

September • Analyse the Quantitative research. • Type the material and share it with the

supervisor. • With the supervisor’s first set of

comments and amendments, work on the first draft for the dissertation

• By 20th September, 1st draft should have been reviewed by the supervisor with valuable comments and amendments.

• Proof read and work on the 2nd Draft/ final report (based on amendments and comments of the supervisor)

October • 1st October-‐ 5th October proof read and finalise the dissertation

• 8th October 2012, submit the Dissertation.


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Conclusion According to Nariman, 2009, even though cloud computing has increasingly become popular; the research issues are still inadequate. The big IT companies and leaders such as Google, Microsoft, and Amazon have decided and have taken initiatives to promote cloud but there are many questions which are left without an answer and the most important one is “Security”. Andrei, 2009 also says that cloud computing is struggling in its’ infancy and carries both the benefits and challenges. But with the amount of research going on, people will improve on the drawbacks and the future of cloud computing looks will be less cloudy. On the other hand, Jhadwani, 2009 has commented “Cloud computing can be rapidly provisioned and released with minimal management effort or service provider interaction. Ultimately, with its offering of scalable, real-‐time, internet-‐based information technology services and resources, the cloud can satisfy the computing needs of a universe of users, without the users incurring the costs of maintaining the underlying infrastructure”. With this research, as mentioned before, cloud computing models will be analysed and the hypothesis will be tested. The research objectives are clearly explained and will be tackled alongside while validating the hypothesis. However, one should bear in mind that cloud computing business models are relatively new area and finding the right cloud business model can enhance organizational sustainability. Moreover, Cloud computing is at its early stages and does have certain benefits and issues. The different authors will view the future prospects of cloud, differently. However, to understand and experience the benefits, businesses need to be made aware of the technology. The SMEs must be encouraged to adopt the cloud business model to attain cost efficiency and sustainability in business. It is only after that, judgements can be made if cloud is just hype or the next computing era.


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