Cloud based marketing systems for SMEs

1st May 2014

Dissertation

Vaibhav Mishra

MBA – M&S

A0102212103

Amity Business School

Under Supervision of:

Ms. TavishiAsst. ProfessorDepartments of Economics

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Table of Contents

Sections Content Slide No.

Section 1 Introduction 3

Section 1.1 Overview & conceptual framework 5

Section 1.2 Marketing Cloud 6

Section 3 Literature Review 7

Section 2 Research Methodology

Section 2.1 Objectives 11

Section 2.2 Hypothesis 11

Section 2.3 Tools and Technique 12

Section 3 Data analysis and interpretations 13

Section 4 Findings and conclusion 23

Section 5 Recommendations 25

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Overview

Classification of SMEs

Micro Size firm: Plant and machinery doesn't exceed Rs. 25,00,000;

Small Size firm: Plant and machinery is over Rs. 25,00,000 however doesn't exceed Rs. 5crore; and;

Medium Size firm: Wherever the investment in plant and machinery is over Rs.5 crore however doesn't exceedRs.10 crore

(RBI)

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While a key achievement of MSMEs over time has been their talent in utilising available domestic resources to deliver quality products and services, these firms have made their presence felt across India’s key sectors as well as in prominent export markets.

The inclusiveness of the MSME sector is highlighted by the fact that around 50 per cent of MSMEs in India are owned by underprivileged groups.

Due to its low capital structure, coupled with high labour absorbing power, the sector has played a noteworthy role in achieving rural industrialisation as well.

The MSME sector remains a key driving force for India’s complete transition from an agrarian economy to an industrialised one. With huge production capacities, all these companies need is a better way to sell and modern marketing practices can open global markets for these SMEs and cloud technology can be a great tool in hands.

Why SMEs

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Conceptual Framework of Clouds

Cloud computing is spreading through enterprises because it allows the Agility wanted by international organizations

Cloud computing has emerged as paradigm shifting technology in business environment. Cloud computing provides pathway for business agility and ready to consume cloud based IT services

Cloud based marketing technology makes it possible for SME to integrate its communication efforts of Social media campaigns, email campaigns.

SMEs of India are second biggest contributor after agriculture and there exist 48.5 million unit SMEs in India and SMEs can wisely take advantage of the cloud computing services, without the need for upfront costs

Private cloudPrivate cloud Public cloudPublic cloud Community CloudCommunity Cloud

Private cloud is cloud infrastructure operated only for one organization, whether or not managed internally or by a third-party and hosted internally or outwardly

personal cloud project needs a big level and degree of engagement to virtualize the business atmosphere, and needs the organization to re-evaluate selections regarding existing resources

Self-run information centres square measure typically capital intensive. They need a big physical footprint, requiring allocations of area, hardware, and environmental controls

Private cloud is cloud infrastructure operated only for one organization, whether or not managed internally or by a third-party and hosted internally or outwardly

personal cloud project needs a big level and degree of engagement to virtualize the business atmosphere, and needs the organization to re-evaluate selections regarding existing resources

Self-run information centres square measure typically capital intensive. They need a big physical footprint, requiring allocations of area, hardware, and environmental controls

A cloud is named a "public cloud" once the services area unit rendered over a network that's open for public use

Technically there could also be very little or no distinction between public and personal cloud design, however, security thought could also be well completely different for services

Generally, public cloud service suppliers like Amazon AWS, Microsoft and Google own and operate the infrastructure and supply access solely via net (direct property isn't offered).

A cloud is named a "public cloud" once the services area unit rendered over a network that's open for public use

Technically there could also be very little or no distinction between public and personal cloud design, however, security thought could also be well completely different for services

Generally, public cloud service suppliers like Amazon AWS, Microsoft and Google own and operate the infrastructure and supply access solely via net (direct property isn't offered).

Community cloud shares infrastructure between many organizations from a selected community with common considerations (security, compliance, jurisdiction, etc.), whether or not managed internally or by a third-party and hosted internally or outwardly

Community cloud shares infrastructure between many organizations from a selected community with common considerations (security, compliance, jurisdiction, etc.), whether or not managed internally or by a third-party and hosted internally or outwardly

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Conceptual Framework of Marketing Clouds

If channel partners have restricted selling resources, it's most likely an improved plan to develop a cloud selling resource library that partners will use to quickly and simply get your product data before of consumers. The partners profit as a result of they get instant, custom-built facilitate and experience from the seller that's supported research and complete quality. the seller edges as a result of partners square measure act a compact, cohesive, and consistent message the least bit client bit points

Advent of Social media has changed marketing forever. Befor Social media companies treated customers like data points but people are more than just adress, phone numbers and credit scores. People are dynamic and with social media more connected than ever.

Social media has created Chaos and opportunity for marketing. PR, Campaign managers and Digital Teams, all manage their own social content using different tools. These Teams are fragmented and there are too many solutions to keep all your campaigns in sync and measurable.

Marketing Cloud integrates these marketing functions, converts insight into action and content into connection and customer for life. With Marketing Cloud you can listen to social conversations about industry and company, create stimulating social content, engage with targeted advertisement to your customer and measure the impact of your efforts.

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From the stance of vendor in developing SME, the advantages of Cloud-based technologies are: low start-up prices, low value for scattered use, easy management, quantifiability, device and placement independence and speedy innovation (TechRepublic , 2009). SMEs stand to benefit from pay-per-use, high performance computing eventualities sanctioning them to encourage innovation and enhance their fight.

Survey conducted on sixty SMEs personals to analyse scope of cloud services for SMEs reveals that p.a. price of cloud primarily based services sums up to 83000 Rs. This indicates that ancient on-premise ERP incurred higher price as compared to cloud computing services. (Sharma M. and Mehra A. 2010)

Out of the 48.8 million SMBs around 55% situated in urban areas whereas the remainder constitutes to the agricultural regions. Over the previous few years SMBs in Asian nation have gained strategic importance from firms and government (Shinde S. 2013, Business standard)

The first profit is that these solutions will open doors and permits organisations of this size to grow in ways in which would haven’t been possible. It’s clearly a big chance to jump-start the economy and lead the Asian nation into brighter economic times. (FX-MM, May 2013)

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SMEs face variety of issues, such as, absence of adequate and timely banking finance, restricted capital and information, non-availability of appropriate technology, low production capability, ineffective promoting strategy, identification of latest markets, constraints on improvement & growth, non-availability of extremely adept labour at reasonable price, follow up with numerous government agencies to resolve issues, etc (RBI, 2013)

value reduction (45.5%), quality and convenience in accessing applications (44.9%) seem to be the key reasons behind SMEs adopting cloud computing services.(Sahandi R, 2012)

According to GFI May 2010 report on cloud computing state of affairs out of 100% of senior business decision makers of small and medium size enterprises (SMEs) claim to completely perceive what cloud computing suggests. 62% haven't been aware of cloud computing., an additional 13% have detected of it however don’t grasp what it suggests. .

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• To analyze perception of SMEs towards Cloud based marketing services.

• To find out driving factors that encourages SMEs to migrate to cloud computing services.

• To explore the strategies adopted by SMEs for could utilization.

ObjectivesObjectives Hypothesis 1

Hypothesis 2

Companies perceive high risk in adopting cloud based marketing techniques.

There is low level of awareness of cloud based marketing tools.

Research DesignBoth, exploratory followed by descriptive analysis is adopted to gather and analyze knowledge in accordance with the objectives

Exploratory Research: To confirm the most effective analysis style, knowledge assortment methodology and choice of subjects. Secondary data analysis served as background in planning a form for conducting survey. 8 Positive factors were identified which more or less play important role in decision for selecting independent vendor of marketing cloud. These identified variables are: Cost reduction, Mobility, Flexibility, Increasing computing capacity, Greater IT efficiency, Business continuity, Avoiding capital expenditure, Network infrastructure redundancy

11 concern factors were identified as: Privacy, Existing Infra clouds migration, Disaster recovery, Integrity and reliability of services and or data, Technology has not been proven, Lack of internal security expertise, Uncontrolled variable cost, Confidentiality of private data, Cost and difficulty of migration to cloud, Interoperability issues , Lack of liability of providers in case of security incidents

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Descriptive Research: A questionnaire was developed on variables identified in exploratory research. Questionnaire includes 8 variables that more or less have impact on selection, 11 concern factors and adaptation of cloud based services to extract info regarding the present, behaviour, attitudes or different characteristics of cluster of respondents

Data collection: Primary data:

Questionnaire form filled by 80 respondents

Secondary data: Secondary data of the Cloud tools was collected through student research papers , publications, Technology research papers, websites and catalogues, past research data, company’s official records, and online journals and independent research firm reports. Data regarding market trends and industry forecasts were taken from research articles and commercial research reports for independent research firms like OCLC research and KPMG researches.

Scaling Technique: 5 point Likert scale where 1 indicate Least/Not important and 5 indicates very important and nominal scale was used.

 Sample Size: Sample frame of 200 respondents was taken. Survey received 40% rate and 80 responses were recorded. Judgement sampling was used to pin point the respondents to ensure quality of responses.

Tools and Technique : SPSS 17 is used to run Factor analysis, Charts, Cross tabulations and Correlations

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We required good mix of micro, small and medium size firms with focus on small and medium size firms, the fallout of sample is appropriate for the purpose.

87% of respondents were from small size firm or larger. 13% of respondents were from micro sized firms. This representation fits to research needs.

Respondents category

Respondents involvement in ICT decision making77% of the respondents were decision makers or influencers of ICT acquisition in company.

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79% of the respondents were aware of the cloud technology.

Cloud awareness

Marketing Cloud awareness35% of the respondents were aware of the marketing clouds (Cloud based marketing services).

Significantly high (65%) of the respondents were not aware of the Marketing clouds. This is positive indication for our first hypothesis which states that there is low level of awareness about marketing clouds in SMEs

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Cross-Tabulation: Cloud awareness and marketing cloud awarenessCross-Tabulation: Cloud awareness and marketing cloud awareness

Through cross tabulation it is clear those SME representatives not aware of Cloud technology were not aware of Marketing cloud terminology. 29 respondents aware of cloud technology were aware of Marketing Cloud too.

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Objective 2 : Exploring driving factorsObjective 2 : Exploring driving factors

Factor Analysis 1: Principal component method is used in factor analysis model when the objective of the factor analysis is to summarize the information in a larger set of variable into fewer factors. Here factor analysis is used on“Drivers of Marketing cloud acquisition”

KMO Test: The Kaiser-Meyer-Olkin Measure of Sampling Adequacy is a statistic that indicates the proportion of variance in your variables that might be caused by underlying factors. A high value of statistic (0.5 to 1.0) indicates the appropriateness of factor analysis for the data in hand. H0: There is no significant relation between variables taken in considerationH1: There is significant relation between variables taken in consideration

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of

Sampling Adequacy.

.652

Bartlett's Test of Sphericity Approx. Chi-Square 42.217

df 21

Sig. .004

KMO test score >0.5 which shows factor analysis is applicable here.Sig 00.000< .05 thus Null hypothesis rejected. There exists significant relationship among the variables can be identified. It indicated that there is scope for dimension reduction and factor analysis can be applied.

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6 Scree plot on Driving factor componentsBy Scree plot we can infer that 3 Components have Eigen value above 1, which means the factors can be grouped into 3 components with significance factor loadings.

Rotated Component Matrixa

Component

1 2 3

D1_efforts .117 .045 .905

D2_access -.234 .462 .374

D3_computing_capacity .700 -.139 .159

D4_agility .795 .184 -.101

D5_business_continuity -.035 .721 .299

D6_Capex -.450 .049 .015

D7_networkInfra .143 .820 -.306

By rotated component matrix, we can group these 7 different factors in 3 components:Computing F1: Computing capacity(.70) + agility(.795)IT Infrastructure F2 :Network infra(.820)+ Business continuity (.721)EffortsF3: marketing efforts (.905)

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Factor Analysis 2: on concern factorsFactor Analysis 2: on concern factors

KMO testH0: There is no significant relation between variables taken in considerationH1: There is significant relation between variables taken in consideration

KMO and Bartlett's Test

Kaiser-Meyer-Olkin

Measure of Sampling

Adequacy.

.611

Bartlett's Test of Sphericity Approx. Chi-Square 62.472

df 55

Sig. .028

KMO test score >0.5 which shows factor analysis is applicable here.Sig 00.000< .05 thus Null hypothesis rejected. Which means, there exists significant relationship among the variables can be identified. It indicated that there is scope for dimension reduction and factor analysis can be utilized.

From scree plot we observe that 5 components have Eigen value above 1, thus there are 5 components which are major concerns to companies in using cloud based marketing systems

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Rotated Component Matrixa

Component

1 2 3 4 5

C1_privacy .663 .522 .202 .060 .047

C2_migration .123 -.015 -.040 -.812 .000

C3_recovery -.024 -.449 .601 -.116 .344

C4_Integrity .056 .042 -.059 -.041 .898

C5_technology_maturi

ty

-.057 .033 .745 .174 -.045

C6_internal_expertise -.061 -.592 .125 .361 .181

C7_var_cost .189 .108 .595 -.130 -.075

C8_Confidentiality .832 -.232 -.129 .015 .156

C9_migration_issues .084 -.003 -.049 .685 -.035

C10_interoperability -.030 .697 .150 .244 .387

C11_Lack_of_Liability .752 .227 .170 -.077 -.104

Grouping of variables on basis on rotated component matrix:

Security F1= Privacy (.663)+confidentiality(.832)+lack of liability (.752)

Interoperability F2=interoperability(.697)

Long-term issueF3= Disaster recovery(.601)+ technology maturity (.745)+ var. cost( .595)

Integration F4 = migration issues (.685)

IntegrityF5= Integrity (.898)

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Objective 3: Marketing Cloud utilization strategyObjective 3: Marketing Cloud utilization strategy

By the chart we can infer that 85%of the respondents have plans to utilize Cloud technology in their existing business operations whereas 5% of the respondents find cloud based services a possible tool for their new business operations.

By the chart, 21% of the respondents think that hosting services are easy to be handled using Cloud based marketing system. 6% of the respondents would use Cloud service for booking systems, relatively higher number (23%) find Cloud systems suitable to be utilized for Email services. Rest of the respondents were equally split between preference of utilizing Cloud for Backup services and Secure online Data storage services.

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One Sample t-test on key factorsOne Sample t-test on key factors

Hypothesis:  H0: µ = 4H1: µ ≠ 4

One-Sample Test

Test Value = 4

t df Sig. (2-tailed) Mean Difference

C1_privacy 9.422 61 .000 .67742

C4_Integrity 20.292 61 .000 .87097

C11_Lack_of_Liability 4.606 61 .000 .38710

For all three key concern factors significance <.05Null hypothesis rejected. With positive mean difference from test value 4 it is clear that privacy, integrity and Lack of liability of service provider are major perceived risks in SMEs towards Cloud based marketing systems.

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Based on survey analysis, we can deduce that there is high awareness of cloud technology in MSMEs market now but service like Cloud based marketing systems or Marketing Clouds have huge scope of awareness. So our hypothesis(H1) that there is less awareness about cloud based marketing systems is accepted.

By factor analysis of concern variables we can deduce that Security concern and integrity of sensitive data are highly concerned. So our hypothesis (H2) that companies perceive high risk in adopting cloud based marketing techniques is accepted.

One sample t test on key concern factors indicates most critical for SMEs are:•Security •Integrity of data•Var. cost of cloud based marketing system

 Marketing Cloud fits specific SMEs needs as follows:

•Increased Computing capacity •Increased operational flexibility/agility •Marketing efforts cost reduction•Strengthens IT infrastructure•Strategic impact

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RecommendationsRecommendations

Awareness of marketing cloud is much less in companies. To sell the service, vendors need to provide consultative selling in SME market.

Marketing clouds should be made customized to need of individual enterprise. Agility of systems is important for continuous environment changes of SMEs.

it is important to consider existing infrastructure of SMEs. Migration of existing marketing practices and tools to Cloud is a hassle to companies and reluctance to change plays critical. Cloud vendors can ensure that their systems are much more user friendly than existing tools in these small organization.

Cloud vendors must ensure that variable costs will not skyrocket while offering flexibility to the customer. SMEs find marketing clouds useful for integration of webmail management, SMS marketing, Data storage, Data recovery, Availability and for effective channel communication. Vendors need to provide value additions to these which focusing on consistent disruptive growth strategies for marketing clouds.

Thirds party data security practices certifications like ISO/IEC: 27001/2005 should be showcased to assure that client data on cloud is not only secure from volatility but its integrity is also going to be maintained. Systems which can assure that the data are much safer behind security layers of cloud than a node on office network can be a great value proposition.

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References

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53-zinnov-study-113031400498_1.htmlAccessed on 01st Oct 2013

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on 01st Oct 2013

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144

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Thank You