TECHNOLOGY ADOPTION

MSc IT Assignment 2013 Task 01: Analyse the diffusion of innovation of Smartphone technology in Sri Lankan context

using Geoffrey A Moore’s model. Task 02: Case study of hSenid Software

International adoption to Cloud Computing.

Hansa K. Edirisinghe BSc (Hons) University of Portsmouth, UK

MSc IT - Cardiff Metropolitan University, UK

21th April 2013

This assignment in its task one attempts to analyze the diffusion of innovation of Smartphone technology using Geoffrey A Moore’s model contributed to Technology Adoption Life Cycle and under the Task two, a leading Human Resource solution provider hSenid Software International has been selected to analyze their adaption to Cloud Computing.

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Abstract

This assignment in its task one attempts to analyze the diffusion of innovation of Smartphone

technology using Geoffrey A Moore’s model contributed to Technology Adoption Life Cycle.

Accordingly, the first part provides a basic understanding of Smartphone technology; history of

Smartphone; Technology Adoption Life Cycle and Geoffrey A Moore’s model; Diffusion of

innovation; Analysis of diffusion of innovation with regard to the Sri Lankan context; as well as

the Disruptive nature and actuality of Smartphone. The document has discussed phases of

technology adaption with aid of revolutionary Smartphone brands such as Apple, Samsung and

BlackBerry and the way they approach on the different phases of technology adaption lifecycle.

It is followed by the disputes due to the unfair competition such as patent infringement.

Under the Task two, a leading Human Resource solution provider hSenid Software International

has been selected to analyze their adaption to Cloud Computing. It provides critical analysis of

Strategic and operational intent of adaption; Internal and external influences to adaption;

Technology acquisition process; and Financial Justification. The paper in its conclusion

discusses the identified issues when adopting to Cloud computing and provides necessary

recommendations to those issues. The three service models of Cloud computing has been

discussed with their benefits to both service provider and client. It elaborates the history of

hSenid HR solution market and the changeover from standalone HR application to Cloud HR

application. The selection of a local organization (i.e. hSenid) proved to be fruitful as it

facilitated in providing required evidences of the benefits of adapting to cloud computing in Sri

Lanka.

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Table of Contents

1.0 Task 1 ................................................................................................................................... 1

1.1 Moore’s model contributed to Technology Adoption Life Cycle .................................... 1

1.2 Critical Analysis of diffusion of innovation in the Sri Lankan context ........................... 2

1.3 Disruptive nature and intention / actuality of using “Smart Phone” ................................ 4

2.0 Task 2 ................................................................................................................................... 5

2.1 Introduction to organization and technology adopted ...................................................... 5

2.2 Introduction to Cloud Computing .................................................................................... 5

2.3 Critical Analysis ............................................................................................................... 6

2.3.1 Strategic and Operational Intent ............................................................................... 6

2.3.2 Internal and External Influences ............................................................................... 7

2.3.3 Acquisition Process ................................................................................................... 7

2.3.4 Financial Justification ............................................................................................... 8

2.4 Conclusions and Recommendations to identified Issues ................................................. 9

3.0 Bibliography ...................................................................................................................... 11

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Table of Figure

Figure 1.1 Technology Adoption Life Cycle ................................................................................................ 1

Figure 1.2 Crossing the Chasm ..................................................................................................................... 2

Figure 1.3 Bowling Alley Model .................................................................................................................. 3

Figure 2.1 Cloud Computing Model ............................................................................................................. 6

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1.0 Task 1

Selected technology: Smart Phone

Smartphone is a combination of cellular phone and Personal Digital Assistant (PDA). Thus it has

voice calling, SMS, MMS representing cellular phone and Internet browsing, email, networking

from PDA. “Simon” was the first Smartphone designed by IBM in 1992. Today, Samsung,

Apple and Huawei considered to be leaders in Smartphone market seems overridden the

computers. Therefore the Smartphone highly impacts on the modern business world.

1.1 Moore’s model contributed to Technology Adoption Life Cycle

According to Technology Adoption Life Cycle (TALC) some people will adapt to the

technology very soon while the rest take long time. Based on the likelihood of adoption they are

categorized as Innovators, Early Adopters, Early Majority, Late Majority and Laggards.

Figure 1.1 Technology Adoption Life Cycle

Source: (Rannala, 2012)

According to figure 1.1, Innovators acquire the product in the introductory level. When a reputed

brand launches a new product there are few buyers who want to be the first customer in that

particular market. As an example “Samsung Galaxy S” series is one of the famous Smartphone

series in the market. Before the company launches the product some customers have ordered the

product regardless of its price. They are known as Innovators in TALC.

Early Adopters are the next fastest respondents. Youths usually represent this category. They

take the risk and adapt to the innovation to be the first user among their society, although the

price is high.

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Next stage in Moore’s model is known as Chasm. Those who successfully cross the chasm using

various strategies are considered to be halfway succeeded in market. According to the Moore’s

model the innovation has to cross bowling alley, Tornado and Main Street levels within Early

and Late majority stages. Finally comes the Laggards stage and it is total assimilation level.

1.2 Critical Analysis of diffusion of innovation in the Sri Lankan context

Diffusion is the process in which an innovation is communicated through certain channels over

time among the members of a social system. It is a special type of communication, in that the

messages are concerned. (Rogers, 2003)

Rogers’s Diffusion of Innovation (DOI) divided into five steps. This process also explains

different stages of marketing. This includes Awareness, Interest, Evaluation, Trial and Adoption.

According to TALC, Innovators usually skips few steps of DOI and start from trial stage and

usually influenced by high income of people. Therefore, according to Sri Lankan economic

context least innovators can be expected. But given the high economic disparity between the

richest and poorest in Sri Lanka (SL) there is a sizable niche of Innovators who could afford to

buy even such expensive phone.

It takes comparatively longer time to introduce new phones to SL than developed countries.

However, with heavy use of internet newly launched phones spreads faster among the youths

thus some of them become Early Adopters. As an example once “Samsung Galaxy S4” released

with eye-tracking feature those who wanted to be the first users in their groups/society rushed to

buy. Accordingly, SL has a potential for early adopters market.

To cross the chasm companies use strategies such as price discounts; raffle gifts; sponsorships

and online competition to win the phone as a gift. These are the popular strategies in the Sri

Lankan market to promote the product in the target market.

As explained in figure 1.2, shifting the customer from Main Street of the previous product to

Early Majority of the new product is crossing the chasm of new product.

Figure 1.2 Crossing the Chasm

Source : (Vespa, 2007)

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The “Early Majority” attracts the phone after it crosses the chasm stage. As far as the product is

concerned this stage falls under “Bowling Alley”. Similar to the real bowling game, every

segment has a relationship with the neighboring segment. As shown in figure 1.3 the

accomplishment of bowling alley is a kind of niche market development.

Figure 1.3 Bowling Alley Model

Source : (Wiefels, 2002)

The Blackberry Smartphone market of SL is an example for this. Few years ago businessmen in

SL used to carry laptops to check their email when traveling. This trend was declined and around

80% of them now use Blackberry for this purpose. In the beginning of Blackberry era it was only

few businessmen but subsequently others too followed due to the prestige.

Successful passing of “Bowling Alley” will take the business moves in to “Tornado”. It is the

climax of the product and market share of the product is usually very high at this stage. Since

there are lots of alternatives being introduced, this could sometimes be an unfavorable time for a

product as well. When Apple's “iPhone 4” was in its climax, “Samsung Galaxy S” came in to

compete with it. It created a bad time for iPhone and their sales were dropped drastically.

“Samsung Galaxy S2” also launched successively and combination of this ruined the iPhone

market in Sri Lanka.

The user friendliness of “Samsung Galaxy S2” and innovative features “Samsung Galaxy S3”

created a big market share to Galaxy S series among locals. Now the Galaxy S2 is in “Main

Street” and Galaxy S3 is passing Tornado level. Main Street is the aftermarket development

period and the product is about to be obsolete. It is usually the best time to release the next

version of the product and push it to Tornado.

There is a level that every product drops out from the TALC. Laggards come after Late Majority

stage and it leads the product to come to the “Total Assimilation” level in Moore’s model.

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Although “Galaxy S” series is in the market, the “Samsung Galaxy S” which is known as i9000

is now in the Total assimilation level.

1.3 Disruptive nature and intention / actuality of using “Smart Phone”

According to Apple's market disruption survey (Jade, 2013) there are three types of disruption in

every country.

1. New market disruption – Targeting a new market segment when a new product brings in

to the market, and the existing product will not be served to them. As an example, when

iPhone 5 came in to the market, existing iPhone 4 user did not go for iPhone 5. Most of

the Sri Lankan Smartphone users use a phone for more than two years. Therefore iPhone

5 will be served to a different set of people and iPhone 4 will not be served to them.

2. Bringing a better product into an established market – Due to the competitiveness newer

products are being introduced frequently and the demand for the old model declines.

Demand for iPhone 5 will decrease when the next version arrives with more innovative

features. Therefore, everyone should face the actuality of market.

3. Addressing over-served customers with a low cost business model – Few years ago low

quality alternative phones imported from china. Those phones came with a similar

interface to the original phone and sold at very low price. It was one of the best examples

for low cost business model.

Apart from the disruptions on the market there were several disputes and conflict of opinion

among companies as well. As per the usual nature of Tornado, Apple Inc. and Samsung

Electronics Co. were engaged in a patent battle.

They found that Samsung infringed on a series of Apple’s patents on mobile devices, awarding

Apple more than $1 billion in damages. (Wingfield, 2012)

However, all the Smartphone users like to enjoy new features every day. So the actuality is all

the competitors do new innovation to sustain in the competitive market and to offer the best

product.

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2.0 Task 2

Selected technology: Cloud Computing

Selected Organization: hSenid Software International

2.1 Introduction to organization and technology adopted

hSenid is a leading Human Resource (HR) solution provider is SL founded in 1997. Their initial

HR application was a VisualBasic standalone application. This application contained a complete

database of Employee Information and Attendance Management. Payroll modules were added at

a later stage of the system. To make the system user friendly it was taken to web platform and

variety of modules were subsequently added. The web application was developed by ASP.NET

and sold at module basis. Once a client purchase the system hSenid will host the application on

the client’s database and application servers. Since the application will host at the client’s end,

the client has to bare both application cost and the server cost. To ease this difficulty hSenid has

gone for a hosted solution.

“People’s HR” is their latest cloud computing solution in HR management. Since this is a cloud

computing solution the total benefit goes to the client.

The solution is hired on a monthly rental basis which is calculated based on the number of users.

(hSenid Software International (Pvt) Ltd, 2013)

While using cloud based solution the client need not have to keep a separate technical staff to

maintain the application and the client can save the additional cost for hardware and

maintenance. Since the licenses for the database and software already purchased by the service

provider the client is free from such additional costs.

2.2 Introduction to Cloud Computing

Cloud computing is a model for enabling convenient, on-demand network access to a shared

pool of configurable computing resources (e.g., networks, servers, storage, applications, and

services) that can be rapidly provisioned and released with minimal management effort or

service provider interaction. (Mell & Grance, 2011)

Cloud Computing consist of three service models. There are Software as a Service (SaaS),

Platforms as a Service (PaaS) and Infrastructure as a Service (IaaS).

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Figure 2.1 Cloud Computing Model

Source : (FCCI, 2011)

SaaS model provides hosted applications to could users which are accessible through a web

browser. No other supportive software and hardware requirements such as servers, operating

systems, storage and software license are required by the user thus it is an eminent model for cost

cutting especially in local organizations. This could save a lot of money to companies. Usually

the SaaS applications have per month rentals.

PaaS provides a capability to develop, deploy, integrate and test application on the cloud

interface. As an example, the online hosting space could be purchased on yearly rental. PaaS is

the best solution to eliminate the server maintenance cost.

IaaS provides a cloud interface to storage, processing, networks and other fundamentals to the

consumers. The user will be able to develop, deploy and run the application on these virtual

machines, operating systems and storage.

2.3 Critical Analysis

2.3.1 Strategic and Operational Intent

hSenid had adopted several strategies to make their HR application popular. They have timely

changed the application according to operational trends and technology trends. Their strategic

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intent had always been to actively represent for the technology until cloud computing sustain in

the local market. Accordingly, hSenid had launched the first Cloud HR application in SL. The

strategic intent of providing a SaaS solution has attracted small to medium scale companies for a

total HR package which could reduce 80% of manual work of HR staff. As an example the

application facilitated to perform client specific algorithms, calculations, analysis and reports

through all 20 modules.

hSenid tested the performance of the cloud application on different environments and data

traffics. Therefore the operational intent of the application is high.

hSenid cloud HR application has different databases to each client and the backup schedule

works every hour. Three data centers that store data guaranty the data availability and security.

Hardware from the Client’s end has been integrated with the cloud HR application. As an

example the clock machine database of client, passes clock data to the attendance module of the

cloud application. The clock data download schedule usually run two times per day to pick the

employee’s in time and out time.

2.3.2 Internal and External Influences

hSenid was succeeded with their “HRM enterprise” application sometimes back, which was not a

cloud computing solution. But the software was purchased only by the large scale multinational

organizations such as Unilever, Nestle and Etisalat. The common influence of adaption is

usually generated by the value for money as perceived by the user.

Although the application has variety of useful features, it did not attract small and medium scale

organization, since the capital investment will be high. The type of external influence that was

experienced by hSenid stayed between these extremes.

On the other hand, if hSenid competitors adopt the latest technology before hSenid, the

competitors may get first mover advantage. As an example if a competitor succeeded with a

cloud HR application before hSenid, the existing/target market may shift away from hSenid.

Initiating a cloud solution requires a huge capital. But the maintenance cost is very low after the

solution is established. Therefore high return on investment (ROI) could be expected.

Understanding of this profit factor by company top management will lead to an internal pressure

to acquire the technology. The projects teams engage in a cloud project more enthusiastically

than the others, as they learn the latest technology and earn high profits. Therefore internal

influences lead to adopt for the new technology similar to external influences.

2.3.3 Acquisition Process

Cloud computing is not a highly penetrated technology in the local market yet. Therefore the

service providers have to adopt different marketing strategies. Initially it demands a change in

the thinking pattern of the people. Traditionally, anything is more secured when they are

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physically in own custody than having it in somewhere else. Therefore, companies used to keep

the application server, database servers and other mass storages with their custody for the data

security. This mentality prevents companies using a cloud computing solution. But hSenid

effectively convinced on the data security to their clients and marketed it well. Once overcome

the security barrier, company went through a three step process to increase the level of

acquisition.

1. Sign-up trial period

2. Effective follow-up

3. Sign the contract and do Customization

Since cloud computing is a new concept, it takes some time to realize benefits by the users.

Therefore they would feel more secured to use the application for a trial. The real look and feel

of application may convince the user to adopt subsequently.

The effective follow-up assures the user that the application comprehensively delivers all the

requirements of user. It also identifies the user requirements and the problems which user has in

the application as well as the barriers while adapting to the technology.

It is very important to come up with tailor made strategic plans to approach different type of

customers. Securing one customer should not be the end of acquisition process; rather it should

be the starting point of a “Bowling Alley”.

2.3.4 Financial Justification

Cloud computing users enjoy lot of facilities which ultimately reflects financial benefit for them.

Fully utilized hardware

The only hardware requirement for Cloud user is a computer and internet. For an example

“Suntel” is one of the hSenid clients who purchased the Cloud HR application. Every HR staff

member of Suntel already had been using a computer with internet even before purchasing of an

IT system. Therefore it did not add any additional cost to the company but facilitated the

company to maximize the utilization of existing resources such as hardware.

Lower power costs

Operating additional server for a new application will be adding power cost to the company.

Since the cloud application does not require additional hardware, the additional power cost could

be eliminated.

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Lower people costs

Since the server operation and control is done by the service provider’s end, there are no

additional IT staff required from the Client’s end.

Zero capital costs

When considering the previous example, Suntel purchased the application for one year

subscription. It is similar to staying at house for a yearly rental. There’s no capital investment to

the tenant.

Resilience without redundancy

There are several issues occur while using the own hardware that could be eliminated through

Cloud computing. Company need to buy hardware, in case of a failure and it reduces the system

up time as well. Buying new hardware will cost to the company and system down time may be

harmful the productivity.

2.4 Conclusions and Recommendations to identified Issues

Service providers should use high end servers to provide efficient service. As an example the

speed of Google is constant regardless of the number of users. Similarly every cloud service

provider should be capable of handling huge traffic at once.

The memory and storage should be increased to cater to the growing customer base. The cost of

the other hardware devices such as routers and swatches, software license renewal fees,

increasing internet and electricity bills cannot be added to the user’s subscription.

The server up time is one of the most important factor in Cloud computing. Therefore facing

power failures will be one of the major issues in the counties like SL.

Considering these issues it is recommended that service providers proactively should explore

ways and means to pass down the increasing costs to the Cloud users as it is not possible to

increase the subscription fee while the application is being used. It is vital to have necessary

terms and conditions to cover any logical factors in the service contracts.

Frequently change the business plans for new customer could be another solution to recover the

cost. Introduce more innovative features will attract more clients thus the subsequent costs could

be incorporated to new pricing.

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Service providers should explore overseas markets and secure business at premium prices. Since

the service is provided through internet, client’s geographical location has no bearing to the cost.

Since the power failures make huge impact on server plants and data centers, appropriate feasible

plans to deploy UPS and power generators especially in the SL context.

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3.0 Bibliography

FCCI, 2011. What are the Services?. [online] Available at: <http://info.apps.gov/content/what-

are-services > [Accessed 16 April 2013]

hSenid Software International (Pvt) Ltd, 2013. HR Application. [online] Available at:

<http://www.hsenid.com/business-areas/hr-applications/10-business-areas/64-enterprise >

[Accessed 13 April 2013]

Jade, K., 2013. Apple's market disruption savvy is bad news for Android. [online] Available at:

<http://forums.appleinsider.com/t/156839/editorial-apples-market-disruption-savvy-is-bad-news-

for-android > [Accessed 13 April 2013]

Mell, P. and Grance, T., 2011. The NIST Definition of Cloud Computing. [online] Available at:

<http://csrc.nist.gov/publications/nistpubs/800-145/SP800-145.pdf > [Accessed 17 April 2013]

Rannala, E., 2012. Back to The Chasm. [online] Available at: <http://www.muckerlab.com/back-

to-the-chasm/ > [Accessed 11 April 2013]

Rogers, E. M., 2003. Diffusion of Innovations. 5th ed. New York: Free Press.

Vespa, R., 2007. Outsourcing And “Crossing The Chasm”. [online] Available at:

<http://www.it-outsourcing.vsisoft.com/2007/09/using-outsourcing-to-cross-the-other-chasm/ >

[Accessed 11 April 2013]

Wiefels, P., 2002. The Chasm Companion. New York: Harper Collins.

Wingfield, N., 2012. Business Day Technology. [online] Available at:

<http://www.nytimes.com/2012/08/25/technology/jury-reaches-decision-in-apple-samsung-

patent-trial.html > [Accessed 12 April 2013]