Meaning And Definition Of Cloud Based Services

Published Date: 02 Nov 2017

This proposed research will evaluate on key factors influencing Indian SME firms’ adoption of Cloud based computing services. It will identify and confirm the key factors which are determinants of adoption of Cloud computing in Small to Medium Enterprise (SME) Indian organizations. The report through an extensive literature review will analyze the current situation, benefit and challenges of Cloud computing adoption for Indian SME.

The Theoretical basis for this study will be Diffusion of Innovation (DOI) theory, and Technology Organization and Environment (TOE). The selected theories support the need to explore the role and importance of analyzing key factors (facilitating and inhibiting factors) that influence the adoption of Cloud based services by Small to Medium Enterprise (SME) in India. Furthermore, the theories present a solid theoretical framework on which to base the proposed studies.

This Quantitative and Qualitative study will undertake an approach to investigate factors that can influence the organization in adopting successful Cloud based models (e.g., security, legal and trust). The target population for this study will be SME organizations in India using Cloud based computer services, regardless of the field of industry each firm is involved in. Online surveys will be conducted on Employees of randomly selected organizations.

Following on from this research, a roadmap can be developed that could be used to guide Indian SME organizations through the process of successfully adopting or migrating to Cloud computing.

Keywords: Cloud Computing, Small to Medium Enterprise (SME), adoption, Diffusion of Innovation (DOI), Technology Organization and Environment (TOE)

Table of Contents

1. Research Focus

The main aim of this Research is to identify determinant factors that influence the adoption of Cloud computing services in Indian SME organizations. Following on from this research, a roadmap can be developed that could be used to guide Indian SME organizations through the process of successfully adopting or migrating to Cloud computing services. The roadmap could serve as a guide to the different strategic problems that can arise when evaluating, designing and migration to Cloud computing. The road map could also be used by technical managers as well as management in general by combining strategic factors from a variety of disciplines (e.g., security, legal, organizational management and trust).

Without a doubt, the emergence of Cloud computing in recent years has sparked an interest from a range of key stakeholders, business organizations, institutions and even government bodies. This interest is fuelled by the promised new economic model of Cloud computing which is a paradigm shift from heavily investing physical IT infrastructure for IT resources that are internally managed and owned to pay per use for IT infrastructure and services provided by a service supplier. Cloud computing promises scalability and on-demand provisioning of IT infrastructure and software as a service Buyya and Bubendorfer (2010). However, although the term Cloud computing is fairly new Luis (2008), the concept is not new. Cloud computing borrows terms and ideas from different computing paradigms such as utility computing, grid computing, and service oriented architecture (Buyya 2008, Wang 2008, Geelan 2009).

India is emerging at a rapid pace in the information technology field thus showing high potential for the development of cloud computing services. Cloud computing services have great opportunities in the Indian market because of the high number of SMEs (Small and Medium Enterprises) is approximately 35 million and these small enterprises would like to reliable, easy to use and scalable application that assists these enterprises to develop and extend their business sector. Small and Medium Enterprises provide a way for entering new global markets and finding innovations in raising their economic level.   According to Rao and Popli (2009), In India, 95% of the industrial units are Small and Medium Enterprises which provide about 50% of the total industrial output. Therefore, small and medium enterprises (SMEs) considered as the backbone of the Indian economy.  SMEs business has adequate IT budgets in order to buy its bandwidth (resources) and pay based on their need and usage. This research examines about the factors that influence Indian SME (Small and Medium Enterprise) in adopting the cloud based services.

1.2 Purpose/ Significance of the Study

This research discusses about the adoption of cloud computing in small and medium enterprises (SMEs) and the factors that influences small and medium enterprises in India. Cloud computing has been quickly placed in the top position of the list of considerations particularly in the IT strategies which was used in several organizations. But cloud computing adoption includes a lot of unanswered requirements which creates a delay in the complete adoption of this model. Although, many organizations realized the advantages of cloud computing and cloud service providers are also highly increased Li, Yang et al. (2011) mentioned that the task of selecting cloud service providers is really complicated in cloud computing. Actually, the choice is not limited to their service but also the choice of selection is associated with good performance at the level of minimal cost. It is also influenced by various considerations like privacy, trust and security issues, and so on.

A proper cloud computing service usually corresponds to the reduction of trade-offs between these issues whereas satisfying many other requirements. But, trade-off decisions entirely based on the organization’s objectives or goals, type and scope of work. Cloud computing is a commercial infrastructure model that provides to eradicate the requirements for organizations in order to manage in-house high-cost hardware, software, and other network infrastructures. Apart from these, it also decreases or removes the high-cost of recruiting technical professionals in order to maintain these infrastructures and functioning in-house IT solutions. Cloud computing has become more rapid in computing model and enable different kinds of services to be offered especially for interested customers at large profits and cheap rate. Cloud computing is the technology that enables functionality of an IT platform, IT product or an IT infrastructure to be exposed as services to the users of these services and they can use this service and they may pay for their use (Pay per Use).

Small and Medium size Enterprises (SME) are the organization or firms whose turnover may fall under the certain limits. Cruz-Cunha, Hauc et al. (2010) mentioned that Small and Medium size Enterprises are playing a critical and important role in the developing and competitive world. Knight (2000) stated that it is possible to easily implement SME in the firms or organizations and it has capacity to allow the organization or firm to meet all the requirements that needed for the business in low cost, time and effort. SME (Small and Medium size Enterprises) can easily grow and survive in the global market and if their characteristics are flexible, innovative, customer focused, both reactive and proactive in the business strategies of the organization.

The large businesses are changing the information technology environment to another new structure and in fact, the main witness to it is the Small and Medium size Enterprises Bondre (2004). From past few years, the Small and Medium size Enterprises (SME) have realized about the cloud computing and their practices and financial benefits to the organization. With advent of cloud computing technologies, organizations can achieve their core activities by outsourcing the entire works and technology that related to support the organization processes. The cloud computing has been adopted by many organizations which have resulted in low costs for operation without any losing focus towards the customer needs. These, reasons make small and medium enterprises to concentrate more on adopting cloud computing services in their organization.

1.3 Problem statement

At present, there is a lack of empirical research in the area of Cloud Computing adoption in Indian SME settings. This research will also facilitate the IS research community to empirically check and validate the propositions created in our research. A better understanding of the small business enterprise inhabiting and facilitating factors to adopt Cloud Computing will help SME to guide adoption of this emerging technology for speedy adoption translating into increased entrepreneurial startups and stimulating small business growth.

Cloud computing is one of the latest technologies which has evolved in the recent times and it has created both fear and great expectation to what consequences this technologies might bring to the industries. Cloud computing is a new trend and advanced technology in IT which offers various advantages but unfortunately cloud services are not widely adopted. Small and Medium Enterprise and start-up firms adopt Clouds and this is because it provides access to best available information technology resources in low capital expenditure. (Kim 2009)mentioned that technological adoption issues in the large scale organization with IT enterprise are totally different from the small scale organizations. Several significant circumstances exist in the firms while adopting the Cloud Computing. Some of the challenges are multi-dimensional as they are technical, financial, organizational, and operational in nature (McKinsey 2009).

According to Damanpour and Schneider (2006)the adoption of new technologies may create change within the organization or firms with an intention to improve or maintain its performance level. The adoption of Clouds in the organization brings multiple changes in organizational capabilities, employees and IT practices. Balaji and Ranganathan (2007) mentioned that organisational capabilities are the process which is used to take benefits from external and internal resources. These processes are most important for adopting any technologies in the organization and so the organization also requires technological capabilities in order to use or design new technology (Chen 2006).

Leavitt (2009) mentioned that adoption of Clouds in organization may cause lot of barriers such as lack of standards, latency, reliability, control issues, vendor lock-in, and clouds’ performance issues. Apart from these, Kim (2009) user considers some concerns of cloud computing as security, support, privacy issues, availability (outage), and interoperability. In addition to these, Xin and Levina (2008) stated that there are several challenges in adopting cloud computing and they are organizational influence, demand uncertainty for the (software) functionality, application integration, technological uncertainty and strategic essential of the IT application.

Apart from these, Heinle and Strebel (2010) mentioned that presence or absence of innovation champions, legal compliance within the IT departments, fear of organisational change and difficulties in cost benefit regarding evaluation of Cloud are the major issues in the Cloud vendor selection. (Khajeh-Hosseini 2010) stated that, apart from technological issues, there are many socio-technical factor issues such as limitation of business models, control, confidentiality, impact on work practice, and cost may provide various changes while adopting the clouds.

According to Misra (2010), lack of understanding about the cloud computing is the major issue while adopting cloud computing in small and medium enterprise (SME). These issues and challenges are the evidence which makes cloud computing adoption complicated. The adopting cloud computing will produce an impact on security, compliance, accounting, project management, the authority of the IT department, system support, IT procurement, work of end users, IT policies and practices, and IT provisioning (Greengard 2010, Khajeh-Hosseini 2010). So, it is essential to identify practices and capabilities which will produce an effect within the Small and Medium Enterprises before adopting the cloud computing.

The Cloud has been seen as good for on demand services and potential market opportunities. A 2012 IDC report according to Draft (1986), (Kar 2013) shows that worldwide revenue from IT Cloud services exceeded $21.5 billion in 2010 and will grasp $95 billion by 2015, representing a compound annual development rate (CADR) of 27.6%. Early adopters of Cloud Computing services, such as SME intuitively embrace the opportunity to rely on massively scalable IT infrastructure from providers like Amazon, Google, and Microsoft. However, there is no systematic, dedicated approach to identify the benefit from Cloud Computing that could serve as a guideline for SME to adopt Cloud based model.

Over the past few years, there had been a steady growth of Cloud Computing services adoption in India. Although an increase in productivity and cost savings are the key drivers for Cloud Computing services adoption by organizations, there are still some factors that deter Cloud Computing services adoption by Indian SME firms. Some of the factors that affect adoption of Cloud Computing services in India, ranges from IT infrastructure change, legal and compliance issue, Security issue and power availability. As in most of the part in country power outages are quite frequent and organization needs to rely on private backup power to reduce the downtime.

Despite its speedy growth, Cloud Computing is expected to account for about 5 percent of total worldwide IT spending in 2015 McAfee (2011), because of numerous obstacles it faces in Cloud adoption like business continuity, service availability, vendor lock-in, and data confidentiality issue (Armbrust 2009). For each of the studies, it is necessary to study what factors influence the adoption of Cloud Computing and how those factors are interrelated. To date, most research on Cloud Computing adoption has targeted organizational usersZhang (2010), (Low, Chen et al. 2011, Sultan 2011) , but little is understood concerning key factors for adoption of Cloud Computing for Indian based SMEs.

The key motivation for conducting this research is to determine what are factors, and how are these factors influencing Indian SME firms' adoption of Cloud based computing services.

1.4 Aim of the study

The aim of this study is to explore the factors that influence Indian SME (Small and Medium Enterprise) in adopting the cloud based services.

1.5 Objectives

To identify the challenges encountered by Indian SMEs’ in adapting cloud based services

To identify the key organizational practices and capabilities that facilitate successful adoption of Cloud Computing

To investigate how small and medium size enterprises manage cloud computing services within the organization

To explore the benefits that small and medium size enterprises obtain by adopting cloud based services

2. Research Setting (Literature Review)

This section provides the theoretical background associated with specific areas of research and literature on the current state of Knowledge on Cloud computing.

Recently there has been significant research in the area of Cloud computing. This area is quite new, and most of the literature was only published after 2005. Some of the more significant research is discussed below. Small and Medium Enterprises (SME) play a pivotal role in the development of the country.

Small to Medium Enterprise (SME Definition)

In both developing and developed countries, SME are necessary for the view of employment generations, which is vital in countries like India with a huge backlog of unemployment within the urban sections of the economy. There is no standard definition for Small to Medium Enterprise (SME). There are many different definitions based on each country. Some country, such as USA defines SME based on the number of people employed, Australian defines SME as Australian based company with a turnover of less than $100 million (Google search, no academic search here).

In India, SME definition is based not on a number of workers but on quantity of investment. Most Indian SME are labor-intensive and use more than the prescribed stuff. SME definition is based on annual turnover and cost of equipment. A small service based enterprise are considered Small enterprise having investment in equipment between 25000 to .5 million USD, & Medium enterprise having investment in equipment between $ 0.5 million to $ 1.5 million. (Anoymous)

According to Zaidi (2013) the "SME sector of India is considered as the backbone of the economy contributing to 45% of the industrial output, 40% of India’s exports, employing 60 million people, creating around 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. With approximately 30 million SME in India, 12 million people are expected to join the workforce in next 3 years and the sector growing at a rate of 8% per year". SMEs have the potential and momentum to be innovative, competitive in both domestic and international levels. SME create new jobs as well bring stability in an economy.

The Indian Government has realized the importance as well as the potential these SME can unfold and thus has been quite proactive in protection and nurturing of SME. The Government of India is taking different measures so as to increase SME competitiveness in the international market. There are several factors that have contributed towards the growth of Indian SME. A few of these include, funding of SME by local and overseas investors, the new technology that is used in the market is assisting SME and adding considerable value to their business. Various trade directories and trade portals also help facilitate trade between buyer and supplier and thus reducing the barrier to trade (Zaidi 2013).

2.2 Meaning and Definition of Cloud Based Services

We start our report with a general description of Cloud Computing and its exponential growth in the last few years, as a big revolution from proprietor based software model to subscription based. In this research, the following definition of cloud computing will be used. As per as National Institute of Standards and Technology (NIST) defines Cloud computing as: "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. This Cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models." (Mell, 2009).

Cloud service models are classified based on the computing requirements of the clients and represent different layers of the cloud computing architecture: Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS). Also, cloud deployment models are classified according to type of exclusive and non-exclusive method of providing cloud services to the clients as follows: public cloud, private cloud, hybrid cloud, and community clouds(Mell 2009).

2.2.1 Characteristics of cloud based services

Five essential characteristics are:

On-demand self service

Broad Network access

Rapid Elasticity

Resource Pooling and

Measured Service

The five characteristics and their description are explained in detail in the following table

CHARACTERISTICS

DESCRIPTION

On-demand self service

The user can unilaterally provision computing capabilities such as network storage and server time when required automatically without having any human interactions with every service provider.

Broad network access

Computing capabilities are present in the network and accessed with the help of standard mechanisms that provide their usage by heterogeneous thick or thin client platforms. Eg: Workstations, cell phones, laptops and tablets, etc.

Resource Pooling

The provider’s computing resources are entirely pooled to serve more than two or many customers by suing a multi-tenant model with different physical and virtual resources dynamically. Generally, the user has no knowledge or control about the appropriate location for the provided computing resources but also specify a specific location at a high level of abstraction. Eg: Data Centre, state or country.

Rapid Elasticity

Computing capabilities are elastically provisioned and released automatically in many cases and also depends upon inward and outward commensurate in demand. At the customer’s point of view, the available capabilities are useful for provisioning to be unlimited and suitable for any kind of quantity and at any period of time.

Measured service

Automatically, cloud systems optimize and regulate resources at a certain level of abstraction based on the kind of service such as bandwidth, processing, storage and active user accounts. The usage of resources is controlled, monitored, and finally reported. It provides transparency for the customer and the provider of the used services.

Table: Five essential characteristics of cloud computing (Ref)

2.2.2 Deployment models in cloud computing

The cloud computing consists of four kinds of deployment models such as private, public, community and hybrid cloud.

Private cloud: The infrastructure of cloud is provisioned for specifically used by a single organization containing multiple customers in the business environment. It may be owned, managed and functioned by an organization or third party or any other combination of itself. Eg: Business units.

Community cloud: The cloud infrastructure is provisioned for special use of by a certain community of consumers from the organizations. It can also be owned, managed and functioned by one or many organizations within the community or by a third party or some other combinations. Eg: Policy and mission.

Public cloud: An infrastructure of cloud is provisioned and openly used by the public. It may be owned, managed and functioned by an academic, business, government organization or any combination of itself. Eg: Public.

Hybrid cloud: The cloud infrastructure is a combination of two or several distinct cloud infrastructures such as private, public or community. It contains unique or identical entities but also joined together by a standardized technology including data and application portability. Eg: cloud bursting used for load balancing among clouds.

This model is also termed as demand or utility computing or recently Cloud computing, where user access service regardless of where it is hosted. There is no one specific definition of Cloud computing, but has been described as a model where users can utilize resources through the internet.

Global businesses and its major changes make a lot of changes in the consumer behavior and also it generates significant growth year by year. Many organizations expect to grow in their economic environments due the global competition. In order to achieve their expectations, organizations are starting to look for new markets and also towards the consumer behavior. Consumer behavior is changing day by day according to their basic needs and capabilities in order to compete with the global change. The cloud expands its collection of services which enables the customers to connect from anytime and from anywhere in order to learn, work, play and live. These connected services provides consumers better quality and easier control in the cloud based services.

The following table illustrates the cloud features to the corporate consumers.

Cloud Features

Cloud Benefits to consumers

Advanced Sharing

Allows consumers to share information and online files with friends and also with others

Automatic Backup

Unified Data Management and

Automatic Data Synchronization

The cloud allows consumers to store / backup their information on cloud. Apart from these, the cloud allows consumers to access view and manage information at any time and also anywhere from an Internet enabled device. Synchronization and backup will happen automatically.

One Time Payment

Immediate Access and

Single Menu Access

The cloud allows customers to pay once and allows using the resources based on their requirements; single interface from the multiple sources.

Seamless Switching and

Any Device / Location

The cloud allows the services to switch seamlessly from one device to other devices. The cloud allows consumers to use or access the resources at any location and also from any network.

Automatic Add

Auto Fix and Remote Monitor

The cloud allows consumers to click or call in order to enable the new capabilities immediately. Apart from these, cloud monitors and fixes the problems that occur remotely and automatically.

Table: Cloud Features to the Corporate Consumers (Ref Mell 2010)

High speed networks have grown in the last decades along with an increased usage of thousands of e-commerce transactions with many Web queries a day. This demand can be effectively handled by large-scale data centers that could take care of the servers along with the related infrastructure like storage, cooling and network systems. Some of the internet companies like Amazon, Yahoo and eBay have huge data centers round the world (Watson 2010)

There is a rapid commercialization of these developments in the field of Cloud computing in which the computing is delivered in the form of a utility on a pay-as-you-go basis. Many firms made a huge amount of capital invested and a lot of time put in the implementation and maintenance of computational resources.

The figure below shows the usage of the Cloud computing usage across the companies worldwide.

C:\Users\Admin\Desktop\1.png

Figure: The usage of Cloud Computing across the Companies Worldwide

Source: Pham (2011)

Cloud computing takes into account many technologies like Virtualization, pay as you go, utility computing, no capital investment, provisioning on demand, scalability, elasticity, and IT outsourcing Rodrigues (2012). One can see a growing popularity of Cloud computing which has led to a proposal defining its characteristics. The recent development of Cloud Computing provides a convincing opportunity for organizations to outsource their Information and Communications Technology (ICT).

According to Buyya and Bubendorfer (2010) the vision of computing utilities based on service and provisioning model anticipated and the massive transformation of the entire computing industry in the 21st century, whereas computing services will be readily available on demand, like other utilities such as electricity and water.

Most consumers, whether they are aware of it or not, are already heavy users of Cloud-enabled services (e.g., email, social media, online gaming, mobile applications). The business community has begun to embrace Cloud computing as a viable option to reduce costs and to improve IT and business agility (Tomlinson 2011).

The Cloud will also additionally free us from our desktops and laptops with a new generation of intelligent phones and broadband-enabled notebooks and tablets. The number of digital data in the world is doubling exponentially every year; the society will lean increasingly on Cloud computing to contextualise in fast moving personal, entertainment or business experience. Cloud computing is reinventing commerce from push to pull models. (Sean 2011)

As per Buyya (2011), Cloud computing provides dynamic provisioning of computing service from data centers that employ virtual machine technology for consolidation and environment isolation purposes. Cloud computing is a technology which has been enabling outsourcing of the IT needs like computation, storage and software with ERP, and a large Internet. This service-oriented computing brings in an ease of management process which needs software upgrades and bug fixes.

According to Kim (2009), there is a convergence of two major trends in Information technology: (1) the efficiency of modern computers utilizing scalable IT infrastructure hardware and software; (2) business agility where IT can be used as a competitive tool through parallel batch processing, rapid deployment, and the use of computer intensive mobile interactive applications that respond in real time to user requirements and business analytics.

Cloud computing is portrayed primarily by its flexible nature, which stands in stark contrast to the inelasticity of physical IT infrastructure. This flexibility is the source of many of the possible strengths and weaknesses of Cloud computing. From the perspective of the Cloud’s architecture, flexibility can be seen in three main areas: (1) the possibly dispersed and wide-ranging geographical location of data servers and storage aided by Virtualization and remote access; (2) the rapid flexibility and scalability enabled by the on-demand nature of Cloud computing resources; and (3) the broad resource pooling in large-scale data centers, which allows for greater economies of scale and more efficient targeting of resources. So while the technological basis for Cloud computing is not new, the capability of the technology is. The features of Cloud computing are new aspects and opportunities of a current technology (Nathalie 2009).

Cloud computing has been seen to be scalable and cost-effective in the running of small and medium enterprise (SME) in India. According to a study done by Richard (2011), it is predicted that in 2013 more than half of SME will use Cloud computing services. Cloud computing services offer both time and cost saving and it suits SME’s IT service needs. SME could use Cloud computing , as Software as a service, as worldwide experience shown its convenient for SME as there are no maintenance cost and system integration problems. Government business and the general public will benefit from Cloud models.

An SME can take advantage of Cloud computing to provide Cloud services that create value for customers by building on top of existing services or applications. The Internet will make it easier for consumers to compare offerings online, which increases price pressures on providers. Also, smaller organizations would not have to deal with legacy systems and issues to move to the Cloud (Carr 2005).

High speed networks have grown in the last few decades. In addition, there are thousands of e-commerce transactions with many Web queries daily. This demand can be effectively handled by large-scale data centers that take care of servers with related infrastructure such as storage, cooling, and network systems. Some Internet companies such as Amazon, Yahoo and eBay have huge data centers around the world (Watson 2010).

It appears that the development of the Cloud is bringing a major shift in the business sector. No longer do SME need to raise thousands of dollars to buy servers and invest in the technical infrastructure required to start their business. As Cloud computing becomes available to anybody having an Internet connection, any entrepreneurs with an idea can reach a global audience with service available (Chien 2010). More and more services would be available online, such as HR service, Customer Resource Management, Enterprise Resource Planning and other applications. Cloud service would be used as a tenancy model which potentially will lead to lower prices for products and services as well as the convenience to customers in using the service they require. As this tenancy model continues to evolve, it will lead to lower costs. The Cloud will lower costs per use of whatever IT asset a company uses not just storage but also bandwidth or computation. (Buyya 2008)

According to Khalid (2011) we are going to see one of the biggest change in the area and the economy in this century. The Cloud will usher in a seismic shift in all walks of life like environment, commerce, health industry, Business processes, education, and business models of SME. The Cloud is all about the power of network, open access, scalability and rapid delivery of service which was unheard of even a few years back. Ultimately, the Cloud computing will bring revolution by converting web service like any other utility service such as electricity, water, and it will become the platform of the web as the telephone became a platform for voice communication

Cloud computing is a technology which has been enabling outsourcing of IT needs like computation, storage and software with ERP, and a large Internet. This service-oriented computing brings in an ease of management process which requires software upgrades and bug fixes. There are faster application development and testing. Small IT companies generally are not in a position to afford testing as it requires large investments in infrastructure(Martin 2009) The Cloud offers the economics of scale in cases where thousands of users are sharing a common facility, thus reducing the cost per user and server utilization. (Martin 2009)

Loss of governance by using Cloud services the client passes control to the supplier. The terms of use policies can jointly contribute as can be exemplified by Google App engine terms of use which require the user to "agree that Google has no responsibility or liability for deletion or failure to store any Content and different communications maintained or transmitted through the use of the service"Google (2013). Amazon is another example where their terms of use for his or her Amazon Web Services, makes it clear that they need no liability for any unauthorized access, use, corruption, deletion among other thing to the purchasers data or applications Amazon (2013). This poses challenges to customers on how to confirm the security of their information and applications which could be hosted within the Cloud by a third party.

In short Cloud computing has the power to perform all the tasks on the web without having to put in any infrastructure cost such as hardware or software. Cost saving is even for saving and backup of information. Some of the most important benefits SME can avail of it is by a reduction in operating costs, enhanced information storage, increased mobility, easy scalability and better information security.

3. Theoretical framework

This research will theorize that the innovation, alongside technologies, environment and organization issues are the main driver in adopting Cloud based model by SME. Therefore, this report will endeavor to holistically think and examine virtualization inside the context of organizational, technology based adoption initiatives. The integrated framework this report will discuss is hypothesized based employing two well instituted IS theories: (a) Technology Organization and Environment, (b) Diffusion of innovation theory, A brief description of these two theories is given below.

The theoretical implications of this research will try to justify the value of Cloud based adoption. Carr (2003) and Thatcher’s (2007) research on ''IT value paradox'' had questioned the value of Information technology of modern organizations. Studies had theorized that IT would soon be like water, electricity, or other utility and therefore its value will diminish (Carr 2003, Thatcher 2007).

In essence, this research will make contributions to the literature on Cloud Computing adoption. It will suggest that the degree to those organizations considering initiating Cloud Computing approaches are driven by concepts derived from technological, organizational, and environmental contexts. This research highlights the importance of incorporating process virtualization into our understanding of Cloud Computing in business and technological processes.

3.1 Diffusion of innovation theory

This research uses Diffusion of Innovation (DOI) theory developed by Roger (2005) because it is the theoretical foundation for most technology adoption analysis such as Cooper (1990), (Tornatzky 1990) among others, relies on finding out the process of technology diffusion, and also the factors influencing technology adoption choices. Technology adoption is defined by (Rogers 2005) as ‘‘the process through that which an organization defines adoption or assimilation of technology through an innovation". DOI theory, according to Pelin (2010), provides explanations of how new changes are adopted, and how adoption decisions are affected by perceptions of the competitive environment.

The term diffusion is borrowed from natural science and is described as the phenomena where gases or liquid particles wander randomly from one concentration gradient to another to create an evened out equilibrium Askeland (2010). The concept of diffusion of innovations considers how, why, and when innovations make its way through communication channels in society and becomes accepted.

Diffusion as a social concept was coined and defined by Everett Rogers in 1968. The principles were not new, however it was Rogers who gave the concept some real academic weight in his book Diffusion of innovations where he synthesized the work of 580 diffusion studies. Rogers’s book revolves around four key components that greatly influence the spread of innovations in society. These elements are the innovation itself, communication channels, time and social systems Rogers (2005). Although in this report, the factors influencing the determination of the readiness of implementing Cloud Computing initiatives through the virtualization process are modelled and analysed through the integration of the TOE and DOI theory considers a technological change that will help SME in the decision to adopt Cloud Computing service via virtualization.

DOI theory may be a powerful descriptive tool but is less robust in its explanatory power, but useful in predicting outcomes and providing direction on how to accelerate the speed of adoption (Zhu 2006)

In order to handle a potential change among the technology, it is important to create awareness of how and when the innovation is spread through society. To what degree a technology is understood may be crucial for its future market potential. For Cloud Computing adoption of SME it is important to understand the technology adoption facilitation factors.

This report selected DOI theory as a foundation for the research question: Identifying the process of technology diffusion and also the factors influencing technological adoption choices.

3.2 Technology Organization Environment (TOE)

Various factors have an effect on the Cloud Computing adoption among previous researchers' findings (Newell 2001, ALi Khajeh-Hosseini 2011, Sultan 2011, Venters 2012). All these factors can be classified into technological, organizational, or environmental contexts. Thus, it is reasonable to use the technology organization environment (TOE) framework to explore the Cloud Computing adoption issue.

At the firm level, theories such as diffusion of innovation Rogers (2005) are widely applied to study how innovations are adopted and adopted. Still, this does not mean that the technological characteristics of the innovation don't seem to be of key importance to the Cloud Computing. This research will therefore use the Technology, organization, and Environment (TOE) framework place forwarded by Depietro (1990) for a range of reasons. First of all, despite the similarity in their ideas, Oliveira (2011) suggest that as the TOE framework includes the environmental context, that is not included in the Diffusion of Innovation theory, the former is also better in explaining intra-firm innovation adoption. From studies of (Chong 2009, Oliveira 2011) point of view, the reliable empirical support and solid theoretical basis are the main advantages of the TOE framework. Secondly, review of previous studies (e.g. Found that, usually, studies on ICT adoption, compared to Rogers' (1995) innovation diffusion model, the TOE framework (or those TOE-like frameworks) overcomes the domination of the technical perspective and provides a useful analytical tool to differentiate between the inherent qualities of an innovation and the motivations, capabilities, and broader environmental context of the adopting organization.

According to this theory, the organizational adoption and implementation of technological innovations is influenced by three parts. First the technological context refers to characteristics of the technologies which are available for possible adoption by the organization, and the current state of technology in the organization. This current state of technology will be expressed in both materials (e.g., equipment owned by the organization) and immaterial (e.g., strategies currently in use). Second, the organizational context consists of the organizational structure, the presence of innovation enabling processes such as informal communication, and strategic planning of top management. Thirdly the environmental context combines elements like market environment and competition, the external support offered for adopting new technologies and government rules. These three components are posited to interact with each other and they influence technology adoption in organizations (Depietro 1990).

C:\Users\Admin\Desktop\5.png

Figure : Schematic diagram of Technology Organization Environment Framework (Depietro 1990)

This research shares certain theoretical backgrounds that belong to the domain of Strategic Information System (IS) analysis and development. According to the strategic IS literature, IT-dependent strategic initiatives comprise identifiable competitive moves that rely on the utilization of IT to be enacted, and are designed to steer to sustained improvements in an exceedingly firm's competitive position Piccoli (2005). Examples of such initiatives include ERP-enabled business integration, client relationship management, and e-business among others. In this research Cloud based strategic initiative is rooted in a very perspective of improving economic conditions of SME Brandenburger (1996). The implementation of Cloud Computing initiatives as IT-dependent strategic initiative to highlight the fact that it may not be feasibly executed without the enabling the infrastructure technology foundation.

Although the TOE theory would be primarily used to review the adoption of Cloud Computing by Indian SME, it will not provide concrete models describing the factors that influence the organizational adoption; rather it will provide a taxonomy for classifying adoption factors in their respective context. The TOE theory has been used by a large variety of studies to analyze the adoption of, for example, Electronic Knowledge Interchange (EDI) Kuan (2001), open systems Chau (1997), and e-business Zhu (2005). The main contribution of the TOE is that it encourages the researcher to inquire about the broader context into condition in which innovation takes place.

4. Research Question

There is growing recognition that Cloud Computing adoption is essential but it is more complex than originally anticipated. The research question will attempt to analyze some of the aspects of SME which can either significantly enable or impair its ability to reap the reward of Cloud adoption. The organization has started to recognize that Cloud adoption should address security issues such as application and data safety and reliability and issues related to intellectual property. Cloud adapters also need to prepare for the inevitable complexity that will arise from legal and regulatory environment.

Notable benefits of Cloud Computing models are relatively easy deployment and price savings/payments. Cloud Computing services are designed for quick and easy deployment. By adopting Cloud based architectures, organizations can decrease prices connected to employees, infrastructure, maintenance and management. On demand services are aligned with utility style. The future of Computing lies in Cloud Computing, whose major goal is reducing the cost of IT services while increasing processing throughput, reliability, availability, and flexibility and decreasing processing time (Hayes, 2008). Owing to the shortage of exploratory studies that specify the adoption of Cloud Computing in Indian SME context, this research is to perceive the method of adoption of the technology and to identify facilitating and inhibiting factors affecting the Cloud Computing adoption decision with the Indian SME firms.

While focusing on the research question it would be reviewed iteratively and the question would be further divided into two parts for research purposes. The main research question is:

RQ what are the key factors facilitating and inhibiting Indian SME firms' decision to adopt Cloud based Computing services?

This research question is subdivided into two sub questions as follows.

RQ1 - What are the facilitating factors for Indian SME in adopting Cloud based services?

Regarding RQ1, there is a rapid commercialization of developments in the field of Cloud Computing in which Computing is delivered in the form of a utility on a pay-as-you-go basis. Many firms have invested a lot of time and a huge amount of capital towards the implementation and maintenance of computational resources (Watson 2011). From a client's point of view Nair (2010), the Cloud Computing service delivery model brings capital expenditure reduction, increased IT agility, faster come on investment, removal of barriers to entry and a more strong and resilient infrastructure, leading to better business continuity.

In the particular case of SME, access to Cloud services is becoming an important component for their competitiveness and effectiveness. Conversely, lack of access would imply that the SME sector will not achieve its full potential. In general, Cloud Computing services give an open business platform for everybody, everywhere, for each country, for every company, for every organization and for each business it provide opportunities for collaboration between business partners, by enabling access to information that are time and distance independent.

SME generally do not have a massive ICT department or budget, so they do not have access to sophisticated IT architectures and supporting tools. Cloud Computing seems to be the answer to several of their business necessities, whereas at the same time it avoids IT maintenance cost. Cloud Computing allows them to enhance IT support for their business activities and keep pace with new technologies (Dimitrakos 2010).

RQ2 - What are the inhibiting factors for Indian SME in adopting Cloud based services?

The second research question needs to consider some of the inhibiting factors that affect SME firms in India for adopting the Cloud based service. Although Cloud Computing has been discussed as a new technology development which will provide many blessings, both strategic and operational, to its adopters, the Cloud Computing adoption is not growing as fast as expected (Banerjee 2009, Buyya 2011).

Understanding Cloud Computing risks and advantages is crucial. Some of the inhibiting factors for adoption of Cloud Computing are security, loss of control, availability and legislative aspects. Oke (2007) Security risks refer to the exposure to an organization’s data and services by outside entities. Loss of management is the lack to possess exclusive control of information and services outside the organization. Availability underlines the readiness of services and information. It is essentially affected by quality of affiliation between the access purpose and therefore the service location. Internet connectivity is presently significantly less reliable than organizational intranets. Legislative aspects relate to liabilities and adequate legal protection of users.

Business leaders around the world are discovering that Cloud Computing is more expensive than imagined at the time they decided to adopt the technology, according to KPMG survey report. The KPMG survey, "The Cloud takes shape", polled more than 650 IT and business leaders across 16 major global markets and found that almost 33% of executives say the cost of implementation of Cloud Computing have been greater than expected and a similar number noted significant implementation challenges (Hill 2013, Kar 2013).

The main reason for companies to move to Cloud were, it facilitates the transformation of their existing business process, and moving their services to the Cloud would make it easier to enter two new markets. But according to KPMP Survey most of the responded said that the cost associated with moving data internally to Cloud was higher than they expected. More changes in their business models than they realized while redesigning of IT Infrastructure to the smoother and secure Cloud.

5. Research methodology:

This research main objective is to study the cloud computing adoption by SMEs in the India. More specifically, this research aims to examine which factors and to what extent every of these factors influence the cloud adoption call creating by SMEs. Consequently, ontologically the research will consider the SMEs as the unit of research. Epistemologically for this exploratory work, a qualitative study was deemed appropriate because it enables deeper analysis of the underlying factors. . With the purpose of exploring the impact of DOI and TOE factors on SME adoption of cloud computing services, initial empirical work using interviews as the information collection technique is deemed appropriate, as they will offer the required flexibility needed. Creswell (2003) recommend that using semi-structured interviews within the context of a qualitative approach might facilitate exploring all the factors and the communication of all stakeholders at intervals an ICT innovation adoption process.

The research methodology will include questionnaires and a survey. The target population for this study is all SME from a range of industries, that are trying to adopt all or part of their IT functions from the Cloud service provider.

5.1 Primary Research Tools:

The use of a web-based survey tool is most popular as responses are received quicker than with traditional mail methods. While mitigating data entry errors encountered in recording hardcopy survey results. The use of an on-line survey tool is also lower in cost than the traditional mail ways as a result of printing, mailing, and handling expenses are mitigated. Additionally, the utilization of a web-based survey tool benefited the participant by providing participant anonymity whereas capturing necessary informed consent, eliminating manual response, and assimilating with present experiences through electronic communication. (Creswell 2003) states that post positivism thinking challenged positivism, a previous traditional viewpoint about the absolute truth of information. The post positivist assumptions are based on the deterministic philosophy that emphasizes examining relationships between objects studied Stacey (2007). This can be predominately used for quantitative research, commonly known as the scientific technique or the empirical science. Empirical research has been classified as deductive reasoning. Deductive reasoning has been used as a lens for testing hypotheses derived from research questions (Stacey 2007). Alternatively, qualitative strategies are recognized as more exploratory and inductive, formulating general rules primarily based on particular cases (Creswell 2003).

Questionnaires as a research tool are known to most of the Employee and generally all Employees will have some experience of completing questionnaires. Questionnaires decrease bias, and especially the open ended question can provide rich Feedback from the people.

Based on the findings from a literature review, a survey will be prepared which will investigate the main concerns of organizations in adopting Cloud computing.

A sample of employees will be collected. These would be based on selection on a random sampling method Qualitative and Quantitative. The tool such as surveymonkey.com would be helpful for this research, as it will allow for data collection and provided capabilities for analyzing the results. After posting the survey queries, it will invite to participate in the survey to be sent to the created mailing list. The invitation will introduce the survey purpose, explaining the aim of the survey and requested the respondent for their participation.

5.2 Secondary Research

The secondary research will utilize data that is readily available in the field of Cloud computing, it would be collected from the IT department of some of the companies. Other data will be collected from known business organizations in India such as the Federation of Indian Chambers of Commerce and Industry FICCI (2012), information is provided in their portal.

Data collected from secondary research acts as the support system of the findings from primary research. The following sources of information will be referred to, to serve the purpose of secondary research:

Financial statements of the company

News articles

Magazines and other information portals

Books, Weekly issues of famous authors

5.3 Research Model:

The sample will be chosen in a random manner from the sampling frame because a random sample tends to occur with the same probability as they do in the population McPhail (2004). Therefore, the sample can be a representative of the whole population and this study will have higher external validity.

According to Neuman (1997), sample size is determined according to the size of the population. Neuman (1997) suggested that for moderately large populations (10,000), a sampling ratio about 10 precent (sampling size is then 1,000) is needed to be accurate.

5.5 Analysis of the data

6. Conclusion

We can conclude from above studies that Cloud computing had a power to revolutionize the way Indian organization are doing business. Cloud computing had potential to level the playing field for small and medium enterprise by reducing infrastructure cost. As Cloud computing is here to stay, many Cloud computing general-purpose applications can provide cost benefit through economy of scale to Firms in India.

Although Cloud computing is emerging as transformative trends in business and society today. Still some of the challenges such as Security, Privacy, Compliance, and management term such as trust and governance need to be addressed before it can be adopted in Indian Firms.