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A Research Report on The Influence of Cloud Computing Adoption on Organisational Performance in SMEs in China

Nyamweya is a global researcher with many years of experience on practical research on a diversity of topics

Chapter 1 Introduction and background

a)Rationale of this project

This report seeks to establish the influence of cloud computing adoption on organisational performance in SMEs in China. Particularly, two SMEs WAPS Inc. and KingYee, will be analysed against their application of cloud computing to ascertain its relevance in Chinese contexts. WAPS Inc is a mobile marketing service provider based in China. Its core business entails providing integrated marketing services and mobile internet based advertisements for advertisers and mobile developers. This company which was established in 2005 is presently building one of the biggest intelligent networks of mobile advertisements (Crunchbase Inc, 2019). On the other hand, KingYee is a smart device and healthcare technology firm based in Shanghai, China. The company deals with software solutions which help doctors and hospitals in better management of patient records and profiles in digital contexts (cbinsights.com, 2019).

This project is particularly deemed useful for organisational leaders in SMEs towards understanding how their organisations can exploit the benefits inherent in new technology, particularly cloud computing. This is the same case with industry leaders who will be at a better position to understand the implications of cloud computing in organisations. Practically, they will be able to comprehend how the cloud computing features of elasticity, broad network, pooling resources and on demand service will enhance the effectiveness and efficiency of operations thus reducing costs. Furthermore, the insights generated from this analysis will trigger the interest of more researchers to undertake a more in-depth research on this subject to unearth the potential and implication of cloud computing in business arena. As the researcher, this project enable me to formulate a research problem in the field of cloud computing adoption and organisational performance, and through solving it I will produce new knowledge. It also presents the opportunity to gather meaningful data and then analyse it towards solving the research problem.

b) Project aims

This study proposes to explore the influence of cloud computing adoption on organisational performance in SMEs in China.

c) Project objectives

According to the feature of cloud computing model, this research seeks to address the following objectives:

1. To analyse the impact of on-demand self-service on organisational performance in SMEs in Chinese IT industry

2. To analyse the impact of broad network access on organisational performance in SMEs in Chinese IT industry

3. To evaluate the impact of resource pooling on organisational performance in SMEs in Chinese IT industry

4. To determine the impact of rapid elasticity on organisational performance in SMEs in Chinese IT industry

5. To offer suggestions for SMEs in Chinese IT industry to improve organisational performance through cloud computing adoption

Chapter 2 Literature review

2.1 Organisational Performance

Upadhaya et al (2014) define organisational performance as the actual outcome or output of a given firm as measured out against its intended objectives and purposes. Similarly, according to Jenatabad (2015) measuring the performance of an organisation is an essential aspect of monitoring the progress of an organisation. This entails assessing the actual outcome of a specific organisation against its stated objectives. This also necessitates a top-down approach in defining and establishing the criteria for performance instead of a bottom-up approach which some organisations employ.

On the other hand, Jenatabad (2015) explains it as the relation on how successful an organisation is in performing its function. On their part, Bashaer, Singh, Sherine (2016) define organisational performance as operational, customer and financial outcome of a given organisation. This research will adopt the views of Bashaer, Singh, Sherine (2016) to measure organisational performance based on three dimensions of financial, customer and operational performance.

In regard to organisational performance of Kingyee Company, its mobile app revenue in October 2019 was $50,000. It also recorded a total mobile app downloads of 40,000. The company has a total of 44 apps, comprising of 31 iOS apps, and 13 Android apps. Some of the apps are shown in the figure below;

2.2 Cloud computing model

Cloud computing is defined by Mirrazavi and Khoorasgani (2016) as the delivery of computing services which includes databases, intelligence, servers, networking, software, storage over the internet. The purpose of this is to provide flexible resources, facilitate faster innovation and economies of scale. On his part, Wang (2012) refers to cloud computing as the on-demand accessibility of computer system resources particularly the computing power and data storage without the user having a direct active interaction. Hussein and Mohamed (2015) identify four key features of cloud computing environment. These features are On-Demand Self-Service, broad/ubiquitous network access, resource pooling, and rapid elasticity (Hussein and Mohamed, 2015).

Regarding demand self-service it means that the service provider do not have to interfere with the process. Furthermore, the service user can decide on whether to purchase, rent or reserve online resources when required or the capabilities required. This is basically like reserving a hotel room after being ascertained of the specifications. In addition, the service provider avails the necessary tools for resource provision while the user is entitled to release the necessary resources (Attaran, 2017). Regarding the broad network access, this is the ability of the service users to access and utilize the resources inherent in a cloud computing contexts from heterogeneous platforms. These range from smart phones to workstations (Mell, and Grance, 2011). Pertaining to resource pooling, this characteristics ensures that the service provider has in place a pool of computing resources from where users are able to pick either virtual or physical resources in a multi-agency framework as per their demand. Lastly, rapid elasticity entails the capability of the cloud computing environment to alter the capability of the consumer needs when and as required. Accordingly, the computing environment must have in place tools which make it possible for the service user to either reduce or increase the resource capability in a quick manner (Rashid and Chaturvedi, 2019).

2.3 Impact of cloud computing adoption on organisational performance

Objective 1: Impact of on-demand self-service on organisational performance

The on-demand model is aimed at facilitating consumers to pay on demand, as well as reduce the user’s investment on conventional hardware and software. What this means is that the system makes it easier for consumers to pay for services. Consequently, many SMEs in China no longer need to have physical data centres that support their IT requirements. This owes to the fact that providers of cloud service are mandated to maintain the data for their users (Schouten, 2014). It is also possible for users to provision cloud computing resources without necessarily commissioning human interactions (Hassan, 2011). In this regard, WAPS Inc. and KingYee will be able to save massive cost on human labour which is used in data storage, retrieval, maintenance and or operations. This is the same case with the need of hardware and software equipment which many organisations including SMEs have to do away with in light of the on-demand service. For instance, prior to the development of cloud computing, SMEs customers in China could wait up to five weeks for hardware to arrive.

Objective 2: Impact of broad network access on organisational performance

With the broad network accessibility of cloud computing, people are able to access the information they require from any device or any location. This ability is advantageous for WAPS Inc. and KingYee which can expand their market base by reaching customers in different parts of the world (Ankeny, 2011). Traditionally, Chinese SMEs were serving and reaching customers only in their locality. However, nowadays, these businesses do not have to work in a particular region. For example, a customer can order products online and receive deliveries as and when needed. This was not so in the past. As a consequence, SMEs and companies are now able to sell more and without necessarily using more human labour through technological devices (Wang, 2012).

Objective 3: Impact of resource pooling on organisational performance

Resource pooling facilitates a combination of computing resources. As earlier noted, these computing resources may include network bandwidth, processing software or hardware that is used to provide service to consumers (Mahmood, 2011). There is also pooling of providers resources so as to serve a diversity of consumers through a multi-tenant model. In this regard, different virtual and physical resources are dynamically assigned and reassigned in line with the consumer’s needs and demands. This obviously leads to reduced cost of computing resources for an organisation. If WAPS Inc. and KingYee opt to employ cloud computing services, they will no longer be required to install high priced and powered computers in running their applications (Goncalves and Ballon, 2011). These owes to the fact that these resources can be shared from “a pool” with lesser costs.

Objective 4: Impact of Rapid Elasticity on Organisational Performance

As earlier noted, elasticity is simply is the capability of removing or adding capacity, mostly processing memory from or to an IT environment whenever required. Moreover, the cloud computing system has helped in eliminating administrative overheads for SMEs while also enabling access from different geographical locations (Ankeny, 2011). Furthermore, it is now possible for SME clients to access services from any organisation or device. Devices that were earlier considered to be less powerful including netbooks, smartphones have now a capability of making the most out of an organisations backend IT systems through basic web applications such as AWS console. Most SME employees may work remotely out of their companies or offices. In light of this, it becomes advantageous for them to access the company data through their smartphones (Marston et al, 2011). Furthermore, the cloud computing solutions have been attributed to the high number of online transactions which have been considered convenient for users and SME companies, as well as the high number of employees working remotely. For WAPS Inc. and KingYee these thus reduces the cost of hosting and managing employees including the need for uses they can use especially if they are able to work remotely. On the other hand, consumers of the two firms are finding it convenient accessing and paying for services even at the comfort of their homes.

Conclusion

This review has unearthed major impact of adopting cloud computing in business organisations. Among these include cost reduction, ease of use, convenience, collaboration and sharing.

In particular, this review has established that the on-demand self-service feature of cloud computing will enable WAPS Inc. and KingYee to save massive cost on human labour which could have been used in data storage, retrieval, maintenance and or operations. With the broad network accessibility of cloud computing, people are able to access the information they require from any device or any location. This ability is advantageous for SME organisations including WAPS Inc. and KingYee which can expand their market base by reaching customers in different parts of the world and thus raise its earnings. On the other hand, resource pooling facilitates a combination of computing resources.

Chapter 3 Research design and methodology

3.1 Introduction

This chapter introduces the methodology that will be adhered to by the researcher when conducting the research. In particular, the author has presented the research methods, pointing out why a specific approach has been utilized. The final part which is a conclusion summarizes the chapter.

In this study, the author opted to employ both primary and secondary data so as to avoid the researcher bias that is commonly experienced when one of the methods is relied upon (Bryman, and Bell, 2015). Furthermore, this approach will as well enable gathering of sufficient information so as to fully explore the subject under focus (Franklin, 2012).

3.2 Secondary Research

The secondary research is essentially a form of research that relies on information and data that had been collected, gathered by previous authors. These may include journals, reports, books, government agencies, organisations among others (Franklin, 2012). Among the advantages of using secondary studies is that the information can be obtained faster and in a cost effective way compared to primary data. However, the information and data so obtained may not relate to the immediate context of the study (Chawla, and Sodhi, 2011).

Below are the examples of literature that will be employed in analyzing specific objectives


RO1:

Rashid, A., & Chaturvedi, A. (2019) ‘Cloud Computing Characteristics and Services: A Brief Review’, International Journal of Computer Sciences and Engineering, 7 (2), pp. 421-426.

The information in this article alongside others will help in answering the RO1 taking into concern that it analyzes among other aspects the features of cloud computing which include among others on demand service.

Hussein, A., & Mohamed, O. (2015) ‘Cloud Computing and its Effect on Performance Excellence at Higher Education Institutions in Egypt (An Analytical Study)’, European Scientific Journal, ESJ, 11(10).

In this article the authors investigates cloud computing technology in terms of 1) its most crucial principles, 2)its definition, 3) its benefits, and 4)models. This journal alongside the other sources is quite resourceful in understanding the impact of on-demand service on organizational performance.

RO2:

Mahmood, Z (2011) ‘Cloud Computing: Characteristics and Deployment Approaches’, Computer and Information Technology, 2 (1), pp.121 - 126.

The information on cloud computing concepts and benefits presented in this research will help the researcher in identifying how cloud computing features specifically the broad network access characteristic affects organisational performance.

RO3:

Ankeny, J. (2011) ‘Heads in the cloud’, Entrepreneur, 39(10), pp.50–51.

The article by Ankeny discusses mindshift technologies, a company whose core role is to provide cloud services. Using the case study, the author will be at a better position to understand how resources are pooled and their benefits to organisational performance.

RO4:

Mirrazavi, S., & Khoorasgani, G. H. (2016) ‘The Impact of Cloud Computing Technology on Organizational Performance; Financial, Customer, Operational (Case Study: Zarin Iran Porcelain Industries Co.)’, Mediterranean Journal of Social Sciences, 7(4 S1), pp. 279.


. The author will utilize this resource alongside others in exploring how different components and features of cloud computing, specifically elasticity affects organizational performance.

3.4 Primary Research

Primary research entails interacting with the source(s) or participants directly and asking them questions to get the first-hand data (Howell, 2013). Primary research is mainly conducted through interviews, surveys, questionnaires, focus groups and observations. This research is preferred owing to its ability to provide conclusive results. However, it has a demerit in the form of high expenses and longer time of completion than the secondary research (Chawla, and Sodhi, 2011). In this study, the author will use primary data so as to gain first hand information from case companies regarding the research objective.

In this regard, the use of interviews is part of the primary data collection since the researcher will interact with the selected participants while collecting information from them. The participants will include 6 managers obtained from 2 SMEs which have already adopted cloud computing in China. Specifically, each SME provide 3 managers for the interview. The author will access the managers through friends and relatives who work in the said companies.

Primary data from managers will be conducted through interview method. This approach was preferred since the researcher will be able to explore the subject opinions of the subjects, phenomenon, and experiences and to get in-depth information about the research (Bryman & Bell, 2015). Accordingly, the interview guide will have open ended questions in line with the research questions. The research will be conducted through telephone during a work day and responses will be recorded in a laptop. Each interview will take approximately 15 minutes.


3.11Conclusion

This chapter has presented the research methodology which the researcher will rely on while undertaking the investigation. Accordingly, it has discussed research methods while also explaining primary, secondary and interview research approaches and how they will be used in the study. In addition to these is a discussion of how the researcher intends to get information for each research objective.

Chapter 4: Findings and analysis

4.0 Introduction

This chapter presents key findings as obtained from primary and secondary study. The chapter also presents key suggestions for SMEs in Chinese IT industry to improve organisational performance through cloud computing adoption as provided by respondents.

RO1:

Secondary Data

The on-demand service feature has enabled WAPS Inc. to set its billing system to the actual effect as defined by the customer. If there is no effect, then there is no billing (WAPS Inc. 2019). On its part, KingYee Company has partnered with other technology companies and cloud service providers to provide on demand services to its clientele who includes hospitals and doctors to manage patient’s profiles and other records digitally as and when they need them (Kingyee.com, 2019). This means that the services can be granted when needed and terminated when not required.

Primary Data

From the interviewees, it is clear that the SMEs under investigation were using Networking services, security services for our IT, Databases, Storage and Big data services from cloud vendors. Other cloud technology services included Elastic computing, Domain Registration, Big Data Services, security management, Internet of things, Security, and Artificial Intelligence. Practically, respondents affirm that the implementation of cloud computing by their respective SMEs has resulted into acceleration of time to market their wares while also improving business agility. It is also true that labor costs have been cut down through a minimization of human input (labor), IT hardware and software infrastructure and making it possible for employees and customers to access services at their comfort.


RO2:

Secondary

Regarding this RO, it is noted that the broad network access feature has made it possible for Kingyee Company to provide its service offerings on mobile app, smart devices(Kingyee.com, 2019). On the other hand, WAPS Inc is able to offer its service through the internet, and mobile devices thanks to the broad network access feature (WAPS Inc. 2019).

Primary

Regarding this objective, the interviewees agreed that their respective organizations were able to respond to the changing needs of customers and in this respect; they are able to achieve a competitive advantage which has been advantageous in terms of raising their marketbase.

RO3:

From secondary source review, it is noted with the implementation of cloud computing services, WAPS Inc. and KingYee will not be mandated to install high priced and powered computers in running their applications (Goncalves and Ballon, 2011). These owes to the fact that these resources can be shared from “a pool” with lesser costs. There is also a decreased need for storage space and processing power.


Secondary

According to the interviewees who participated in the study, some of the shared resources include Applications, Databases, Storage, Networking, Security, Big Data and Artificial Intelligence. Others include computing, content delivery, machine learning, Internet of Things, Customer engagement, applications, analytics and networking, content delivery and processors. Through pooling of resources, these companies have been able to cut hardware costs including procurement and maintenance which translates to more profit.

RO4:

Secondary

The rapid elasticity feature according to Marston et al (2011), will enable WAPS Inc. and KingYee to reduce the cost of hosting and managing employees including the need for uses they can use especially if they are able to work remotely. On the other hand, consumers of the two firms will find it it convenient accessing and paying for services even at the comfort of their homes.

Primary

Regarding this objective, respondents cited that their respective cloud vendors give them opportunity to specify and decide on the tools and framework that fits them. In other words, the vendors were capable of tailoring the services to fit their specific needs. Through elasticity feature, SMEs and other businesses have been able to raise their innovative capabilities subsequently giving them a competitive edge in their industry. Alongside these is the enhancement of the service with improved quality and efficiency.

RO5: Suggestions

To improve business performance through adoption of cloud technology, respondents offered various suggestions. Among these is the need for the companies to exploit the potential of cloud computing by allowing staff to work remotely and also work with their own devices. This will further cut operation costs for the companies. Alongside these is the need to for these companies to make use of the efficient management and governance, as well as media services capability to enhance our market reach and for effective management of our systems.

Conclusion

In summary, adoption of cloud computing has been critical for raising the profile, financial returns, market base, and competitive edge of the respective SMEs. Specifically, there is a massive reduction of operational costs since these companies do not have to spend resources on hardware and software infrastructure which can instead be obtained from cloud vendors. This is the same case with management and operations whereby; the use of cloud technology has minimized human interactions, thus reducing on labour costs. In addition to these is the enhancement of service reliability, and customer reach by businesses.

Chapter 5 Conclusions and recommendations

5.1 Conclusions


5.1.1 Objective 1

Practically, this research affirms that the implementation of cloud computing by SMEs has resulted into acceleration of time to market their wares while also improving business agility. The research also establishes that labor costs have been cut down through a minimization of human input (labor), IT hardware and software infrastructure and making it possible for employees and customers to access services at their comfort.

5.1.2 Objective 2

On objective 2, this research finds that cloud computing has been able to increase returns through reduced capital costs of IT assets which is then transformed into operational costs. Again, these companies are able to meet the expanding needs of their clients taking into account that most cloud service providers are able to design their offerings for scability.

5.1.3 Objective 3


This research notes that through pooling of resources, companies have been able to cut hardware costs including procurement and maintenance which translates to more profit. Further, the pay as you go model has created cost efficiency, and thus minimal wastage of company resources. This has led to massive cost reduction in hardware acquisition and maintenance.

5.1.4 Objective 4

This study establishes that through elasticity feature, SMEs and other businesses have been able to raise their innovative capabilities subsequently giving them a competitive edge in their industry. Alongside these is the enhancement of the service with improved quality and efficiency.


5.2 Recommendations


In order to exploit more opportunities inherent in cloud computing, companies can tailor their culture in a way that allows staff to work remotely and also work with their own devices. This will further cut operation costs for the companies. Alongside these is the need for these companies to make use of the efficient management and governance, as well as media services capability to enhance our market reach and for effective management of our systems.

5.3 Ethical Considerations

In conducting this research, the researcher ensured that participation of interviewees was voluntary and no one was coerced. Furthermore, participants were duly informed of their right to withdraw from the study at any time they felt so. In addition to these is the confidentiality of the personal details of all interviewees. All participants and their personal details were and still are kept anonymous as per the research protocol. All information from secondary sources were duly cited and referenced.

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