Leveraging Cloud – Based Information Technologies for Organizational Agility: A Conceptual Model

Abstract

Chief Information Officers have always struggled to implement right Information Technology (IT) solutions aligned with business strategy, with speed. The challenges of doing the same include upfront costs and skills required to implement the project. The organizations which are able to do the same stay one step ahead of their competition. Hence, IT organizations are always engaged in understanding and addressing the needs of employees and providing solutions for the same. The ubiquitous Internet has helped them to address the need of reach and availability of such systems. The emergence of cloudbased services in the form of Infrastructure-as-a- Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) has added to the panoply of new options for deriving cost-effective benefits from technology in a flexible and faster way. Adoption of cloud-based services provides IT resources agility to an organization which is further defined in terms of pricing, scalability, availability, security and ondemand provisioning of services, etc. This research paper develops a theoretical model for understanding various factors influencing the decision to adopt cloudbased services. Further, this paper explores whether adoption of cloud-based services helps in achieving organizational agility measured through service agility, market capitalizing agility, and customer agility.

Introduction

The business environment today is characterized as Volatile, Uncertain, Complex and Ambiguous (VUCA). In such an environment, the capability to sense and respond to market threats and opportunities with speed and surprise has become essential for survival of organizations (Pan, Pan, Chen, & Hsieh, 2007). In such a fast-paced and often changing business environment, firms achieve sustainable competitive advantage by engaging in rapid and relentless innovation for seizing market opportunities. Therefore, continuous innovations in products and services and vigilance to emerging opportunities and threats are vital for superior performance. Organizations which have developed ability to detect opportunities for innovation and seize those competitive market opportunities by assembling requisite assets, knowledge and relationships with speed and surprise, would be ahead of other organizations which have not been able to develop such capabilities. Such organizations with sensing and responding capabilities are the ones that have understood the role of agility in addressing the opportunities and threats with speed and surprise. Agility has increasingly become indispensable for survival and prosperity for organizations. Given its significant role in a turbulent business environment, agility has garnered considerable research attention over the past few years (Huang, Ouyang, Pan, & Chou, 2012).

The ubiquitous nature of Information and Communication Technology (ICT) and leveraging information technology (IT) to derive competitive advantage is emerging as a top priority for firms as they often enable an organization to be a marketplace differentiator Huang, Ouyang, Pan, & Chou, 2012(; Liu, Ke, Wei, & Hua, 2013). Further, it is the IT vendors who have made it their key strategy to help organizations achieve agility (e.g. IBM’s ‘On-Demand’ vision and HP’s ‘Adaptive Enterprise’ strategy). These vendors provide a variety of organizational and technical solutions that would help achieve the proper level of agility to handle unexpected waves of change.

Use and deployment of emerging and new-age technologies like cloud-based services to scale and optimize operations is now de rigueur in today’s competitive business and globalised environment. Cloud computing is becoming an adoptable technology for many of the organizations with its dynamic scalability and usage of virtualized resources as a service through the Internet (Ercan, 2010).Cloudbased services enable organizations to hire any software application only when there is a requirement of such a utility. The licensing for using this kind of application may be with a single user or it can be shared with multiple users, and offers a simple and economic way to have proper software facilities with a minimum of expenses (Limbăşan & Rusu, 2011).

A key differentiating element of cloud-based service is its ability to become a true, valuable, and economical contributor to organizational agility. Cloud-based services provide agility in terms of faster adoption of IT services, in terms of reduced information technology overhead for the organization, greater pricing flexibility, on-demand services, scalability etc. (Vouk, 2008). Thus, adoption of cloud-based services results in achieving organizational agility in terms of reaching out to customers and providing them services within no time.

Given its crucial role in enabling business success, the concept of agility has garnered considerable research attention (Huang et al., 2012). Over the years, many dimensions of agility (e.g. manufacturing agility, operational agility, customer agility) have been identified and researched (e.g., Braunscheidel & Suresh, 2009;Huang et al., 2012; Ngai, Chau, & Chan, 2011;Raschke, 2010; Sambamurthy, Bharadwaj, & Grover, 2003). Past research generally has asserted that IT can enable agility by speeding up decision making, facilitating communication, and responding quickly to changing conditions (Lu & Ramamurthy, 2011). IT improves operational and management competencies in enterprise systems (Ngai et al., 2011)and helps in achieving competitive advantage by improving interaction with customers (Roberts & Grover, 2012). However, past research has also suggested that IT may obstruct and at times even delay organizational agility (Lucas Jr. & Olson, 1994; Lu & R a m a m u r t hy, 2 0 1 1 ; O ve r b y, B h a ra d wa j , & Sambamurthy, 2006).

The emergence of the phenomenon commonly known as cloud computing represents a fundamental change in the way information technology (IT) services are invented, developed, deployed, scaled, updated, maintained and paid for (Böhm, Leimeister, Riedl, & Krcmar, 2010).Cloud computing is viewed as one of the most promising technologies in computing today, inherently able to address a number of issues such as scalability of IT resources where a service can easily be scaled up or ramped down for optimum utilization giving customers an option to pay only for services they have used (Leavitt, 2009; Lin & Chen, 2012; Vaquero, Rodero-Merino, Caceres, & Lindner, 2008). Yet, despite the growing body of research on cloudbased services adoption and organizational agility, how to achieve agility through cloud-based services is still not answered by previous research. Given the indispensable role of agility in VUCA business environments, it is imperative to investigate how cloud-based services can help organizations in achieving agility.

The objective of this research is –

1) To identify the factors that impact adoption of cloud-based services.

2) To study the impact of adoption of cloud-based services on organizational agility.

The remaining sections of this paper discuss the theoretical underpinnings of cloud-based services, agility and understanding of how cloud-based services provide a transformational platform to enable business processes (Raschke, 2010). This is followed by a discussion of the theoretical model and propositions.

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