According to some experts, complexity of the supply chain is increasing, profoundly fuelled by the growing level of internet use and integration initiatives, as evidenced by the number of networks current IT systems are supporting (Yami et al. 2010). Due to its ubiquitous nature, the internet is being employed in multidimensional and multifaceted ways in various supply chains to improve the quality of information and integration initiatives. Irrespective of the type of supply chain, the internet has
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proven to be limitless in the purpose it can serve provided its use had been carefully or strategically planned. Its use has ranged from communication information exchange (Hart et al. , 2000) to more operational related functions such as order filling, purchasing, human resource management etc. (Lancioni et al. , 2003). These systems are increasing in the level of support and function provided and the cost of their application is increasingly becoming inexpensive where many small and medium size enterprises can now afford technologies that were beyond their reach due to lack of affordability. An example of this is the concept of cloud computing which is a somewhat recent development in the way IT is being exploited. It is a way of accessing hardware or software resources, or a combination of both, anywhere in the world by an organization or an individual via the internet.
2.2.1 Cloud Computing- Internet Use Example
At the most basic definition, cloud computing entails using computing resources such as computer applications and programmes over the internet as opposed to license-and-install on the desktop (Buttell, 2010). Leveraging Information Technology (IT) can be costly and has deterred small to medium scale organizations from using it. This in part has led to the emergence and justification for the somewhat new IT concept called ‘cloud computing’. The emerging trend of enabling IT systems on the platform of cloud computing has been a subject of discussion in recent years. A purely functional definition of cloud computing is that it is a way of accessing hardware or software resources, or a combination of both, anywhere in the world by an organization or an individual via the internet (Amir, 2009, Smith, 2009, Armbrust et al. , 2010). These resources are shared amongst many users, abstracted, available on demand, scalable, and configurable (Marston et al. , 2011). Although this is not an entirely new concept, its unique feature where resources are pulled as opposed to being pushed makes it a more promising concept than its predecessors; time sharing in the 1960s and application hosting in the 1980s (Amir, 2009, Cusumano, 2010). Its applicability would entail seeing this concept being delivered over different service configurations. There are three basic service configurations also known as cloud service models which are Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). In SaaS, the cloud user buys the right to use a working application hosted by an external provider via the internet. The PaaS model involves the use of an externally provided
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infrastructure to host the application, while IaaS model requires the use of servers provided externally for raw computing, storage and network transfers (Durkee, 2010, Subashini and Kavitha, 2011). One can also look at the scope of the service whether it is purely open to the public (Public Cloud) or restricted to certain users (Private Cloud) or a combination of both (Hybrid Cloud).
2.2.2 Benefit of Cloud Computing
The result of an information security survey by Ernst & Young (2011) reveal close to half of the total number of respondents from 56 countries have either deployed or are evaluating cloud computing. This suggests that a significant amount of organisations are now using or close to adopting cloud computing which in a way puts pressure on others to follow suit. A summary of the opportunities organisations can avail themselves to when they enable their IT on the cloud and the various concerns associated with this new concept is shown in Table 2.1.
Cloud computing has several benefits over traditional IT models reported in literature. Cloud services bring flexibility, configurability, cost effectiveness, low implementation cost to IT and SCM. Primarily it offers a cost advantage to firms especially the small to medium scale enterprises who otherwise cannot afford the huge financial commitment required for deploying typical cutting edge enterprise- level IT systems such as Enterprise Resource Planning (ERP) systems (Marston et al., 2011). This is achieved through the metering system based on the notion of “pay as you go”. Other benefits include taking away the associated costs of IT such as; system upgrades; recruiting and training IT staff; equipment delivery and installation; or modification of IT facility, from the Cloud user (Smith, 2009). It also helps to prevent the loss that would otherwise be incurred when an organization is unsuccessful in deploying an expensive in-house information system (IS). This is because its flexible feature makes it possible to change from one cloud service provider to another without any major cost to the user. If a service provider does not deliver an agreed level of quality of service (QoS), the service user may change to another provider offering a better or even cheaper service. These advantageous features of Cloud computing can help organizations or supply chains to be lean, agile or both (le-agile), responding effectively to demand. However there are some concerns over its adoption with data security being the chief of those concerns.
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Propellants for Adoption Barriers to Adoption Elasticity/scalability: the
ability to scale IT infrastructure requirements both up and down rapidly
Corporate culture shock: going from internal provision to external provision
Flexibility: ability to purchase software components from oracle, Apple, SAP etc and combine it to form a business solution
Quick provisioning: being able to scale computing resources up or down at the level of automation
Pay-as-you-go: pay-per-use basis versus install-and-own.
Loss of control: managing IT infrastructure through service level agreements (SLAs) with Cloud Service Providers (CSPs)
Cost savings: reduction in IT operational cost
Information security: How safe is your information and data from security threats? Stepwise adoption: ability to
decompose an entire technology into piecemeal sizes and
gradually adopt it in stages
Privacy concerns: safeguarding personally identifiable information of employees, business partners and customers and meeting legal and ethical requirements regarding privacy regulations Infrastructure utilization:
virtualization of hardware and software resources as a service to multiple users simultaneously
Regulatory compliance: conforming to the regulations of the part of the world where hardware and software is located
Reducing market barrier: reduction of IT barriers to market entry. IT that was unaffordable before can now be utilised over the cloud.
Specificity: has to do with compatibility issues and data lock-in.
Security: delivering “security as a service”
Lack of standards: lack of commonality in interoperability among cloud providers and between enterprise systems and cloud services Table 2.1 The opportunities and threats to cloud computing adoption