IaaS Adoption

Adoption is often associated with the decision to accept and use something new, such as ideas, artifacts or product (Roger, 1995). But this seems to be a generalized definition that can be applied to almost every kind of innovation. However, from this definition, we know that adoption should involve the notion of “accepting (agree or approve)” and “using (implement)” certain innovation.

According to the works studying the relationship between organization characteristics and IT adoption by Thong and Yap (1995), the authors defined adoption as using IT to support business.

This definition is still not very accurate for our research because it does not distinguish the different stages of using some information technology, which usually have many different stages of adoption.

Since our research focus is mainly on the adoption decision of infrastructure as a service, which may be a new efficient instrument that can help one company to operate a business and thus need a certain amount of investment, by the actual implementers or decision makers of government’s

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policy, we specifically define the adoption in this thesis more precisely as “the level of acceptance of the decision makers in the government agency to invest and implement the new IaaS technology to support business” by incorporating these two definitions mentioned above so that it can fit in with our research scenario.

2.4.2 Technological Factors

1. Perceived Efficiency Improvement

According to the research “Perceived usefulness, perceived ease of use, and user acceptance of information technology” conducted by Davis (1989), he defined perceived usefulness as the degree to which a user believes that using a particular system would have a positive use-performance relationship. On the other hand, relative advantage is the degree to which an innovation is perceived as being better than the idea it supersedes (Roger, 1995).

These are two very similar terms and they are both somewhat ambiguous. In this research, we combine both meanings to form two more complete enabling variables.

After our survey and judgment of the benefit of IaaS in the previous section of this chapter, we know that governments around the world view cloud computing as a means of increasing efficiency. Evidently, IaaS can improve efficiency by reducing management complexity, improving resource utilization, consolidating hardware, and in many other ways. For example, IaaS users don’t need to spend much time making a purchasing plan, placing an order, waiting for the component to arrive, and then setting it up in the data center. IT staff no longer has to worry about server updates, maintenance problems, and other annoying issues. IaaS users can set up a cloud infrastructure in a relatively short period of time and can add capacity into it in minutes. Briefly speaking, IaaS can save users a great amount of money and let users to focus more on the core business that can enhance their service efficiency and quality. We think it is reasonable to infer that people tend to have more intention to adopt IaaS if they consider it helpful. Therefore, we decide to incorporate the most prominent characteristic of IaaS,

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improving efficiency, into our research framework as one of the technological determinants. We specifically define “Perceived Efficiency Improvement” as “Having better IT infrastructure service quality, more hardware choice, higher resource utilization rate, and more elastically scalable IT infrastructure, all of which enable users to focus on their core business, boost their working efficiency, and lead to greater organizational performance.”

This argument leads to the following hypothesis:

H1: The degree of “Perceived Efficiency Improvement” is positively related to the degree of IaaS adoption.

2. Perceived Cost Reduction

Cost reduction may be one of the most obvious benefits that IaaS can bring. IaaS can meet the technological and budgetary needs of diverse organizations and has the potential to greatly reduce the costs of IT infrastructure, for example, savings in power, cooling, space, and manpower. That is to say, IaaS can economize the use of electricity power for cooling and the operation of machine, avoid redundant IT investments, and thus reduce a huge amount of operation cost. Moreover, its pricing mechanism enables users to access very expensive data center resources through a rental arrangement and thus preserve capital for the business. This advantage can lead to a great deal of cost saving, which usually means higher revenue. In a research called “Cost and Service Capability Considerations on the Intention to Adopt Application Service Provision Services,” the research results show a dominant effect of cost savings consideration on ASP adoption intention (Yao Y., et al., 2010). Besides, many other relevant or analogous researches also indicate that cost saving have a significant effect on the intention to use. As a result, we believe that, as a matter of course, “Perceived Cost Reduction”

can be a key factor affecting the adoption of IaaS technology. We specifically define “Perceived Cost Reduction” as “Lowering the upfront cost in the initial stage, maintenance cost, including power, space, cooling, and manpower, and the administrative burden.”

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This argument leads to the following hypothesis:

H2: The degree of “Perceived Cost Reduction” is positively related to the degree of IaaS adoption.

2.4.3 Organizational Factors

1. Satisfaction with Existing IT Infrastructure

In organizational computing, IT infrastructure always requires a huge amount of capital and a long period of time to implement. Chau and Tam (1999) claimed that an organization would not consider adopting a new technology unless a need, such as a performance gap, was

recognized. A performance gap may result from a low satisfaction level with existing computer systems, unacceptable price/performance ratio of the existing systems or inability to serve the organization’s new needs. Conversely, whenever the current systems satisfied the needs of the organization, the propensity to change should be lower. Therefore, it stands to reason to state that a company satisfied with its existing IT infrastructure tends to retain its existing equipment and has no reason or low intention to adopt IaaS. We specifically define “Satisfaction with Existing IT Infrastructure” as “The satisfaction level with existing IT infrastructure includes users’ perception, the price/performance ratio of the existing systems, the ability to serve the organization’s new needs and so on.” It is anticipated that the satisfaction with existing IT infrastructure will negatively influence the intention to adopt IaaS.

This argument leads to the following hypothesis:

H3: The degree of “Satisfaction with Existing IT Infrastructure” is negatively related to the degree of IaaS adoption.

2. IT Knowledge

IT knowledge means the basic knowledge and awareness of IT innovation. Many researches, for example, “E-Commerce Adoption in Brunei Darussalam: A Quantitative Analysis of Factors

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Influencing Its Adoption” (Looi, 2005) and “How Information Technology Capabilities

Influence Organizational Innovation: Exploratory Findings From Two Case Studies” (Tarafdar

& Gordon, 2005), found that overcoming the lack of knowledge of the innovation will lead to greater likelihood of adopting the innovation. IT knowledge also stands for different aspects of an organization’s base of IT resources. These resources influence and determine the

organization’s ability to convert IT assets and services into strategic applications, and to mobilize and deploy IT based resources with other resources and capabilities. The more IT knowledge an organization has, the more probability for it to make use of new information technology to strengthen its business competencies. Therefore, we assert that IT knowledge has a positive influence on the intention to adopt new information technology. We expect that “IT knowledge” has a positive relationship with the intention to adopt IaaS.

This argument leads to the following hypothesis:

H4: The degree of “IT Knowledge” is positively related to the degree of IaaS adoption.

2.4.4 Environmental Factors 1. Agency Trust

Although IaaS may bring organizations many benefits, it can’t be implemented

automatically without the vendors’ help. The success or failure of an IaaS initiative may depend heavily on the vendors’ experience, technical expertise, trustworthiness, and so on. Moreover, IaaS in itself is the practice of turning over all or part of an organization’s IT infrastructure to an outside vendor, that is, we can view IaaS as a special form of IT outsourcing (ITProPortal.com, 2011). The management of a company should take into account the risk of property

infringement and contract management before making any decisions related to IT outsourcing.

If an organization doesn’t trust outside vendors, it is impossible for it to outsource. In “An empirical study of information outsourcing from user perspective” (Jung-Ya Hung, 2008), the author stated that the supplier-customer relationship, namely “agency trust,” has a positive

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influence on IT outsourcing. Thus, we believed that the experience interacting with IT vendors might influence the decision of IaaS adoption. We specifically define “Agency Trust” as “The level of mutual trust between users and vendors, which is related to the past experience in cooperation” in our research.

This argument leads to the following hypothesis:

H5: The degree of “Agency Trust” is positively related to the degree of IaaS adoption.

2. Vendors’ Promotion

According to the research result of “A Study on the Factors that Influence Enterprises’

Decision to Adopt New Information Technology─Based on ADSL” (Uen-Yu Chuang, 2002), we know that vendors’ promotion would influence the decision making of adoption of certain information technology, especially when the technology is still new to the market. Besides, Shuo-Bo Xu (1997) also stated in his study, “A study on factors affecting the adoption of Intranet and benefits”, that the promotion activities and incentives provided by vendors may influence positively the adoption of Intranet technology. It is natural to infer that vendors’

promotion activities, such as advertising campaigns, planning proposals, and discount, would have more or less influence on buyers’ intention to consume. Therefore, we believe that vendors’ promotion may play an important role in our research and has a positive influence on the adoption decision of IaaS. “Vendors’ Promotion” here includes vendors’ marketing and promotion, vendors’ planning proposals, and their sales promotion.

This argument leads to the following hypothesis:

H6: The degree of “Vendors’ Promotion” is positively related to the degree of IaaS adoption.

The conceptual definition of key variables in our research is summarized in Table 2-1.

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Dimension Concept Expected

Effect

Conceptual Definition Source of Definition

Technological

Perceived Efficiency Improvement

Positive

Having better IT infrastructure service quality, more hardware choice, higher resource utilization rate, and more elastically scalable IT infrastructure, all of which enable users to focus on their core business, boost their working efficiency, and lead to greater organizational performance.

Perceived usefulness, perceived ease of use, and user acceptance of

Lowering the upfront cost in the initial stage, maintenance cost, including power, space, cooling, and manpower, and the administrative burden.

Perceived usefulness, perceived ease of use, and user acceptance of

The satisfaction level with existing computer systems includes users’

perception, the price/performance ratio of the existing systems, the ability to serve the organization’s new needs and so on.

The basic knowledge and awareness of IT innovation.

Agency Trust Positive

The level of mutual trust between users and vendors, which is related to the past experience in cooperation.

An empirical study of information outsourcing from user perspective (Jung-Ya Hung, 2008)

Vendors’

Promotion Positive

The activities that vendors use to encourage users to believe in the value or importance of something they provide.

A Study on the Factors that Influence Enterprises’

Decision to Adopt New Information Technology─

Based on ADSL (Uen-Yu Chuang, 2002)

Intention to Adopt

The level of acceptance of the decision makers in the government agency to invest and implement the new IaaS technology to support business. Business (Thong & Yap, 1995)

Table 2-1: Conceptual Definition of Key Variables

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