Success factors for deploying cloud computing

62 CommuniCationS oF the aCm | SepteMBer 2012 | voL. 55 | No. 9

contributed articles

ClOUD COMPUTiNg iS “a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (such as networks, servers, storage, applications, and services) that can be quickly provisioned and released with minimal management effort or service provider interaction.”14 The emergence of cloud computing is transforming the way organizations purchase and manage computing resources,17 providing a fundamentally different IT model in which a cloud provider might be responsible for a range of IT activities, including hardware and software installation, upgrades, maintenance, backup, data storage, and security. The result is that organizations can lower their IT capital expenditures

and operating costs by purchasing on-demand technology resources (such as increased data storage, bandwidth, and processing power) while elimi-nating the need to maintain outdated equipment. Cloud services also in-clude environments for application de-velopment and access to key technolo-gies, software, and skilled IT personnel that might otherwise be too costly and difficult to obtain and maintain (see Figure 1).

Along with hardware, software, and technology platforms, cloud comput-ing delivers additional benefits, in-cluding reduced IT-related costs and increased business agility.18 With cloud computing, the IT expenses generally associated with developing, procuring, administering, and maintaining in-house IT infrastructure can be shifted to the cloud vendor. Cloud computing enables organizations to lower IT capi-tal expenditures, as well as operating and maintenance costs, while redirect-ing resources toward core business ac-tivities, turning cloud computing into an IT-related strategy for competitive advantage.

However, despite these benefits, organizations face obstacles adopting cloud services,8 including uncoordi-nated adoption by stakeholders, inade-quate business and technical acumen, and data security.17 There may also be inadequate understanding between the organization and the vendor about the span, scope, and implementation of the services. Since an IT investment can be wasted or implemented in a non-optimized manner, organizations

Success Factors for Deploying Cloud Computing

Doi:10.1145/2330667.2330685

Trust between client organization and cloud provider is a strong predictor of successful cloud deployment.

By GaRy GaRRiSon, SanGhyun Kim, anD RoBin L. WaKeFieLD

key insights Cloud-vendor relationships characterized

by trust are critical for cloud deployment and the promise of gaining advantage in a competitive market.

in successful cloud deployment, organizations are able to focus on the core competencies that result in competitive advantage.

organizations achieve greater it economies of scale with cloud computing when investing first in relational, technical, and managerial capabilities.

SepteMBer 2012 | voL. 55 | No. 9 | CommuniCationS oF the aCm 63

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are unlikely to fully realize the benefits or related competitive advantage when cloud services fall short of expecta-tions. What factors are most likely to enable deployment of cloud comput-ing so as to differentiate the organiza-tion from its competitors? We take the resource-based view of the organiza-tion to identify organization-specific capabilities that contribute to deploy-ment of cloud computing. To help identify them, we collected data in 2011 from a global sample of 314 com-panies in various industries, including manufacturing, financial, logistics, IT, and education. The results reflect the importance of technical, managerial, and relational capabilities for leverag-ing cloud-computing resources to max-imize the likelihood of deployment success and competitive advantage.

Service models Cloud computing is organized into three standard service models: Infra-structure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).11 With IaaS, the cloud vendor provides the servers (such as processing capability), storage (such as replication, backup, and archiving),

and connectivity domains (such as firewalls and load balancing), with the client organization charged based on their use. PaaS describes a model in which the cloud vendor provides the platform that allows creation and de-ployment of applications and services the organization accesses through the Internet. The organization has access to an application-hosting environment for application design, development, and testing without the complexity and cost of procuring, deploying, and man-aging the infrastructure. Organizations adopting SaaS gain access to software hosted by the cloud vendor through a thin client—a Web browser. In SaaS environments, the cloud vendor has complete control over the application, including capabilities, updates, and maintenance (see Figure 2).

The three main delivery models are the public cloud, the private cloud, and the hybrid cloud.4 The public cloud provider operates a shared-service en-vironment accessible to any customer, whereas in the private cloud the orga-nization has exclusive use of an iso-lated cloud. While the private cloud might address some security concerns, cost savings are more limited. A hybrid

cloud environment combines both service-delivery models in situations where a client organization might re-quire the extra capacity of a public cloud while primarily using the pri-vate cloud. This view of cloud comput-ing reflects how organizations derive value from IT—by reducing costs and increasing computing capacity and services. However, organizations mov-ing to cloud computing may not realize these advantages if cloud deployment is ineffective. Our study highlights how organization-specific capabilities are necessary for leveraging cloud resourc-es and increasing the likelihood of de-ployment success (see Figure 3).

Resources Resource-based theory views all organi-zations in terms of available resources and how to combine them to differenti-ate them to achieve competitive advan-tage;1,2 for example, an organization developing innovative IT enabling it to be more effective than a competitor has positioned itself for greater economic return. The resource-based view stress-es that organization resources that are valuable and rare can help yield short-term advantage over competitors. An



organization implementing a cloud service that results in increased IT economies of scale thus has an advan-tage over a direct competitor until the competitor also implements the cloud service. The effi ciencies potentially provided by cloud computing are easily duplicated and may provide only short-term competitive advantage. Long-term advantage is possible only when resources are not easily imitated by competitors and adequate substitutes

are not readily available. While cloud-computing resources are not rare and inimitable, the idea of resources en-compasses more than physical assets; for example, organization-specifi c capabilities play a role in competitive advantage by helping differentiate the organization from its competitors. Capabilities could include leadership, business-systems thinking, relation-ship building, architecture planning, contract facilitation and monitoring, and vendor development.6

The resource-based view empha-sizes performance differences among organizations based on how they lever-age their resources,1 describing cre-ation of unique, valuable, inimitable organization capabilities or competen-cies. Proponents of capability building contend organizations create econom-ic separation by being more effective than their competitors at deploying resources.15 When unique capabilities are combined with other resources that are more homogeneous, or cloud computing, the result is differential organizational value. Capabilities are generally organization-specifi c, non-transferable, and embedded in the organization, with researchers classi-fying IT-based capabilities into three categories: IT infrastructure, IT busi-ness experience, and relationship in-frastructure.3 This differentiation is the framework we use to identify spe-cifi c IT-related factors and their effect

on cloud-computing performance.

Cloud Success To deliver technical and economic advantage, cloud computing must be deployed, as well as implemented, successfully. Deployment supersedes implementation, because merely utilizing the services of a cloud ven-dor does not by itself differentiate an organization from its competitors. Competitors likewise can implement cloud services, imitating resulting IT effi ciencies. Successful deployment denotes the realization of unique or valuable organizational benefi ts that are a source of differentiation and competitive advantage.

IT-related success is described through three categories of derived benefi t: strategic, economic, and tech-nological.7 Strategic refers to an orga-nization’s renewed focus on its core business activities that can accompany a move to cloud computing when its IT functions, whole or in part, are hosted and/or managed by a cloud vendor. Economic refers to an organization’s ability to tap the cloud vendor’s ex-pertise and technological resources to reduce in-house IT expenses. Tech-nological refers to an organization’s access to state-of-the-art technology and skilled personnel, eliminating the risk and cost of in-house technological obsolescence. Deployment is defi ned in terms of the strategic, economic,

Figure 2. Cloud computing’s three standard service models—iaaS, PaaS, and SaaS—and workload distribution in virtual servers in the cloud infrastructure.

PaaS

SaaS

IaaS

Workload DistributionSystem

Cloud Infrastructurevirtual Server

Containers

Figure 1. Storage closets for blade servers hosting SaaS applications.



and technological benefits realized through cloud computing, setting the organization apart from its competi-tors.

Optimizing the strategic, econom-ic, and technological benefits derived from cloud computing is a function of an organization’s ability to use its own IT-related resources and capabilities to leverage the resources of the vendor. Since cloud computing is generally characterized as an IT service (with the vendor providing and maintaining the software and hardware infrastructure), the ability of the client organization to integrate and utilize the vendor’s services determines the extent IT ben-efits are likely to be achieved. Orga-nization-specific capabilities related to implementation, integration, and utilization of cloud services play a key role in deployment performance. Our study focused on three IT-related ca-pabilities—technical, managerial, and relational—characterized as a major potential source of competitive advan-tage (see Figure 4).3,12 Since cloud-com-puting services are duplicated so eas-ily, an organization’s unique IT-related capabilities are difficult to copy and yield deployment success.

Technical. Technical capability rep-resents physical assets (such as com-puters, network equipment, and data-bases) or collective resources that give an organization functionality and a flexible, scalable foundation. It means being able to respond quickly to tech-nology shifts in the marketplace while not inhibiting implementation of new technology. Technical capabilities are a means of achieving greater IT econo-mies of scale and competitive advan-tage when leveraging the resources of cloud computing; for example, being responsive to the solutions offered through cloud services is more likely when the client organization’s techni-cal capability is sufficiently adaptable and scalable, enabling it to realize IT efficiency and reduced IT expenditures (deployment success) more quickly than a competitor.

An organization’s unique techni-cal capabilities coupled with cloud computing could yield improved cycle times and streamlined business pro-cesses distinguishing the organization from its competitors. The organization could also integrate new technologies

(such as cloud computing) with exist-ing platforms and exploit opportuni-ties synergistically across business units; the business and economic potential of emerging technologies would be realized more quickly and cost effectively. Greater technical capa-bility would also limit the complexities of cloud implementation and integra-tion, enabling the organization’s IT department to deliver new technology more efficiently. Robust technical ca-pability would increase the likelihood that adopting cloud services would enhance IT-related economies of scale and free up resources for core busi-ness activities—components of perfor-mance and competitive advantage.

Managerial. The likelihood of an or-ganization implementing a new system successfully is a function of its manag-

trust develops through communication, procurement, and transactional activities, culminating in the it manager’s perception that the vendor is trustworthy, reliable, evenhanded, and working in the best interests of the client.

Figure 3. Server racks for servers that give cloud users the ability to grow capacity through an iaaS cloud-computing model.

Figure 4. organization-specific capabilities that can be a source of competitive advantage.

technical. It resources giving the organization functionality, flexibility, and scalability.

managerial. Human It resources resulting from training, experience, and insight.

Relational. Ability to develop positive associations with It providers characterized by trust.



ers’ ability to coordinate the activities associated with the implementation effort.16 Human IT capabilities are critical to the client organization real-izing the benefits of cloud computing since they represent the accumulated training, experience, and insight be-hind the managerial capability needed to implement cloud services. Manage-rial capability includes the business and technical skills, as well as organi-zation-specific knowledge, required to recognize the potential of emerging technologies to influence the organiza-tion’s overall performance.

An IT manager’s technical skills might include a systems-thinking ap-proach to integrating emerging tech-nologies into an existing IT infrastruc-ture, as well as project coordination and leadership skills that work with techni-cal skills to exploit new technologies ahead of the competition. Greater lev-els of managerial capability would im-prove the effectiveness of new technol-ogy integration into existing business processes. Organizations with highly capable IT managers or strong techni-cal and business skills should likely be better positioned to distinguish among the services available from cloud ven-dors and implement cloud solutions that complement business strategy. Managerial capability also includes the organizational knowledge necessary to anticipate future business needs and understand how emerging technologies affect business performance. A capable IT manager is more likely to implement

trust as the adopting organization’s expectation that the cloud vendor will perform as expected and treat the cli-ent organization fairly and reasonably. Many interorganizational studies fo-cus on the relational characteristics between organizations in terms of strength and degree of trust and how these characteristics affect renewal, dissolution, and other business perfor-mance outcomes. Researchers say in-terorganizational trust is a predictor of behavior between two organizations, with fulfillment of the positive expec-tations of the partner inspiring confi-dence in the relationship.19

Trust can be deconstructed into two dimensions: cognitive and affective.13 From a cognitive perspective, trust is the adopting organization’s perception that the cloud vendor has delivered as promised. The cognitive dimension is understood in terms of organizational competence in which competence trust9 is based on the organization’s be-lief that the cloud vendor has the req-uisite skills, abilities, and expertise to facilitate cloud deployment. The affec-tive dimension assesses the perception of genuine concern and care, as dem-onstrated through the cloud vendor’s actions. Openness trust9 highlights the importance of honest communication and willingness to share information between partners characterizing affec-tive trust.

Openness trust contributes to com-petitive advantage since it develops over time and may be difficult to imi-tate or substitute. The stronger the tie between the client organization and its cloud vendor and the more intangible the value so derived, the more difficult it is for competitors to imitate and com-pete. Interorganizational trust thus plays a key role in the performance of cloud computing, as it should increase the willingness of the partners to work collaboratively, transfer resources, limit perceptions of opportunistic be-havior, and lower transaction costs. In-dicators of trust can include the cloud provider securing the client organiza-tion’s data and delivering reliable ser-vices, evenhandedness in the negotia-tion process, and timely assistance. As relational trust increases with a cloud provider, the client organization real-izes greater IT economies of scale and deployment success.

cloud computing effectively and also have a direct influence on the business outcome of cloud deployment. That is, an astute IT manager would exploit the advantages of cloud computing across business units to enhance overall orga-nizational performance, likely minimiz-ing IT-related expenditures and improv-ing IT economies of scale.

Relational. Relational capability re-flects an ongoing positive association between the IT manager and the cloud vendor where the vendor has a clear understanding of how cloud services benefit the client organization and is motivated to deliver. The client organi-zation must be confident the cloud ven-dor is working to help it leverage its IT resources. Some of this confidence may develop from the give and take of pro-curement and contract negotiations, while trust develops through commu-nication, procurement, and transac-tional activities, culminating in the IT manager’s perception that the vendor is trustworthy, reliable, evenhanded, and working in the best interests of the client. Organizations looking to build strong, trusting relationships tend to be effective in their cooperative efforts with strategic partners.10 Since trust is a key factor in interorganizational rela-tionships, we define it as a specific rela-tional capability and worth examining in its role in cloud deployment.

In business, trust generally refers to one party in the relationship having confidence in the other party based on alignment of value systems.5 We define

Figure 5. model of cloud deployment.

ß = 0.251**

ß = 0.335**

relational(trust)

ß = 0.269**

technical

Managerial

CloudDeployment

Successr2 = 0.49

Fit Indices:X2/df = 1.99, GFI = 0.93, AGFI = 0.87CFI = 0.96, NFI = 0.93, rMSeA = 0.04** p < 0.01



model Deployment In the hypothesized relationships in cloud deployment, success depends on positive linkages with the client organization’s technical, managerial, and relational capabilities (see Figure 5). Our survey of organizations adopt-ing cloud computing was a test of the cloud-deployment model (see Table 1). We collected a total of 314 usable ques-tionnaires based on on-site interviews, online participation, and telephone in-terviews. Participants, mainly IT man-agers, provided subjective evaluations of their relationship with cloud ven-dors, including the vendor’s technical ability (such as speed of integration), managerial ability (such as to exploit emerging technologies),15 the affec-tive dimension of trust (such as fair-ness and trustworthiness),19 and the cognitive dimension of trust (such as service reliability).9 We also asked par-ticipants for their perceptions of their deployments (such as “meets business needs” and “produces timely informa-tion”)7 and verified all survey items met the requisite tests for reliability, internal consistency, and validity. We tested the structural-equations model using AMOS 7.0 analytical software, finding the model-fit indices in Figure 5 all meet the standard thresholds for acceptability of the fit of the data to the model (see Table 2).

model Results We found that trust, managerial ca-pability, and technical capability each have a significant relationship with cloud-deployment performance. The results of the user-vendor partnership imply that when a client organization and its cloud vendor develop a relation-ship characterized by trust, the client is more likely to realize the technical and economic benefits for which it origi-nally pursued cloud computing. The importance of trust in the client-or-

nization is characterized by strong technical and managerial capability, it is more likely to achieve greater IT economies of scale, as well as greater access to skilled IT personnel and key technologies. The three factors mod-eled as influential in the organization reaching its cloud-computing poten-tial explain a large percentage (49%) of

ganization/cloud-vendor relationship cannot be overstated when organiza-tions move to cloud services. Trust is a strong predictor of deployment suc-cess and key factor in effective collab-oration and assurance that the client organization’s cloud strategy is imple-mented in its best interests.

Moreover, when the client orga-

table 1. Survey-respondent demographics and cloud use.

Industry Frequency %

It 75 23.7%

Manufacturing 63 19.9%

Finance 52 16.4%

Logistics 46 14.5%

Service 44 13.9%

education 27 8.5%

Location

Asia 92 29.0%

North America 81 25.6%

europe 79 24.9%

Australia 34 10.7%

Africa 17 5.4%

other 14 4.4%

Cloud Services Used

Saa S 134 42.3%

Iaa S 117 36.9%

paa S 66 20.8%

Cloud Delivery Methods

public 134 43.8%

private 91 28.7%

Hybrid 72 22.7%

other 15 4.7%

Reasons for Cloud Use

Cost Savings 126 39.7%

Information Sharing 101 31.9%

performance over in-house 87 27.4%

In-house performance degradation 73 23.0%

other 16 5.0%

random Sample of 314 Firms

table 2. hypotheses test results.

hypothesis effects Path coefficient t-value Results

H1 trust → Successful cloud deployment 0.251** 10.438 Supported

H2 technical capability → Successful cloud deployment 0.335** 7.950 Supported

H3 Management capability → Successful cloud deployment 0.269** 8.273 Supported

** p < 0.01



the variance in cloud-deployment suc-cess among our survey participants, senior IT managers. This is another indication of their importance in the cloud-computing model, where maxi-mizing the benefits of the cloud is es-sential for operational performance and business success.

Sources of advantage While cloud computing should deliver benefits to any client organization, the challenge of differentiating an organi-zation and gaining advantage depends on development and use of internal IT-related capabilities. Organizations may differentiate themselves despite applying similar IT solutions when or-ganization-specific capabilities are em-ployed to leverage IT resources. IT cost reductions, IT economies of scale, and performance (deployment success) are expected outcomes when technical, managerial, and relational capabilities optimize cloud implementation.

Despite implementing uniform information technologies, organiza-tions can create competitive advantage through superior interorganizational relationships with their cloud provid-ers. The related trust would lower the cost of negotiations, as well as the possibility of related conflict. It would also enhance cooperation between the organization and the vendor by creat-ing favorable conditions for construc-tive exchange and shared governance. Genuine cooperation and the coordi-nation of activities should encourage the organization and its cloud provider to explore new ideas, increasing the likelihood of achieving shared goals. In contrast, a lack of trust indicates a heightened sense of suspicion that would impede effective exchange of information. Such conditions would cause the client organization to re-think its vendor relationship and sec-ond-guess its own cloud-deployment decisions.

Organizations with rigid IT infra-structure generally lack the ability to fully implement a cloud strategy. IT managers who lack business knowl-edge and IT understanding of how to exploit cloud technologies or integrate a cloud solution across business units would likewise hinder successful de-ployment. However, an organization without effective technical and mana-

gerial capability might achieve perfor-mance gains and IT cost reduction but not competitive advantage.

Our study leads us to suggest that prior to implementing cloud comput-ing, any potential client organization should assess its technical and mana-gerial capabilities, as well as its ability to develop positive relationships with IT providers. The extent these capa-bilities are (or are not) developed deter-mines how well cloud services achieve the organization’s goals and potential competitive strategy. Organizations devoid of such capabilities are encour-aged to develop or obtain them prior to cloud implementation to create the proper IT environment. Effective orga-nization-specific IT capabilities mean greater probability of cloud success, with the organization more likely to reduce IT costs, achieve IT economies of scale, and redirect resources toward key business activities and core compe-tencies that yield long-term competi-tive advantage.

ConclusionCloud computing services can pro-vide IT functionality to small and large organizations alike. Organiza-tions throughout the industrialized world, challenged by competition and government regulation, show strong interest in cloud computing to help reduce operating costs and increase business agility while addressing their computing and data-storage needs.18 While many benefits are associated with cloud computing, one key to suc-cess is for the client organization to use its IT-related capability to leverage cloud-provided resources. Organiza-tion-specific IT capabilities, coupled with homogeneous information tech-nologies, promise a differentiated IT environment that can be a source of competitive advantage. Management and market factors being equal, orga-nizations that develop and strengthen their IT-related capabilities are likely to realize greater value from their investment compared to organiza-tions that implement only a cloud re-source.

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Gary Garrison ([email protected]) is an associate professor of information systems management in the Jack C. Massey graduate school of Business of Belmont university, nashville, tn.

Sanghyun Kim ([email protected]) is an associate professor of management information systems in the school of Business administration of Kyungpook national university, Daegu, Korea.

Robin L. Wakefield ([email protected]) is an associate professor of management information systems in the hankamer school of Business of Baylor university, Waco, tX.

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Success factors for deploying cloud computing