1 SRI LANKA INSTITUTE OF INFORMATION TECHNOLOGY FACTORS INFLUENCING THE ADOPTION OF CLOUD COMPUTING FOR SMES IN SRI LANKA This dissertation is submitted as a partial fulfillment of the degree of Master of Business Administration NLGN Sandamali MB20854942 4 ACKNOWLEDGEMENT Firstly, I would like to express my special thanks of gratitude to my research supervisor Prof. Samantha Thelijjagoda, Dean, SLIIT Business School for guiding me throughout the study. His guidance made a lot for me to complete this research study in a meaningful way. I sincerely thank Prof. Ruwan Jayathilaka, Head of the Department of Information Management and coordinator of the subject for his valuable advice throughout the period of my research work. I wish to express my gratitude to all the members of academic staff of SLIIT- MBA for their support to complete my research project successfully. My heartfelt thanks also goes to my beloved husband Ajith Ramawickrama, daughter Enoli Ramawickrama and loving parents for their blessing and enormous support during my research period. Finally, I would like to express my thank for all my colleagues ( MBA 2020 January batch) in SLIIT Business School for assisting me in various ways during this study. 5 1 Table of Contents ACKNOWLEDGEMENT ................................................................................................................. 4 Abstract .............................................................................................................................................. 9 1. CHAPTER 1- INTRODUCTION ........................................................................................... 10 1.1 Research Problem .............................................................................................................. 10 1.2 Research Questions ........................................................................................................... 11 1.3 Research Objectives .......................................................................................................... 11 1.4 Significance of the Study .................................................................................................. 12 1.5 Scope and Limitations of the Study .................................................................................. 12 1.6 Chapter Outline ................................................................................................................. 13 2 CHAPTER 2 - LITERATURE REVIEW .............................................................................. 14 2.1 Cloud Computing .............................................................................................................. 14 2.1.1. Types of Cloud Services ..................................................................................................... 14 2.1.2. Cloud Deployment Models ................................................................................................. 16 2.1.3. Cloud Providers .................................................................................................................. 18 2.2 Small & Medium Scale Enterprises in Sri Lanka ............................................................. 19 2.2.1 Definition- SMEs ........................................................................................................... 20 2.2.2 Literature on Adoption of Cloud Computing for SMEs ................................................ 21 2.3 Adoption Theories ............................................................................................................. 22 2.3.1 Diffusion of Innovation Theory ..................................................................................... 22 2.3.2 Technology, Organizational and Environmental framework ......................................... 23 2.3.3 Factors Influencing the Adoption of Cloud Computing TOE Framework ..................... 24 2.3.4 DOI Theory .................................................................................................................... 26 3 CHAPTER 3 - RESEARCH METHODOLOGY ................................................................... 28 3.1 Introduction ....................................................................................................................... 28 3.2 Research Design ................................................................................................................ 28 3.3 Preliminary Study .............................................................................................................. 28 3.4 Sampling............................................................................................................................ 29 6 3.5 Conceptualization Framework .......................................................................................... 29 3.6 Hypotheses ........................................................................................................................ 30 3.7 Operationalization ............................................................................................................. 31 3.8 Data Collection Method .................................................................................................... 31 3.9 Data Analysis Techniques ................................................................................................. 31 4 CHAPTER 4 - RESULTS AND DISCUSSION ...................................................................... 32 4.1 Results ............................................................................................................................... 32 4.2 Discussion ......................................................................................................................... 41 5 CHAPTER 5 - CONCLUSION AND RECOMMNEDATIONS............................................. 44 5.1 Conclusion ......................................................................................................................... 44 5.2 Recommendation ............................................................................................................... 44 5.3 Limitations of the Study .................................................................................................... 45 REFERENCES ................................................................................................................................ 47 APPENDICES ................................................................................................................................. 50 7 List of Tables Table 1- Framework for SMEs ............................................................................................................ 20 Table 2 - Definition of SMEs............................................................................................................... 20 Table 3- Correlations between cost, security, and scalability with relative advantage of cloud computing ............................................................................................................................................ 35 Table 4 - Correlation- Hypotheses ....................................................................................................... 36 Table 5 - Coefficient- Multiple Leaner Regression ............................................................................ 39 Table 6 - Hypotheses Testing .............................................................................................................. 40 List of Figures Figure 1 Types of Cloud Services ........................................................................................................ 16 Figure 2 Types of cloud deployment model ........................................................................................ 17 Figure 3 - DOI Theory ......................................................................................................................... 23 Figure 4 - TOE Framework.................................................................................................................. 24 Figure 5 - Conceptualization framework ............................................................................................. 29 Figure 6 - Percentage of Responses- Industry ..................................................................................... 32 Figure 7 - Percentage of Responses – No of Employees ..................................................................... 33 Figure 8 - Percentage of Responses- Year in Business ........................................................................ 34 Figure 9 - Percentage of Responses- Provinces ................................................................................... 34 8 List of Abbreviations DOI- Diffusion of Innovation IaaS – Infrastructure as a Se Service ICT- Information Communication Technology IS – Information System IT - Information Technology PaaS – Platform as a Service PC – Personal Computers SaaS – Software as Service SDKs- Software Development Kits SME- Small Medium Enterprises SPSS – Statistical Package for the Social Sciences TOE- Technology, Organization, Environment 9 Abstract Cloud computing is a computing paradigm provides many advance computing services for organizations via internet on pay- for- use based. This paper examined the multiple factors influence the adaption of cloud computing for SMEs in Sri Lanka. The research model developed by combination of diffusion of innovation (DOI) theory and technological, organizational and environmental (TOE) framework. Data were collected from 87 SMEs in Sri Lanka by online survey and analyzed using Pearson correlation coefficient and multiple linear regression methods. Six main hypotheses were tested with three sub- hypotheses. Results were shown that relative advantage, complexity, top management support, and technology readiness were positively influenced and regularity support and competitive pressure were not positively influenced for the cloud adaption for SMEs in Sri Lanka. Key words: Cloud computing, Cloud adaption, Small and medium scale enterprises (SME), Diffusion of innovation (DOI) theory, Technology, organizational and environmental framework (TOE)