CC Researchreport FINAL

8/2/2019 CC Researchreport FINAL

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CHAPTER 1

INTRODUCTION AND BACKGROUND

By the turn of the 21 st century, with the empowerment and widespread of

information, communication and technology, and the evolution of the Information

and Communications Technology (ICT), The Cloud came to our world.

Cloud Computing is a service that disrupts the conventional data center,

where you keep acquiring servers, personal computers and software licenses as

your business grows. Running application services on a cloud platform movesCapEx (capital expense) to OpEx (operational expense), because business can

develop, deploy and use more application services as they require them, without

needing huge initial capital investments (and ensuing operational costs) for

dedicated infrastructure that may never be needed.

Small and medium-sized enterprises (SMEs) play a central role in a

countrys economy. They are a major source of entrepreneurial skills, innovation

and employment for they are 95% of the economy (World Bank, 2006).

Countries in the world are moving from an industrial economy to a

knowledge economy in which economic growth is dependent on a countrys

ability to create, accumulate and disseminate knowledge. Computers and the

Internet helped the growth of the knowledge economy by allowing people to

acquire knowledge digitally easily transmitted from anywhere around the world.


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SME usage of ICT ranges from basic technology such as radio and fixed

lines to more advanced technology such as email, e-commerce, and information

processing systems. The use of Email, Internet browsing, intranet, file sharing,

creating websites, e-commerce, Voice over Internet Protocol (VoIP) falls into the

category of e-business, including the use of Cloud Computing.

An SME will definitely have a significant advancement in the delivery

services, and an advantage in speed, agility and efficiency. By providing on

demand access to a shared pool of computing resources in a self-service,

dynamically scaled and metered manner. However, is Cloud Computing really

suitable for SMEs?

Statement of the Problem

With the increasing rate of development in Information and

Communication Technologies (ICTs) and the increasing complexities of demands

from clients, SMEs from other countries have began adopting advance ICT

products and services to increase efficiency and productivity while reducing

operational cost. However, Kotelnikov, stated that the Asia-Pacific region is

lagging behind the others bec ause of the fact that many SMEs are not aware of

the benefits and the direct financial gains to be attained by adopting ICT (2007).

The researchers decided to adapt this statement in the local context and tospecifically focus on cloud computing as an emerging technology in the country.

Thus, the research paper will focus on the benefits and the direct financial gains

of SMEs in the Philippines attained by adopting cloud computing .


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Moreover, the study will attempt to answer the following questions:

1. What are the perceived benefits of cloud computing to SMEs ?

2. What programs or regulations regarding the advocacy of ICTs in the

Philiipines currently exist?

3. Which government or private entities would bring significant assistance to

the proliferation of advocacy and use of cloud computing technology

amongst SMEs?

Hypotheses

Based on the reports and articles gathered by the researchers, they have

come to formulate that if the government implements a more aggressive ICT

awareness and assistance campaign then SMEs would be more knowledgeable

about the benefits of implementing cloud computing.

Significance of the Study

The global business economy operates year -round without regard in time,

location, geographic boundaries, language or culture. For any business to

succeed, it must create a technology platform and infrastructure that operates in

the same way (Haag et al, 2007). Thus being said, conducting a study to

further improve a business is a pursuit that will always be welcomed in any

community. Business as a whole does not only generate livelihood and jobs for


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people, it also fosters the improvement of technology and innovation due to the

complexity of demands that from consumers and clients (Reynolds, 2010).

The majority of the business sector comes from SMEs thus, this sector

proves to be a great driving force in any country. The Department of Trade and

Industry recognizes the significant contributions of the SME sector; moreover,

this group tends to be more innovative in developing indegeno us or appropriate

technology, which may be grown later into pioneering technological

breakthrough (2009). This sector is more than willing to adopt new technologies

to increase the rate of improvement within the core of their organization;

therefore, it is advantegous for this group to stumble upon a study that may

contribute to their improvement and development.

Within the business and IT industry around the world, Cloud computing

can be considered one of the most controversial trends in IT as of today.

Conducting a study within the local context of the Philippines may serve as a

supplement to the further examination of the appropriation of this technology in

the SME sector.

To the Country

The researchers believe that the ICT advancement of SMEs in the

Philippines can help develop the countrys economy dramatically, for SME s are

97% of the Philippines economy. Cloud computing will help SMEs grow and

become more efficient, which will soon require more people to work which will

definitely improve the c ountrys economy.


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To the Community

The community can benefit from the great and quick service they get from

ICT equipped, super SMEs, thanks to Cloud Computing. The promise of

simplifying business transactions in shorter periods of time through commonly

used devices is now more viable. The increase of a business productivity affects

not only their clients but their employees as well. The success of a business in a

local district may mean more employment jobs for the members of the

community.

To the Students

Cloud computing may still be in the early stages, however, as projected by

IT practitioners it can transform the means and ways that business can operate.

Students might as well be informed about the emergence of this innovation. This

study may be a medium where students will have the basic knowledge on Cloud

computing and the benefit it brings to an individual or an enterprise. Awareness

of emerging technologies may also inspire them to be more innovative.

To Future Researchers

Future researchers may find this study valuable for it contains accurate

and reliable data to be studied or developed. This study may also help in the

improvement of ICT technologies in developing countries such as the Philippines.


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Scope and Delimitation

Cloud computing is relatively new to the Philippines, thus, knowledge and

awareness of this technology is still in its latent stage. The researchers have

opted to focus on SMEs based in Metro Manila due to the fact that majority of the

businesses are based in the NCR (DTI, 2009). The research will also be based

on interviews from industry expert and random surveys from various SMEs

coming from different industries aside from journals and articles in print and

published online. Programs and advocacies coming from the government and

private sectors will also be studied for this paper.

Due to the strained period of research, the report does not focus on any

specific industry or business . The research offers an overview of the perceived

benefits the cloud computing technology can offer to SMEs. Also, due to the

latent stage of cloud computing and the lack of awareness, the researchers

based several aspects of the research from the answers of the industry experts

they were able to contact for this paper.

Theoretical Framework

To further understand the how to promote the potential benefits of cloud

computing to SMEs, theories on Adoption and Acceptance of Technology and

Innovations will be utilized in this paper.

First, the Technology Acceptance Model (TAM) would provide the most

probable reasons why a technological innovation is accepted within an

organization. As a supplement to the former, the Technology, Organization and


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Environment (TOE) Framework, will attempt to focus more on the factors that

organizations consider before they adopt a new technology.

Telecommunication companies, such as Globe and PLDT, have started

introducing cloud computing ventures to their clients (Reyes, 2010). With the

availability and the competitive prices of mobile services in the country, the

dessimination of cloud computing applications would be easier to diffuse down

the levels of an organization. Once an owner of a company approves of an

application to be used within the organization, the ease of accessing data online

would be readily available to their members. There will be no need to login the

office computer to view reports and data needed by individuals. Information will

always be accessible and available to them.

TAM: Technology Acceptance Model (Davis, 1989)

This theory assumes that the perceived ease of use and usefulness of an

innovation determines the intention of an individual to use a system. TAM, which

has strong behavioral elements, posits that when there is an intention to act

from individual, he will be free to act without restrictions. This, however, is an

ideal situation and in reality there are factors such as time, organizational or

environemental limits and limited ability that inhibits the freedom to act (Davis,

1986).

Entrepreneur magazine recently featured an article on cloud computing

and how it benefits entrepreneurs. Orrock says that For small and medium

enterprises(SMEs), one of the major barriers in acquiring technology is cost


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(2011). The advantage of reducing IT capital and ongoing support cost with the

added simplicity of accessing payroll systems or accounts through any device

equipped with a web browser makes cloud computing an attractive venture to

invest in (Orrock, 2011). The ease of using applications specifically tailored for

the needs of an organization and the usefulness in reducing expenses is

projected to influence the acceptance of cloud computing by SMEs. Moreover,

through cloud computing, the luxury of increasing productivity through

applications that automate day-to-day processes used by biggers businesses

can now be readily available to smaller enterprises. The advantages of cloudcomputing, as presented in the aforementioned example, can be assumed to

attract more SMEs to look in to the utilization of cloud applications.

TOE : Technology, Organization, and Environment Framework (Oliviera and

Martins, 2011)

This theory, conceptualized by Tornatzky and Fleisher, describes 3

aspects of an enterprises context that influences the process by which it adopts

and implements a technological innovation . The first aspect is the technological

context which describes the relevant external and internal technologies used by

an enterprise. This includes the current equipment and practices found internallyinside a firm. External set of technologies are also factored in this context. The

second aspect is the organizational context that is about the descriptive

measures of the firm such as the size, scope and managerial structure. The last


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aspect of TOE is the environment context arena where a firm conducts its

business its competitors, industry, and government dealings. (Oliviera and

Martins, 2011).

Each industry has different needs and specifications when it comes to

day-to-day processes. Salesforce, an international cloud computing solutions

company, offers consultation to address the distinctive needs of a company. In

the Philippines, Salesforce caters to various companies such as Avon,

Dermatologica and UST-a business solutions group. Coming from different

industries, these companies have unique needs from each other and cloud

computing is working to their advantage (Salesforce, 2011).


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Paradigm

Figure 1. Technology Acceptance Model (Davis, 1989)

Figure 2. Tornatzky and Fleishers Technology, Organization, and

Environment framework (Oliviera and Martins, 2011).

PerceivedUsefulness

PerceivedEase of Use

BehavioralIntention to use Actual System Use


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Definition of Terms

Since the research will delve in technology and business topics, it would

be best to define the commonly used terms that readers will find in this paper for

them to better understand the ideas and concepts that are discussed here.

These terms are as follows:

1. CapEx - Capital Expenditure refers to the funds used by a company

to acquire or upgrade physical assets such as property, industrial

buildings or equipment.

2. CICT - Commision on Information and Communication Technology.

This commission is the primary policy, planning, coordinating,

implementing, regulating, and administrative entity of the executive

branch of the Government that will promote, develop, and regulate

integrated and strategic ICT systems and reliable cost-efficient

communication facilities and services.

3. DTI - The Department of Trade and Industry is the primary

government agency with the dual mission of facilitating the creation of

a business environment wherein participants could compete, flourish,

and succeed and, at the same time, ensuring consumer welfare. "

4. e-Commerce - Electronic commerce describes the process of of the

buying and selling of products or services over electronic systems

such as the Internet and other computer networks.


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5. E-mail - Electronic Mail is a method of exchanging digital messages

from an author to one or more recipients across the Internet or other

computer networks.

6. ICT - Information and Communications Technology is the use of

information in order to meet human need or purpose including

reference to the use of contemporary devices such as the Internet.

7. Internet A worldwide public network of services for businesses and

counsumers

8. Internet Protocol - The method or protocol by which data is sent from

one computer to another on the Internet.

9. Intranet a company-specific network modeled after the Internet

10. IT - Information Technology refers all the tools that capture, store,

process, exchange, and use information. This field includes

hardware, such as mainframe computers, s ervers, PDAs, and

laptops.

11. IT infrastructure a defined set of software, IT hardware, and

networks in an organization.

12. NCR is the center of Luzon and capital region of the Philippines

13. OpEx - Operational Expense is the ongoing cost for running a

business, system or product .


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14. SMEs - Small and Medium Enterprises refers to any business

activity/enterprise engaged in industry, agri-business/services,

whether single proprietorship, cooperative, partnership, or corporation

whose total assets, inclusive of those arising from loans but exclusive

of the land on which the particular business entity's office, plant and

equipment are situated. The enterprise must have more than 9 but

less than 200 hundred employees

15. VoIP - Voice over Internet Protocol is one of a family of internet

technologies, communication protocols, and transmission

technologies for delivery of voice communications and multimedia

sessions over Internet Protocol (IP) networks, such as the Internet.


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CHAPTER 2

DISCUSSION OF THE PROBLEM

As early as the 80s, trend watcher John Naisbitt gave an emphasis on the

occurrence of an information explosion. He stated the fact that we have been

converted from an industrial society to an information society and that

economies will be built on production, management and the use of information

(Senn, 1990). Also from Senns book, Information Systems in Management,

several trends were projected to appear in the business sector and the more

notable trends related to the study are: First, the faster pace of business;

second, the improvement of productivity; third, the global business community;

fourth, the change to information society; and lastly, the availability of computers

to end users.

As stated earlier, the economies have come to transform into an

information society or a knowledge society. Instead of the usual brick and mortar

systems, companies have adapted to the changing times and implemented new

technology and innovations in their organizations. Information became a

commodity in functioning and leveraging a business upward.

With the transformation of economies into information societies, the rapid

change in communication came with it. Marshall Mcluhan (1964) popularized the

global village concept which in turn conceived the idea of global business

communities. Simply put, the advancement of technology, specifically in the ICT

sector, made communication with someone from the other side of the world


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faster as though he inhabits the same physical space such as, people living in

the same district or village (Symes, 1995). From simple telephones and fax

machines to the Internet and the advancement in mobile communication -- these

various mediums enhanced the ability of businesses to transact more efficiently

and in a shorter period of time as compared to the tedious business processes a

few years back.

A concrete example of this is the leading e-commerce company, e-

bay.com; this company which is located in California, brought people together

from various countries because of the service they gave, as a virtual market

where people can buy and sell their products. Buying online became as easy as

buying in your local supermarket. The ease of conducting business online, even

with people who live across the globe, strengthened the global business

community trend.

As countries and people miles apart become closer than ever through the

continuous improvement of technology, specifically through the Internet, it does

not come as a surprise to find out that as time passes by, there is also an

increasing need for more detailed and accurate information to make a business

run smoothly and become more competitive (Senn, 1990).

The forefront sector that brings in competition in the business industry isSME sector. With their number and their openness to new trends, innovations

and technologies, this sector proves to be a significant factor in the promulgation

of cloud computing in any country (DTI, 2009).


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day process and this would not be possible without the use of localized cloud

computing processes in a form of an excel file that is shared and updated by

each department as soon as the applicant is over with the steps on their end.

Some of the properties of cloud computing are: user-centric, powerful,

accessible, intelligent and programmable. First, only authorized users can gain

access to the information while it can be dissimilated throughout a network of

computers with just one click. Updating of the information can be updated in real

time and the analysis for the date can be concise and be double checked in an

intelligent manner. Lastly, since it is automated, all the rest of the time in motion

activities are shortened, making it more effective and efficient. (Winnans, 2009)

Benefits would cover: lower initial cost, overhead minimalization,

maximum mobility, better collaboration and increased safety. Instead of buying a

set of software for each central processing unit, only one is needed and can be

processed via the server. The upgrading of system will only affect the server and

not the individual units tagging along with it which results to savings instead of

additional overhead expenses. Since all the applications are over the Internet,

you can work anywhere as long as there is access from the service provider. The

working and updating of files will be better than before as they are reachable via

browser equipped devices. The best part of this is that this critical file is securely

stored somewhere where viruses and other threats are reduced to zero because

its only viewed on the same place w hich is the server (Kitch, 2010) (Gartner,

2009).


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Cloud computing can be applied to enterprises and be based on the

concept of integrating information and methodologies into a program. A unifying

key factor is that this planning may be used with different application modules to

store organizational data. The availability of data is crucial to the foresight of the

business and can determine the success or failure of such. Reduction of

constant monitoring, updates on between systems, hardware requirement

spending and multiple applications setting are just of the few factors that would

be an advantage. Bottom line: redundancy and reliability are more likely to be

seen with this trend. (Singh, 2010)

A perfect example of this is the evolving system of Luzon Brokerage

Corporation (LBC), a local express courier and money express service provider.

LBC started out as a brokerage and air cargo forwarding service provider and

currently, they offer worldwide couriers services that offers online tracking for

their customers who would want to view where their package is at a specific time,

and as a counter measure for them to make sure the package goes to the right

address.

Another trend that is already happening right now is the increase of

availability of computers to end users. Asian Developmen t Banks survey in the

Philippines came out with the result that 7.3 percent (per 100 people) in the

country has access to a computer. The reach of personal computer use has

spread out from the year 2000 until 2007 (ADB, 2007). The adoption of

computing technology in the country steadily increases year after year. These

trends are currently found not only in big corporations but also in the SME sector.


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As mentioned earlier, SMEs in the Philippines make up 99.6 percent of all

the existing businesses. With their large number, SMEs are seen as a vital entity

in diffusing new industries to the urban areas and stimulating lucrative

employment. Thus, compared to bigger corporations, they are relatively quicker

in adopting and infusing new design trends, developing contemporary products,

and bringing them to the marketplace ahead of competition. SMEs tend to be

more innovative in developing indigenous or appropriate technologies (DTI,

2009); therefore, the implementation of advanced ICT in this sector would be

more plausible in a few years time.

As a whole, ICT investments made by SMEs would greatly differ from the

ICT investments by large firms because a smaller number of people have

decision-making responsibility, standard procedures are not instituted, long-term

planning is limited, and there is more reliance on external IT experts in SMEs

(Lester and Tran, 2008).

In 2011, fueled by the increased complexity in ICT needs of enterprises,

as well as the ever- evolving needs of SMBs and consumers increased u sage of

ICT, the market will see an even larger scale of competition. As a result, ICT

stakeholders such as vendors, service providers (SPs) and channels would need

to focus on coming up with products and services that offer specific business

value to clients; smart pricing models; more tactical partnerships with strategic

players within the ICT ecosystem; and, feeding channels with transformational

initiatives said Jubert Daniel Alberto, manager for IT spending research at IDC

Philippines.


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ICT plays a very important role because it can help SMEs create both

business opportunities and combat pressures from competition. Appropriate ICT

can help SMEs cut costs by improving their internal processes, improving their

product through faster communication with their customers, and better promoting

and distributing their products through online presence (IDC, 2010).

Cloud Computing In A Nutshell

The researchers found that although cloud computing seems very new to

the perception of many, especially in the Philippines, cloud services have already

existed in more ways than one in our society. An interview with Dominique

Catacutan, an Information Security Analyst for Asian Development Bank,

described the most common way majority of Filipinos experience a certain kind of

cloud service without their knowledge. He says that we have been subscribing to

cloud service ever since we signed up for electricity distribution from Meralco.

He emphasized that this service is an example of a cloud service because

consumers don t normally concern themselves where electricity from Meralco

comes from, the important elements consumers care about is how much to pay

and the quality of service that Meralco delivers to them and every other backend

element is thrown in the cloud, curta iled by various legal and corporate

machinery that consumers dont need to know (Catacutan, 2011).


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With this refreshing analogy in mind, the researchers have come to better

understand that this technological innovation has been around for quite some

time and is now being revolutionized to a more customizable delivery of service

for the needs of different clients.

Research shows various version of the definition for cloud computing and

these usually confuse rather than help in explaining to business owners what the

cloud is and what cloud computing can do.

Technically speaking this cloud is a representation of the Internet in

schematic diagrams. Management Information System (MIS) journal online

defined cloud computing as a general term for anything that involves delivering

hosted services over the Internet (2010), instead of increasing the overhead

expenses of a company through buying and maintaining their own servers, cloud

computing service providers assume the responsibility of keeping your data in

their servers which a client can access through the Internet. As Dominique

Catacutan said, cloud computing is another form of delivery of IT services

(2011).

Various studies and literature from academes and vendors are scattered

online and on print talking about the revolution of the cloud computing

technology. Some writers tell their readers to be cautious of companies that rideon the increasing popularity of cloud computing. Business owners and managers

must be very stringent in examining vendors and the services they offer.


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Consumers must be guided when choosing service providers and vendors

of cloud computing services. The next part of this study will talk about the

important characteristics that must be present in any service that presents itself

as a product of the cloud computing technology.

KEY PROPERTIES OF CLOUD COMPUTING

1. User Centric : once connected a user is

authorized to access anything that is stored there i.e.

messages, documents, images, etc. Consumers

should see or need not involve themselves in the

details of implementation (Lester and Tran, 2008).

The service must be ready to use or off the shelf

because the service offered by vendors must already

be tailored according to the specific needs of

consumers. The articula tion of the service feature is

based on service level and IT outcomes (availability,

response time, performance versus price, and clear

predefined operational processes), rather than

technology and its capabilities. Simply put, the

quality of service provided is the main focus of cloud

computing rather than how the technologies are used

to address issues and implement solutions.

Everything must be easy to use without an expert


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knowledge in technology. (Arunsharma, 2010) (Brown

and Winnans, 2009)

2. Scalable and Elastic : the system is intelligent,

with all the various data stored on the computers in a

cloud, data mining and analysis are necessary to

access that information in an intelligent manner

(Arunsharma, 2010). The service can automatically

scale the capacity up or down as the consumer

demands. The result of such demands must be

implemented in real time or in a very short period of

time (which may be seconds for some services and

hours for others). Scalability is an element associated

with the underlying software platforms and

infrastructure while Elasticity is a feature of shared

pools of resources. The latter is also connected not

only to scale but also an economic model that

resembles scaling in both directions in and automated

fashion; resources can be added or removed on

demand (Gartner, 2008).


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3. Powerful : Cloud computing offers a service

which is from the wealth of computing power (MIS

online, 2010). The underlying software or platforms

and infrastructure are shared among the consumers

of the service. This concept produces maximum

efficiency and enables unused resource to serve

various needs for different consumers, all running at

the same time (Gartner, 2008) (MIS online, 2010).

4. Metered by Use : This model allows vendors to

create different pricing plans and models according to

the services needed by a client. Services are tracked

with the use of metrics thus enabling multiple

payment models that may include pay-as-you-go

plans, fixed plans, subscriptions and even free plans.

This concept bases the payment on the usage and

not on the cost of equipment used. Payment plans

may vary, terms may be in hours, use-based

attributes delivered or data transfer (MIS online, 2010)

(Gartner, 2008)


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5. Uses Internet Technologies : The service is

delivered using Internet protocols, such as URLs,

HTTP, IP and representational state transfer Web-

oriented architecture and identifiers, and formats.

With the emergence of smart phones, accessibility of

web services became easier. This characteristic must

innately occur within a cloud computing service. As

aforementioned, cloud computing services must be

accessible through any device that can browse theInternet (Garner, 2008) (Brown and Winnans, 2009).

Cloud Computing Benefits For The Local SMEs

Cloud computing offers many benefits such as accessibility, cost

reduction, elimination of maintenance and upgrading, security, and reliability.

Business owners or managers always try to find means to reduce overhead

expenses. Entrepreneur Philippines suggested 10 ways to save on costs and

one of the tips they gave out was to Think about leasing instead of buying... and

to operate business through mobile or lease a virtual office (2011). These issues

are directly addressed by the cloud computing technology. The benefits that candirectly be of advantage for SMEs are as follows:

1. Transparent Pricing : Instead of buying hardware and

software or applications for business productivity,


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consumers can now avail of these IT necessities

without paying for the services up front. This is one of

the beauties of cloud computing services; users can

customize and choose a payment plan that is

appropriate to the scale of their business. They lease

the application or IT infrastructure they need and pay

according to the approved metrics between the

consumer and the provider. This arrangement

releases the user from further obligations andresponsibilities of upgrading, maintaining and

physically storing hardware and software. The

provider does all the implementation and

maintenance while the user focuses more on revenue

generating activities which in turn aids in decreasing

the overhead expense and capital expenditure of a

company.

2. Business Continuity : Another advantage of adopting

this technology is the ease of accessing data. Any

device with an Internet browser can access, edit, save

and delete their data online. With the complex

demands coming from clients who want everything

done as soon as possible, this feature can be the


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solution to that problem. Databases, payroll,

accounts, spreadsheets and presentations can be

edited and viewed by various users simultaneously

without worrying about their physical location or the

device that they use. In the event of a disaster such

as earthquakes and terrorist attacks, providers and

businesses still need to continue operations. Cloud

computing providers utilize redundancy in data

storage to make sure that in any unfortunate event,the data from their clients are scattered in various

servers, which in turn keeps the data safe from being

destroyed. The ability of data recovery must always

be considered by businesses looking into investing in

a cloud service.

3. Reliability : Cloud infrastructure must be resilient

enough to handle new demands, occasional load

bursts and cyclic peaks without any depreciation in

service. Affordable and reliable Internet connectivity

remains unreliable in various parts of the country, a

cloud-based program or application must be able to

deliver the same quality of service in a quick response


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time, as promised by providers, even though there are

constraints in the network.

4. Configurable : Although some industries use the same

applications, it has to be taken into consideration that

every business is unique from each other. The ability

of a provider to configure an application specifically

for a business while sharing resources makes a

worthwhile investment for SMEs.

5. Security : Viewed as the most important feature to

consider, especially in businesses that deal with

sensitive information, high levels of security must

always be implemented by service providers. Vendors

must secure physical infrastructure, online

applications and programs and the personnel they

have in their organization. Mandatory background

checks for people and frequent vulnerability testing by

experts must always be part of their responsibility.

Data security is a big issue in the business community

and it is best to be vigilant when it comes to infusing a

certain system in an organization.


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6. Usability of Applications : Freedom from system

maintenance and upgrading; these features come

with the services of cloud computing. Vendors take

the responsibility of developing the software and

hardware used by a client. No technical knowledge is

required from users in order for them to utilize these

applications and programs.

7. Infrastructure and device independence: With cloud

computing services, consumers can enjoy device and

location independence of infrastructures used. These

are already handled by the vendors, thus, consumers

need only buy basic machines and devices that can

access the application and programs from the

Internet.

8. Shared Resources : Multi-tenancy or sharing of

resources and costs across a pool of users. This

system of resource sharing shaves off a significant

portion from the expenses of a business. Since

resources are shared, the operation costs are also

shared among those who are leasing the

infrastructure from the same service provider.


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9. Sustainability: Through improved resource utilization,

the carbon footprint of a company is greatly reduced

due to the lessened use of writing implements, and

hardware. Since cloud computing technology makes

use of resource sharing among consumers

sustainability of resource is advocated even without

conscious effort from clients. Aside from these, the

redundancy of systems used ensures that the data

stored online will not be easy to lose or destroy.

(Arunsharma, 2010) (PC World Philippines, 2010) and

(Orrock, 2011)

Overview Of Laws, Regulations, And Policies That Advocate ICT In The

Philippines

For a developing country such as the Philippines, sometimes the

existence of regulations and programs made for various sectors and industries

remain ignored by a majority of the population since they tend to focus on the

more explosive issues in their community. However, the researchers found out

that there are policies, laws and regulations that are championed by the

governments legislative law, namely the Commission on Information and

Communications Technology (CICT) that encourages the improvement and

development of ICTs in the country.


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The Philippine constitution covers a provision on the obligation of the

government to advocate and help in the adoption of technologies and innovations

that would improve the state of the nation as a whole. Article 14, Section 12

asserts that The State shall regulate the transfer and promote the adaptation of

technology from all sources for the national benefit. It shall encourage the widest

participation of private groups, local governments and community based

organizations in the generation and utilization of science and technology. (De

Leon, 2008)

Included in the appendix are the complete texts of executive orders that

would fulfill, if not support, the needs of the economic development of the country

in various industries. Some of them would include knowledge process

outsourcing, business process outsourcing, medical and legal transcription

outfits, back office, gaming and others that would be affected in the medium-term

development plan.

ASEANs website feature on the Magna Carta for Small Enterprises (RA

6977) mentions the two most significant policies that give a general scope on the

importance of ICT in the development of SMEs.

One of the most popular regulations in the business sector is Republic

Act 8792, otherwise known as Electronic Commerce Act (2000). Authored bySen. Ramon Magsaysay Jr. it was passed to make the country IT oriented in

various fields of business and commerce moreover, it is aimed to make

domestic and international transactions better and easier through the use of the


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new communications technology (Republic Act 8792, 2000). This law pioneered

the foundations of necessary legal infrastructure and framework for the utilization

of ICT as a tool in nation building (Camposano, 2006).

The second legislative policy significant to this study is Executive Order

No. 269; this guideline highlights what ICT prioritization can do to help launch

economic development. This plan also envisions a development-oriented

information society that promotes sustainability and quality of life among others

The Department of Information and Communication Technology (DICT)

was only a proposal up until 5 august 2008 that turned into house bill no. 4300.

The Philippine government acknowledges the significance of country and

economic needs when it comes to information technology. This is not a simple

measure to establish a name for formality but has a strong sense to promote the

awareness of the public about information and communications technology, a

business-conducive environment, services delivery, education public

communications and other mediums that disperses information and or goods

(ASEAN, 2011).

E-governance is a project based on the goal that all the agencies will be

conglomerated as a unit easily accessible inter-agency. Another target of the

project is to gain awareness and accessibility for the public to be able todisseminate information and updates to all those concerned.


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If the e-governance project of the government which has a lot of

departments and sectors for it to move and function was able to successfully

deploy it to their operations, cloud computing for small medium enterprises would

not be an impossibility reminded of the fact that companies like such does not

that that much manpower nor logistics needed to operate.

Other industries would include all ranges of enterprises and their goal is to

improve the efficiency and effectiveness of the electronic governance. The E3

project of CICT alongside with Canadian Development Agency (CIDA) has a five-

year time frame to strengthen its policy review, capacity building amongst

officials in the government and to put up in social services agencies policy

project.

Government and private entities that assist in the proliferation of

advocacy and use of ICTs, specifically cloud computing technology, to

SMEs

The utilization of ICTs in the local context, with a special emphasis on the

emerging and revolutionized cloud computing technology, must be handled both

by the government and the private sector. The government can only do so much

as advertise and promote the technology but it is the vendors of these services

and the business sector who should actively bring cloud computing in the

country.


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Key Institutions and Organizations from the Government

1. Commission On Information And Communications

Technology (CICT): primary policymaking and

coordinating entity of the Phil. executive branch for

the promotion, development and regulation of

integrated and strategy. ICT systems and reliable and

cost-efficient communication facilities.

2. National Telecommunications Commission (NTC): a

regulatory body that works hand in hand with the

Department of Transportation and Communications

(DOTC).

3. DOST: specifically, the Philippine Council for

Advanced Science and Technology Research and

Development (PCASTRD) and the Advanced Science

and Technology Institute (ASTI), implements research

and development programs that address critical

applications areas and support ICT based

entrepreneurs.

4. DTI- (Dept of Trade and Industry): through its

agencies involved with investment promotion,

entrepreneurship, and export development seeks to

provide and environment that would attract investors

in ICT and ICT-enabled service (ITES) industries.


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Attached to DTI is the Board of Investments, which

lists ICT and ITES in its investment priority list; the

Philippines Economic Zone Authority (PEZA), which

oversees the development and management of the

ICT Parks; and the Philippine Export Development.

Council, which lists ICT and ITES as its priority

export. (IDRC, 2008)

These government entities collaborate with each other to bring forth

science and technology research, development and implementation to help

businesses prosper with the utilization of ICTs.

Aside from government agencies and commissions, private entities

specifically vendors, should pave the way in making their services and products

more accessible and affordable for SMEs.

The National Competitiveness Council and the Management Association

of the Philippines (MAP) signed a memorandum of understanding to use all the

running resources to guarantee the delivery systems for e-governance. This

project was first implemented with an initiative of electronic governance back in

2007 with Technical Education and Skill Development Authority (TESDA). A year

after that, the Department of Health, Department of Social Welfare andDevelopment and National Disaster Coordinating Council were also covered to

improve their business process especially for client-based operations.


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BizSpark Program, which is a joint collaboration between Microsoft CICT,

was conceived to implement assistance to SMEs and start up businesses. The

Small Enterprise Technology Program (SETUP) through the aforementioned

program offers SMEs easy, fast and affordable access to full-featured Microsoft

development tools and server licenses for a nominal fee of USD$100 which will

only be paid upon the successful completion of the program (CICT, 2009). One

of the platforms offered by Microsoft is its cloud computing platform called Azure.

This service includes cloud computing features for entrepreneurs

(www.microsoft.com , 20110).
http://www.microsoft.com/http://www.microsoft.com/http://www.microsoft.com/http://www.microsoft.com/


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CHAPTER 3

SUMMARY

Summary

The past years have shown how ICTs have evolved in so many different

ways in order to address the growing and complex demands from users. ICT

plays a role in improving the work flow of company by making mundane

processes automated and easier to implement and run. Improvement in

technology cannot be ignored due to the fact that economies worldwide have

shifted or is currently shifting from the industrial society to the information society.

These changes in society also affect the changes that businesses have to adapt

to, thus the implementation of ICT technologies. Businesses around the world

have implemented some form of IT infrastructure in their organizations; from the

most basic personal computer to the more advanced Cloud computing

technologies, these tools became a part of the daily operations and have

embedded into the capital expenses of business groups.

Research shows that SMEs are a big sector in the business industry;

moreover, they become a significant tool in nation building. Their inherit

characteristics prove to be of importance in the diffusion of innovations,

technology and competition. SMEs are seen as a means of uplifting economies

because they provide jobs, services and products that help in the everyday


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operation of a country. Globalization, in effect, connects countries through

business transactions from SMEs thus, providing more opportunities in return.

The researchers found these facts significant in the promotion and

implementation of Cloud computing amongst Philippine SMEs.

Cloud computing utilizes the Internet as another means of IT service

delivery to consumers. The decentralized nature of Cloud computing

technologies make it attractive to businesses that aim to scrimp on overhead

expenses while improving their business systems. Cloud computing services

aim to address the different needs of businesses from various industries. These

services offer mobility of data and applications, business continuity, reliability,

and elasticity in systems among others.

Since the Philippines is categorized as a developing country, the

awareness of such technology is still in its latent stage. The researchers,

therefore, decided to do a study on the general feasibility of Cloud computing in

the local SME context. Adapting this study in the local context meant reviewing

policies and regulations that advocate ICT use for the development and

improvement of businesses. The researchers also looked for government and

private entities that can help in the awareness campaign of Cloud computing

technology.

Literature regarding Cloud computing in the Philippines is still rare, thus

the researchers decided to sought out two IT practitioners to gain further working

knowledge about this emerging technological innovation.


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Theoretically speaking, the study focused on the Technology,

Organization, and Environment framework (TOE) and Technology Acceptance

Model (TAM) to be able to see how Cloud computing technology can be

assimilated by SMEs and what elements are considered before these

innovations can be implemented in an organization.

Conclusion

In conclusion, it can be posited that the adoption of Cloud computingtechnology, like any other ICT service or IT infrastructure is a business decision.

Each business is unique from another thus, the implementation of such

technology depends on the decision making body of an organization. Although

there are many perceived benefits seen, some businesses, especially those that

deal with sensitive technology, might be better off with investing on their own IT

infrastructure such as servers and programs to make them feel more secured

and in control of the information they store and share amongst members of their

organization.

The awareness of Cloud computing amongst SMEs cannot be solely

handed to the government. Although there are several regulations and

commissions from the legislative body of the government, private entities should

also take part in the advocacy of the use of Cloud computing. The private and


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public sector must collaborate to enforce technologies that would greatly improve

businesses in the Philippines.

Recommendations

Vendors should be more aggressive in promoting their services, the

competition amongst service providers would be an advantage to SMEs because

competition will bring in lower costs in cloud computing services. The

government must also be more aggressive in deregulating Telecom companies

to bring in more efficient Internet connection, and to encourage competition

amongst these corporations, thus bringing down the cost of mobile, Internet and

telephone subscriptions.

Before any SME can start using any form Cloud computing application,

they have to make sure to choose carefully the services to be availed. Long-term

use of the application means that business owners or managers should already

know what results they need and what processes they would want to use. Also,

the terms of services used in the application are critical as to up to where one

can extend the use of it. It is vital that SME owners should know what the limit of

the application is if you are the end-user of the application. Security is

nonetheless also as important as files that have sensitive information could be at

risk if one does not choose applications carefully. It would be a completenightmare if a companys files are to be accessed just by anybody else just

because owners did not exercise proper safety procedures. Trial and testing is


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the best way to see if files are still accessible with maximum protection against

data meltdown and illegal access. (Arnold, 2008)

Like any other business opportunity, the implementation of Cloud

computing depends upon the needs of a company. There is no reason to jump

on the bandwagon if the features of a service does not meet your expectations

and address an organizations problems. Ignorance to any form of technol ogical

advancement will also prove to be futile especially with the advent of

globalization and the cut throat competition. It is best to be always aware of

regulations and policies that will aid in the improvement of a business.

Cloud computing is still new and like any other innovation, it is a neutral

tool for consumers. The implementation of advance technologies does not

automatically mean the success of a business, at the end of the day, the

utilization of the tool is the most notable action that would bring in revenue and

customer service satisfaction.


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Documents

CC Researchreport FINAL