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CHAPTER 1 INTRODUCTION AND BACKGROUND By the turn of the 21st 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 moves CapEx (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.

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 because 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 to specifically 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 .

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

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 indegenous 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 SMEs 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 countrys economy.

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.

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

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

(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 cloud computing, 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 internally inside 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

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).


Perceived Usefulness Behavioral Intention to use

Actual System Use

Perceived Ease of Use

Figure 1. Technology Acceptance Model (Davis, 1989)









Environment framework (Oliviera and Martins, 2011).


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.


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, servers, 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 .


14. SMEs

- Small and Medium Enterprises refers to any business 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.


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

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,; 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 is SME 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).


At a glance, SMEs are to be defined as organizations that have less than a thousand but more than a hundred employees for medium enterprises and small ones do have less than one hundred employees (Entrepreneur Magazine, 2011) these kinds of organizations or businesses have the potential for development and growth. Many argue about the manpower size to be considered as such. For the regular retail and logistics business, this is considered as the acceptable number. However, as for the Business Process (BPO) and Knowledge Process (KPO) organizations, the number of work stations, not the manpower itself, is the basis for the number of employees in the business (, 2011.)

Cloud Computing Technology at a Glance These are programs that are on the Internet (Manansala, 2011) (Catacutan, 2011). Unlike the ones from a personal computer, the information is not stored in its central processing units hard drive but rather a server located away from the computer unit being used. The file is shared with all the users and can be updated in real time (MIS online, 2011). One good example of this is the recruitment process in a leading call center, specifically for the process and status of an applicant for a call center agent post. From the time they submit their resumes, all of these are encoded, then processed for initial interview, testing, final interview, account specific assessments and job offer and requirements. All of these are done now as a one

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 which is the server (Kitch, 2010) (Gartner, 2009).


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 Development 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.

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 usage 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.

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 dont 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, curtailed by various legal and corporate machinery that consumers dont need to know (Catacutan, 2011).


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 ride on the increasing popularity of cloud computing. Business owners and managers must be very stringent in examining vendors and the services they offer.


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 articulation 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


knowledge in technology. (Arunsharma, 2010) (Brown and Winnans, 2009)


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).



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).


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)



Uses Internet Technologies: The service is

delivered using Internet protocols, such as URLs, HTTP, IP and representational state transfer Weboriented 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 the Internet (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 can directly be of advantage for SMEs are as follows: 1. Transparent Pricing: Instead of buying hardware and software or applications for business productivity,

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 and responsibilities of upgrading, maintaining and The and

physically storing hardware and software. provider does all the implementation

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

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


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.


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.


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.

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 by Sen. 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


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 to disseminate information and updates to all those concerned.


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 fiveyear 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.

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 entrepreneurs. 4. DTI- (Dept of Trade and Industry): through its agencies involved with investment promotion, areas and support ICT based

entrepreneurship, and export development seeks to provide and environment that would attract investors in ICT and ICT-enabled service (ITES) industries.

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 and Development and National Disaster Coordinating Council were also covered to improve their business process especially for client-based operations.


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

(, 20110).



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


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.









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 computing technology, 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


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 complete nightmare 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


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 technological 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.