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 country‟s 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 country‟s 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 SME‟s? 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 .

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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 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 country‟s 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 country‟s economy.
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as projected by IT practitioners it can transform the means and ways that business can operate. To Future Researchers Future researchers may find this study valuable for it contains accurate and reliable data to be studied or developed. To the Students Cloud computing may still be in the early stages. 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. This study may also help in the improvement of ICT technologies in developing countries such as the Philippines. The increase of a business‟ productivity affects not only their clients but their employees as well. Students might as well be informed about the emergence of this innovation.To the Community The community can benefit from the great and quick service they get from ICT equipped. however. The promise of simplifying business transactions in shorter periods of time through commonly used devices is now more viable. 5 . thanks to Cloud Computing. super SMEs. The success of a business in a local district may mean more employment jobs for the members of the community. Awareness of emerging technologies may also inspire them to be more innovative.

the Technology Acceptance Model (TAM) would provide the most probable reasons why a technological innovation is accepted within an organization.Scope and Delimitation Cloud computing is relatively new to the Philippines. Theoretical Framework To further understand the how to promote the potential benefits of cloud computing to SMEs. the Technology. knowledge and awareness of this technology is still in its latent stage. Due to the strained period of research. the researchers based several aspects of the research from the answers of the industry experts they were able to contact for this paper. As a supplement to the former. due to the latent stage of cloud computing and the lack of awareness. thus. theories on Adoption and Acceptance of Technology and Innovations will be utilized in this paper. Programs and advocacies coming from the government and private sectors will also be studied for this paper. the report does not focus on any specific industry or business . 2009). Organization and 6 . Also. 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. First. 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. The research offers an overview of the perceived benefits the cloud computing technology can offer to SMEs.

posits that when there is an intention to act from individual. Telecommunication companies. one of the major barriers in acquiring technology is cost” 7 . is an ideal situation and in reality there are factors such as time. Entrepreneur magazine recently featured an article on cloud computing and how it benefits entrepreneurs. he will be free to act without restrictions. such as Globe and PLDT. Orrock says that “For small and medium enterprises(SMEs). have started introducing cloud computing ventures to their clients (Reyes. 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.Environment (TOE) Framework. TAM. Once an owner of a company approves of an application to be used within the organization. There will be no need to login the office computer to view reports and data needed by individuals. the dessimination of cloud computing applications would be easier to diffuse down the levels of an organization. will attempt to focus more on the factors that organizations consider before they adopt a new technology. 2010). This. which has “strong behavioral elements”. 1986). organizational or environemental limits and limited ability that inhibits the “freedom to act” (Davis. however. With the availability and the competitive prices of mobile services in the country. the ease of accessing data online would be readily available to their members.

The last 8 . This includes the current equipment and practices found internally inside a firm. TOE : Technology. as presented in the aforementioned example. The second aspect is the organizational context that is about the descriptive measures of the firm such as the size. 2011) This theory. scope and managerial structure. External set of technologies are also factored in this context. The first aspect is the technological context which describes the relevant external and internal technologies used by an enterprise. Moreover. 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.(2011). and Environment Framework (Oliviera and Martins. Organization. can be assumed to attract more SMEs to look in to the utilization of cloud applications. through cloud computing. conceptualized by Tornatzky and Fleisher. 2011). describes 3 aspects of an enterprise‟s context that influences the process by which it adopts and implements a technological innovation . 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. 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.

Dermatologica and UST-a business solutions group. and government dealings. 2011). industry.aspect of TOE is the environment context “arena” where a firm conducts its business – its competitors. Each industry has different needs and specifications when it comes to day-to-day processes. Salesforce. an international cloud computing solutions company. In the Philippines. 2011). (Oliviera and Martins. 9 . Salesforce caters to various companies such as Avon. these companies have unique needs from each other and cloud computing is working to their advantage (Salesforce. offers consultation to address the distinctive needs of a company. Coming from different industries.

Tornatzky and Fleisher’s Technology. Technology Acceptance Model (Davis.Paradigm Perceived Usefulness Behavioral Intention to use Actual System Use Perceived Ease of Use Figure 1. Organization. 2011). and Environment framework (Oliviera and Martins. 1989) Figure 2. 10 .

regulating. e-Commerce . 11 . industrial buildings or equipment. 3.Commision on Information and Communication Technology. 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. flourish.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. implementing. coordinating.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. develop. planning. 2. CapEx .Definition of Terms Since the research will delve in technology and business topics. DTI . at the same time. This commission is the primary policy. and administrative entity of the executive branch of the Government that will promote. and succeed and. ensuring consumer welfare. CICT .Capital Expenditure refers to the funds used by a company to acquire or upgrade physical assets such as property. These terms are as follows: 1. and regulate integrated and strategic ICT systems and reliable cost-efficient communication facilities and services. " 4.

ICT .Electronic Mail is a method of exchanging digital messages from an author to one or more recipients across the Internet or other computer networks. and use information. NCR – is the center of Luzon and capital region of the Philippines 13.The method or protocol by which data is sent from one computer to another on the Internet. process.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. servers.5. such as mainframe computers. IT hardware. PDA‟s. This field includes hardware. 12 . 12. E-mail . Internet Protocol . 6. OpEx . 9. 7. IT infrastructure – a defined set of software. and laptops. store. Intranet – a company-specific network modeled after the Internet 10. exchange.Operational Expense is the ongoing cost for running a business. and networks in an organization. IT . system or product . 11. Internet – A worldwide public network of services for businesses and counsumers 8.Information Technology refers all the tools that capture.

and transmission technologies for delivery of voice communications and multimedia sessions over Internet Protocol (IP) networks. SMEs . cooperative.14. activity/enterprise whether single proprietorship. plant and equipment are situated. VoIP . 13 . such as the Internet.Small and Medium Enterprises refers to any business engaged in industry.Voice over Internet Protocol is one of a family of internet technologies. agri-business/services. inclusive of those arising from loans but exclusive of the land on which the particular business entity's office. partnership. The enterprise must have more than 9 but less than 200 hundred employees 15. or corporation whose total assets. communication protocols.

made communication with someone from the other side of the world 14 . third. Marshall Mcluhan (1964) popularized the global village concept which in turn conceived the idea of global business communities. the availability of computers to end users. 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. trend watcher John Naisbitt gave an emphasis on the “occurrence of an information explosion”. With the transformation of economies into information societies.CHAPTER 2 DISCUSSION OF THE PROBLEM As early as the 80‟s. companies have adapted to the changing times and implemented new technology and innovations in their organizations. the improvement of productivity. second. the advancement of technology. management and the use of information (Senn. Information became a commodity in functioning and leveraging a business upward. the change to information society. Information Systems in Management. the faster pace of business. Instead of the usual brick and mortar systems. Also from Senn‟s book. the rapid change in communication came with it. specifically in the ICT sector. and lastly. the global business community. several trends were projected to appear in the business sector and the more notable trends related to the study are: First. the economies have come to transform into an information society or a knowledge society. Simply put. fourth. As stated earlier. 1990).

there is also an “increasing need for more detailed and accurate information” to make a business run smoothly and become more competitive (Senn. specifically through the Internet.faster as though he inhabits the same physical space such as. people living in the same district or village (Symes. this sector proves to be a significant factor in the promulgation of cloud computing in any country (DTI. innovations and technologies. Buying online became as easy as buying in your local supermarket. this company which is located in California. A concrete example of this is the leading e-commerce company. strengthened the global business community trend. it does not come as a surprise to find out that as time passes by. 1995). brought people together from various countries because of the service they gave. From simple telephones and fax machines to the Internet and the advancement in mobile communication -. With their number and their openness to new trends.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. ebay. 15 . as a virtual market where people can buy and sell their products. The forefront sector that brings in competition in the business industry is SME sector.com. As countries and people miles apart become closer than ever through the continuous improvement of technology. 2009). The ease of conducting business online. 1990). even with people who live across the globe.

2011). 2011). Many argue about the manpower size to be considered as such.) Cloud Computing Technology at a Glance These are programs that are on the Internet (Manansala. Unlike the ones from a personal computer. final interview. account specific assessments and job offer and requirements. all of these are encoded.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. All of these are done now as a one 16 . From the time they submit their resumes. The file is shared with all the users and can be updated in real time (MIS online. then processed for initial interview. One good example of this is the recruitment process in a leading call center. 2011) these kinds of organizations or businesses have the potential for development and growth. not the manpower itself. as for the Business Process (BPO) and Knowledge Process (KPO) organizations. 2011. testing. is the basis for the number of employees in the business (pcmag. this is considered as the acceptable number.com. the number of work stations. specifically for the process and status of an applicant for a call center agent post. However. the information is not stored in its central processing units hard drive but rather a server located away from the computer unit being used. 2011) (Catacutan. For the regular retail and logistics business.

maximum mobility. Since all the applications are over the Internet. 2009). overhead minimalization. First. since it is automated. only one is needed and can be processed via the server. 2010) (Gartner. (Winnans. Lastly.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. better collaboration and increased safety. The best part of this is that this critical file is securely stored somewhere where viruses and other threats are reduced to zero because it‟s only viewed on the same place which is the server (Kitch. you can work anywhere as long as there is access from the service provider. Some of the properties of cloud computing are: user-centric. 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. The working and updating of files will be better than before as they are reachable via browser equipped devices. accessible. all the rest of the time in motion activities are shortened. intelligent and programmable. Instead of buying a set of software for each central processing unit. 2009) Benefits would cover: lower initial cost. making it more effective and efficient. powerful. 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. only authorized users can gain access to the information while it can be dissimilated throughout a network of computers with just one click. 17 .

The availability of data is crucial to the foresight of the business and can determine the success or failure of such. Asian Development Bank‟s survey in the Philippines came out with the result that 7. Reduction of constant monitoring. 2010) A perfect example of this is the evolving system of Luzon Brokerage Corporation (LBC).Cloud computing can be applied to enterprises and be based on the concept of integrating information and methodologies into a program. 18 . Bottom line: redundancy and reliability are more likely to be seen with this trend. LBC started out as a brokerage and air cargo forwarding service provider and currently. and as a counter measure for them to make sure the package goes to the right address. (Singh. hardware requirement spending and multiple applications setting are just of the few factors that would be an advantage. The reach of personal computer use has spread out from the year 2000 until 2007 (ADB. updates on between systems. These trends are currently found not only in big corporations but also in the SME sector. a local express courier and money express service provider. A unifying key factor is that this planning may be used with different application modules to store organizational data. 2007).3 percent (per 100 people) in the country has access to a computer. Another trend that is already happening right now is the increase of availability of computers to end users. 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. The adoption of computing technology in the country steadily increases year after year.

19 . fueled by the increased complexity in ICT needs of enterprises. SMEs are seen as a vital entity in diffusing new industries to the urban areas and stimulating lucrative employment.6 percent of all the existing businesses. more tactical partnerships with strategic players within the ICT ecosystem. SMEs tend to be more innovative in developing indigenous or appropriate technologies (DTI. 2009). As a whole. they are relatively quicker in adopting and infusing new design trends. developing contemporary products. 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. and. SMEs in the Philippines make up 99.As mentioned earlier. long-term planning is limited. and there is more reliance on external IT experts in SMEs (Lester and Tran. smart pricing models. With their large number. feeding channels with transformational initiatives” said Jubert Daniel Alberto. In 2011. standard procedures are not instituted. Thus. compared to bigger corporations. service providers (SPs) and channels would need to focus on coming up with products and services that offer specific business value to clients. therefore. ICT stakeholders such as vendors. as well as the ever-evolving needs of SMBs and consumers‟ increased usage of ICT. the implementation of advanced ICT in this sector would be more plausible in a few years time. and bringing them to the marketplace ahead of competition. 2008). As a result. the market will see an even larger scale of competition. manager for IT spending research at IDC Philippines.

2010). and better promoting and distributing their products through online presence (IDC. an Information Security Analyst for Asian Development Bank. An interview with Dominique Catacutan. 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. Appropriate ICT can help SMEs cut costs by improving their internal processes. 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‟.ICT plays a very important role because it can help SMEs create both business opportunities and combat pressures from competition. curtailed by various legal and corporate machinery that consumers don‟t need to know (Catacutan. Cloud Computing In A Nutshell The researchers found that although cloud computing seems very new to the perception of many. improving their product through faster communication with their customers. cloud services have already existed in more ways than one in our society. 2011). He says that we have been subscribing to cloud service ever since we signed up for electricity distribution from Meralco. especially in the Philippines. described the most common way majority of Filipinos experience a certain kind of cloud service without their knowledge. 20 .

Some writers tell their readers to be cautious of companies that ride on the increasing popularity of cloud computing. 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. 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. Management Information System (MIS) journal online defined cloud computing as a “general term for anything that involves delivering hosted services over the Internet” (2010). “cloud computing is another form of delivery of IT services (2011). Business owners and managers must be very stringent in examining vendors and the services they offer. 21 . Technically speaking this „cloud‟ is a representation of the Internet in schematic diagrams.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. Various studies and literature from academes and vendors are scattered online and on print talking about the revolution of the cloud computing technology. instead of increasing the overhead expenses of a company through buying and maintaining their own servers.

and clear predefined operational processes). 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. 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.Consumers must be guided when choosing service providers and vendors of cloud computing services. 2008). Simply put. Consumers should see or need not involve themselves in the details of implementation (Lester and Tran. Everything must be easy to use without an expert 22 . performance versus price. User Centric: once connected a user is authorized to access anything that is stored there i. rather than technology and its capabilities”. images. 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. documents. KEY PROPERTIES OF CLOUD COMPUTING 1. response time. messages. etc.e.

2010). resources can be added or removed on demand (Gartner.knowledge in technology. 23 . 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). The service can automatically scale the capacity up or down as the consumer demands. 2008). 2009) 2. The latter is also connected not only to scale but also “an economic model that resembles scaling in both directions in and automated fashion. Scalability is an element associated with the underlying software platforms and infrastructure while Elasticity is a feature of shared pools of resources. Scalable and Elastic: the system is intelligent. data mining and analysis are necessary to access that information in an intelligent manner” (Arunsharma. “with all the various data stored on the computers in a cloud. 2010) (Brown and Winnans. (Arunsharma.

Powerful: Cloud computing offers a service which is from the “wealth of computing power” (MIS online. 2008) (MIS online. use-based attributes delivered or data transfer (MIS online. 2010) (Gartner. all running at the same time (Gartner. This concept produces maximum efficiency and enables unused resource to serve various needs for different consumers. Payment plans may vary. Metered by Use: This model allows vendors to create different pricing plans and models according to the services needed by a client. The underlying software or platforms and infrastructure are shared among the consumers of the service. subscriptions and even free plans. fixed plans. 2010). Services are tracked with the use of metrics thus enabling multiple payment models that may include pay-as-you-go plans. terms may be in hours. 4.3. 2008) 24 . 2010). This concept bases the payment on the usage and not on the cost of equipment used.

such as URLs. These issues are directly addressed by the cloud computing technology. elimination of maintenance and upgrading. Cloud Computing Benefits For The Local SMEs Cloud computing offers many benefits such as accessibility. cost reduction. This characteristic must innately occur within a cloud computing service. Transparent Pricing: Instead of buying hardware and software or applications for business productivity.. security. cloud computing services must be accessible through any device that can browse the Internet (Garner. and formats. 2009). With the emergence of smart phones. and reliability. The benefits that can directly be of advantage for SMEs are as follows: 1. 2008) (Brown and Winnans. 25 . HTTP. As aforementioned.” and to operate business through mobile or lease a virtual office (2011). Uses Internet Technologies: The service is delivered using Internet protocols.. 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. accessibility of web services became easier.5. Business owners or managers always try to find means to reduce overhead expenses. IP and representational state transfer Weboriented architecture and identifiers.

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. edit. maintaining and The and physically storing hardware and software. They lease the application or IT infrastructure they need and pay according to the approved metrics between the consumer and the provider. save and delete their data online. This arrangement releases the user from further obligations and responsibilities of upgrading. This is one of the beauties of cloud computing services. 2. this feature can be the 26 . users can customize and choose a payment plan that is appropriate to the scale of their business. With the complex demands coming from clients who want everything done as soon as possible. Business Continuity: Another advantage of adopting this technology is the ease of accessing data. Any device with an Internet browser can access.consumers can now avail of these IT necessities without paying for the services up front.

3. Databases. a cloud-based program or application must be able to deliver the same quality of service in a quick response 27 . payroll. providers and businesses still need to continue operations.solution to that problem. occasional load bursts and cyclic peaks without any depreciation in service. The ability of data recovery must always be considered by businesses looking into investing in a cloud service. accounts. which in turn keeps the data safe from being destroyed. In the event of a disaster such as earthquakes and terrorist attacks. 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. spreadsheets and presentations can be edited and viewed by various users simultaneously without worrying about their physical location or the device that they use. Reliability: Cloud infrastructure must be resilient enough to handle new demands. Affordable and reliable Internet connectivity remains unreliable in various parts of the country.

as promised by providers. Vendors must secure physical infrastructure. The ability of a provider to configure an application specifically for a business while sharing resources makes a worthwhile investment for SMEs. Mandatory background checks for people and frequent vulnerability testing by experts must always be part of their responsibility. 4.time. 28 . high levels of security must always be implemented by service providers. online applications and programs and the personnel they have in their organization. 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. especially in businesses that deal with sensitive information. even though there are constraints in the network. Security: Viewed as the most important feature to consider. Configurable: Although some industries use the same applications. 5. it has to be taken into consideration that every business is unique from each other.

Infrastructure and device independence: With cloud computing services. 29 . Shared Resources: Multi-tenancy or sharing of resources and costs across a pool of users. consumers need only buy basic machines and devices that can access the application and programs from the Internet. Since resources are shared. These are already handled by the vendors. 7. Usability of Applications: Freedom from system maintenance and upgrading.6. 8. these features come with the services of cloud computing. thus. No technical knowledge is required from users in order for them to utilize these applications and programs. Vendors take the responsibility of developing the software and hardware used by a client. This system of resource sharing shaves off a significant portion from the expenses of a business. the operation costs are also shared among those who are leasing the infrastructure from the same service provider. consumers can enjoy device and location independence of infrastructures used.

Sustainability: Through improved resource utilization. 2011) Overview Of Laws. the carbon footprint of a company is greatly reduced due to the lessened use of writing implements. (Arunsharma. Aside from these. namely the Commission on Information and Communications Technology (CICT) that encourages the improvement and development of ICTs in the country. Since cloud computing technology makes use of resource sharing among consumers sustainability of resource is advocated even without conscious effort from clients. And Policies That Advocate ICT In The Philippines For a developing country such as the Philippines. 2010) and (Orrock. and hardware. 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. the researchers found out that there are policies. laws and regulations that are championed by the government‟s legislative law.9. the redundancy of systems used ensures that the data stored online will not be easy to lose or destroy. Regulations. 2010) (PC World Philippines. However. 30 .

It shall encourage the widest participation of private groups. 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. if not support. gaming and others that would be affected in the medium-term development plan. otherwise known as Electronic Commerce Act (2000). business process outsourcing. it was passed to “make the country IT – oriented in various fields of business and commerce” moreover.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. medical and legal transcription outfits. ASEAN‟s 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. 2008) Included in the appendix are the complete texts of executive orders that would fulfill. local governments and community based organizations in the generation and utilization of science and technology. Some of them would include knowledge process outsourcing. the needs of the economic development of the country in various industries. back office. One of the most popular regulations in the business sector is Republic Act 8792. Authored by Sen. “it is aimed to make domestic and international transactions better and easier through the use of the 31 . Ramon Magsaysay Jr.” (De Leon.

2006). services delivery. 32 . 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. education public communications and other mediums that disperses information and or goods (ASEAN. 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. 2011). a business-conducive environment. 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. this guideline highlights what ICT prioritization can do to help launch economic development. 2000). This law pioneered the foundations of necessary legal infrastructure and framework for the utilization of ICT as a tool in nation building (Camposano. 269. The second legislative policy significant to this study is Executive Order No. 4300. The Philippine government acknowledges the significance of country and economic needs when it comes to information technology.new communications technology” (Republic Act 8792.

Government and private entities that assist in the proliferation of advocacy and use of ICTs. 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. 33 . The E3 project of CICT alongside with Canadian Development Agency (CIDA) has a fiveyear time frame to strengthen its policy review. to SMEs The utilization of ICTs in the local context. with a special emphasis on the emerging and revolutionized cloud computing technology. 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. capacity building amongst officials in the government and to put up in social services agencies policy project. specifically cloud computing technology.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. must be handled both by the government and the private sector. Other industries would include all ranges of enterprises and their goal is to improve the efficiency and effectiveness of the electronic governance.

implements research and development programs that address critical applications entrepreneurs. 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. DTI. 4. 3. 34 . the Philippine Council for Advanced Science and Technology Research and Development (PCASTRD) and the Advanced Science and Technology Institute (ASTI).Key Institutions and Organizations from the Government 1. executive branch for the promotion. National Telecommunications Commission (NTC): a regulatory body that works hand in hand with the Department of Transportation and Communications (DOTC). ICT systems and reliable and cost-efficient communication facilities.(Dept of Trade and Industry): through its agencies involved with investment promotion. development and regulation of integrated and strategy. Commission On Information And Communications Technology (CICT): primary policymaking and coordinating entity of the Phil. 2. DOST: specifically.

the Department of Health. (IDRC. 2008) These government entities collaborate with each other to bring forth science and technology research. and the Philippine Export Development. private entities specifically vendors. the Philippines Economic Zone Authority (PEZA). Aside from government agencies and commissions. Department of Social Welfare and Development and National Disaster Coordinating Council were also covered to improve their business process especially for client-based operations. 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. which lists ICT and ITES as its priority export. development and implementation to help businesses prosper with the utilization of ICTs. Council. 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. should pave the way in making their services and products more accessible and affordable for SMEs. which lists ICT and ITES in its investment priority list.Attached to DTI is the Board of Investments. which oversees the development and management of the ICT Parks. 35 .

BizSpark Program. 2009). 20110). 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. One of the platforms offered by Microsoft is its cloud computing platform called Azure. 36 .com. The Small Enterprise Technology Program (SETUP) through the aforementioned program offers SMEs easy.microsoft. This service includes cloud computing features for entrepreneurs (www. which is a joint collaboration between Microsoft CICT. was conceived to implement assistance to SMEs and start up businesses.

Research shows that SMEs are a big sector in the business industry. technology and competition. 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 tools became a part of the daily operations and have embedded into the capital expenses of business groups. These changes in society also affect the changes that businesses have to adapt to. Their inherit characteristics prove to be of importance in the diffusion of innovations. thus the implementation of ICT technologies. they become a significant tool in nation building. services and products that help in the everyday 37 . from the most basic personal computer to the more advanced Cloud computing technologies.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. Businesses around the world have implemented some form of IT infrastructure in their organizations. SMEs are seen as a means of uplifting economies because they provide jobs. moreover.

decided to do a study on the general feasibility of Cloud computing in the local SME context. 38 . Globalization. therefore. providing more opportunities in return. reliability. The researchers. These services offer mobility of data and applications. connects countries through business transactions from SMEs thus. the awareness of such technology is still in its latent stage. Cloud computing utilizes the Internet as another means of IT service delivery to consumers. The researchers also looked for government and private entities that can help in the awareness campaign of Cloud computing technology. thus the researchers decided to sought out two IT practitioners to gain further working knowledge about this emerging technological innovation. Literature regarding Cloud computing in the Philippines is still rare. in effect.operation of a country. Since the Philippines is categorized as a developing country. Adapting this study in the local context meant reviewing policies and regulations that advocate ICT use for the development and improvement of businesses. business continuity. The researchers found these facts significant in the promotion and implementation of Cloud computing amongst Philippine SMEs. 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. and elasticity in systems among others.

Theoretically speaking. 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. like any other ICT service or IT infrastructure is a business decision. the implementation of such technology depends on the decision making body of an organization. the study focused on the Technology. Each business is unique from another thus. The awareness of Cloud computing amongst SMEs cannot be solely handed to the government. Organization. Although there are many perceived benefits seen. private entities should also take part in the advocacy of the use of Cloud computing. it can be posited that the adoption of Cloud computing technology. 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. Conclusion In conclusion. Although there are several regulations and commissions from the legislative body of the government. The private and 39 . some businesses.

the terms of services used in the application are critical as to up to where one can extend the use of it. The government must also be more aggressive in deregulating Telecom companies to bring in more efficient Internet connection. 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. It would be a complete nightmare if a company‟s files are to be accessed just by anybody else just because owners did not exercise proper safety procedures. and to encourage competition amongst these corporations. Internet and telephone subscriptions. the competition amongst service providers would be an advantage to SMEs because competition will bring in lower costs in cloud computing services. thus bringing down the cost of mobile. Recommendations Vendors should be more aggressive in promoting their services. Security is nonetheless also as important as files that have sensitive information could be at risk if one does not choose applications carefully. they have to make sure to choose carefully the services to be availed. Also. It is vital that SME owners should know what the limit of the application is if you are the end-user of the application. Before any SME can start using any form Cloud computing application.public sector must collaborate to enforce technologies that would greatly improve businesses in the Philippines. Trial and testing is 40 .

at the end of the day. The implementation of advance technologies does not automatically mean the success of a business. it is a neutral tool for consumers. 41 . There is no reason to jump on the bandwagon if the features of a service does not meet your expectations and address an organization‟s 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. the utilization of the tool is the most notable action that would bring in revenue and customer service satisfaction.the best way to see if files are still accessible with maximum protection against data meltdown and illegal access. (Arnold. the implementation of Cloud computing depends upon the needs of a company. Cloud computing is still new and like any other innovation. 2008) Like any other business opportunity. It is best to be always aware of regulations and policies that will aid in the improvement of a business.

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