COST-EFFECTIVE OWNERSHIP OF ICT INFRASTRUCTURE,...
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COST-EFFECTIVE OWNERSHIP OF ICT INFRASTRUCTURE, EQUIPMENT AND SYSTEMS IN THE FINANCIAL SERVICES SECTOR - A CASE OF OLD MUTUAL (2009 TO 2013) TAWANDA SHUMBA (R093313Y) A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Business Administration 2013 GRADUATE SCHOOL OF MANAGEMENT UNIVERSITY OF ZIMBABWE Supervisor: Engineer M. Manuhwa
Transcript of COST-EFFECTIVE OWNERSHIP OF ICT INFRASTRUCTURE,...
COST-EFFECTIVE OWNERSHIP OF ICT INFRASTRUCTURE, EQUIPMENT AND
SYSTEMS IN THE FINANCIAL SERVICES SECTOR - A CASE O F OLD MUTUAL
(2009 TO 2013)
TAWANDA SHUMBA (R093313Y)
A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Business Administration
2013
GRADUATE SCHOOL OF MANAGEMENT
UNIVERSITY OF ZIMBABWE
Supervisor: Engineer M. Manuhwa
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DEDICATION
I dedicate this dissertation to my mother who has been a pillar of strength all my life
and to my family, immediate and extended who endured my absence during the
period of study but supported me all the way. Special dedication goes to my wife
particularly for her encouragement and prayers. My final dedication goes to my son
Brendon, who came at a time like this, and is the icing on the cake, literally!
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DECLARATION
I, Tawanda Shumba, do hereby declare that this dissertation is the result of my own
investigation and research, except to the extent indicated in the Acknowledgements,
References and by comments included in the body of the report, and that it has not
been submitted in part or in full for any other degree to any other university.
____________________ Date_____________
Student signature
______________________ Date_____________
Supervisor’s signature
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ACKNOWLEDGMENTS
First and foremost I acknowledge that there is a God who cares, and He has seen
me through a very difficult period in my life as I went about balancing studies, work
and family commitments. He has enabled me to comprehend and acquire MBA
knowledge, write and pass examinations. Finally the dissertation is complete and
ready. For that I am truly thankful.
I acknowledge the effort of all my lecturers who have imparted their knowledge and
advice to me over the past three years. I am thankful to my fellow students with
whom I interacted and from whom I benefited much in terms of support and
friendship. I have also benefited a lot from textbooks, journals and the Internet from
where I obtained a lot of material that has assisted me in putting this research work
together as contained hereunder.
Last but not least, I acknowledge the role my family played during my studies. The
support they gave me encouraged me to soldier on until the work was done, despite
all the hardships and discouragement from the environment. For their being there for
me I will always be grateful.
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ABSTRACT
Information Communication Technologies (ICTs) have become an indispensable
resource in enabling functionality and efficiency in the financial services sector where
Old Mutual Zimbabwe is a major player. The company relies heavily on ICTs for
service delivery. ICT infrastructure is needed everywhere, be it for frontline customer
oriented operations in banking, property management, insurance or internal support
services such as HR, Finance, Risk and Audit. As the use of ICT infrastructure at all
stages of the service delivery process increases, the computing resources that Old
Mutual needs also go up. The huge infrastructure associated with getting a computer
on every workstation brings up problems like machine failure, hard drive crashes,
software bugs, and more importantly effective utilisation of these resources. This is a
big headache for Old Mutual which, like most leading enterprises, must strive to
reduce its costs through models such as virtualization. In developed countries, this
demand to reduce computing costs (and subsequently lower product selling price to
customers), has led to the development and growth of Cloud Computing. Cloud
computing is a paradigm shift in which computing is moved away from personal
computers and even the individual enterprise application server and server farms (in
data centres) to a ‘cloud’ of computers. Innovations like this are necessary to ride the
inevitable tide of change. Cloud Computing is the sum of SaaS and Utility Computing
which offers better computing through improved utilization and reduced
administration/infrastructure costs. The concept of Cloud Computing is still at its
infant stage and a very new technology for the enterprises and as such, most
enterprises are not very confident to adopt it.
This research assesses the preparedness and efficacy of implementing this
technology for Old Mutual in terms of cost and security. It discusses the benefits and
drawbacks Old Mutual can have while adopting Cloud Computing. In the end, the
research concludes that Cloud Computing is better for Old Mutual in terms of both
cost and data security.
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TABLE OF CONTENTS
Contents
DEDICATION ............................................................................................................................................ ii
DECLARATION ........................................................................................................................................ iii
ACKNOWLEDGMENTS ............................................................................................................................ iv
ABSTRACT ................................................................................................................................................ v
TABLE OF CONTENTS .............................................................................................................................. vi
LIST OF TABLES ........................................................................................................................................ x
LIST OF FIGURES ..................................................................................................................................... xi
LIST OF CHARTS ..................................................................................................................................... xii
ABBREVIATIONS ................................................................................................................................... xiii
CHAPTER 1 .............................................................................................................................................. 1
INTRODUCTION ....................................................................................................................................... 1
1.0 Introduction ............................................................................................................................ 1
1.1 Background of Old Mutual Zimbabwe .................................................................................... 2
1.1.1 Role of ICT in Old Mutual ................................................................................................ 4
1.2 Problem Statement ................................................................................................................. 5
1.3 Research Aim .......................................................................................................................... 7
1.3.1 Objectives ........................................................................................................................ 7
1.4 Research Questions ................................................................................................................ 7
1.5 Scope of the Research ............................................................................................................. 7
1.6 Delimitation ............................................................................................................................ 8
1.7 Significance of the Study ......................................................................................................... 8
1.8 Assumptions ............................................................................................................................ 8
1.9 Limitations of the study .......................................................................................................... 9
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1.10 Format of study ....................................................................................................................... 9
1.11 Conclusion ............................................................................................................................. 10
CHAPTER 2 ............................................................................................................................................ 11
LITERATURE REVIEW ............................................................................................................................. 11
2.0 Introduction .......................................................................................................................... 11
2.1 A historical background. ....................................................................................................... 11
2.2 Definition of Cloud Computing ............................................................................................. 12
2.2.1 Trust and Challenges in CC adoption ............................................................................ 13
2.3 Alternative Technologies to CC ............................................................................................. 14
2.4 Characteristics of CC ............................................................................................................. 15
2.4.1 Cloud Computing Pros and Cons ................................................................................... 16
2.5 Cloud Computing Service Models ......................................................................................... 17
2.5.1 Cloud Storage Pricing .................................................................................................... 21
2.5.2 Which Pricing Model to Choose? .................................................................................. 21
2.6 Deployment of CC ................................................................................................................. 22
2.7 Operational excellence through Cloud Computing .............................................................. 23
2.7.1 The Cloud’s Economic appeal ...................................................................................... 24
2.7.2 Cloud Computing and Cost ........................................................................................... 24
2.7.3 Infrastructure consolidation ........................................................................................ 25
2.7.4 Efficiency and productivity improvements .................................................................. 26
2.7.5 Greater agility ............................................................................................................... 26
2.7.6 Integrating operations ................................................................................................. 26
2.7.7 Better decisions............................................................................................................. 28
2.7.8 Expanding to new markets............................................................................................ 28
2.8 Cloud Computing Adoption Decision .................................................................................... 30
2.8.1 Migrating to Cloud - Systems and application migration ............................................. 30
2.9 A Strategic Approach to Cloud Implementation ................................................................... 31
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2.9.1 Establish a strategic direction ....................................................................................... 31
2.9.2 Implement a cloud solution as a structured project ..................................................... 32
2.9.3 Review the Implementation ......................................................................................... 32
2.10 Critical Success Factors (CSF) for a cloud project.................................................................. 32
2.11 Conclusion ............................................................................................................................. 33
CHAPTER 3 ............................................................................................................................................ 35
METHODOLOGY .................................................................................................................................... 35
3.0 Introduction .......................................................................................................................... 35
3.1 The research process ............................................................................................................ 35
3.2 Research Design .................................................................................................................... 36
3.3 The Research Philosophy ...................................................................................................... 36
3.4 Target Population.................................................................................................................. 37
3.5 Sampling Strategy ................................................................................................................. 37
3.6 Data collection instruments .................................................................................................. 38
3.6.1 Questionnaire Construction ............................................................................................... 38
3.7 Pilot Study ................................................................................................................................ 38
3.8 Administration of Questionnaires ............................................................................................ 39
3.9 Data Analysis ......................................................................................................................... 39
3.10 Validity and reliability ........................................................................................................... 39
3.11 Conclusion ............................................................................................................................. 40
CHAPTER 4 ............................................................................................................................................ 41
FINDINGS AND ANALYSIS ...................................................................................................................... 41
4.0 Introduction .......................................................................................................................... 41
4.1.1 Response Rate ............................................................................................................... 41
4.1.2 Analysis of Respondents ............................................................................................... 41
4.2 Alternative models to Cloud Computing .............................................................................. 45
4.3 Cloud adoption and control challenges ................................................................................ 47
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4.4 Barriers to adopting Cloud Computing ................................................................................. 49
4.4.1 Loss of Control .............................................................................................................. 49
4.4.2 Change Management .................................................................................................... 50
4.4.3 Security Concerns .......................................................................................................... 50
4.4 Preferred Cloud Model ......................................................................................................... 51
4.5 Security of business data ...................................................................................................... 52
4.5.1 Disaster recovery options ................................................................................................. 52
4.6 Preferable Cloud computing solution ................................................................................... 53
4.7 Pricing of Cloud computing services ..................................................................................... 54
4.8 Cloud Computing and Cost ................................................................................................... 55
CHAPTER 5 ............................................................................................................................................ 57
CONCLUSION AND RECOMMENDATIONS ............................................................................................. 57
5.0 Introduction .......................................................................................................................... 57
5.1 Conclusion ............................................................................................................................. 57
5.2 Recommendations ................................................................................................................ 59
REFERENCES .......................................................................................................................................... 63
APPENDICES .......................................................................................................................................... 66
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LIST OF TABLES
Table 2.1: Amazon S3 and Rackspace Cloud Files storage pricing comparison
Table 2.2: Price Trends
Table 2.3: CSF high level analysis
Table 4.1: Sex of respondents
Table 4.2: Preferred Cloud Model
Table 4.3: Security of business data in Cloud Computing
Table 4.4: Disaster recovery options
Table 4.6: Server Replacement costs 2009 - 2013
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LIST OF FIGURES
Figure 2.1: Cloud computing as it is today
Figure 2.2: Two trends converge resulting in Cloud Computing
Figure 2.3: Cloud computing stacks
Figure 2.4: Important market players in each of the IaaS areas
Figure 2.5: Important market players in each of the PaaS areas
Figure 2.6: Important market players in each of the SaaS areas
Figure 2.7: Cloud Computing Deployment models
Figure 2.8: Operational excellence through Cloud Computing
Figure 3.1: The research process
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LIST OF CHARTS
Chart 4.1: Age Analysis of respondents
Chart 4.2: Educational Level attained by respondents
Chart 4.3: Position occupied by respondents in Old Mutual
Chart 4.4: Respondents by organization size
Chart 4.5: Main concerns with regards to leasing models?
Chart 4.6: Cconcerns with regards to BYOD?
Chart 4.7: Drivers for engaging cloud computing
Chart 4.8: Respondents’ cconcerns about adopting CC?
Chart 4.9: Most suitable cloud solution
Chart 4.10: Suitable pricing model for cloud services
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ABBREVIATIONS
IDC International Data Corporation
CAPEX Capital Expenditure
CC Cloud Computing
CPU Central Processing Unit
CSF Critical Success Factors
ICT Information and Communication Technology
BYOD Bring your own device
IaaS Infrastructure as a Service
PaaS Platform as a Service
SaaS Software as a Service
OMLAC Old Mutual Life Assurance Company
OMIG Old Mutual Investment Group
OMIGPI Old Mutual Investment Group, Property Investment
OMSEC Old Mutual Securities
OMCUS Old Mutual Custodial Services
RM Insurance Royal Mutual Insurance
CABS Central Africa Building Society
OMSS Old Mutual Shared Services
OMISO Old Mutual International Services Organisation
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CHAPTER 1
INTRODUCTION
1.0 Introduction
The field of Information and Communications Technology is going through rapid,
fundamental change (Doesburg, 2009). It has become essential in many areas and
in professional circles is being managed and integrated into corporate strategy. That
has made them an important enabler of innovation, both for products and services.
The use of cutting-edge technologies has become a decisive factor for
competitiveness of companies in all industries. Shorter innovation cycles are forcing
businesses to invest continually in new technology.
Patterson, Rabkin, Stoica and Zaharia (2009) state that companies, in their quest to
reduce costs, are consolidating their ICT operations and those that are early
adapters of innovations have started using virtualization technologies. There is a
new technology for the benefit of businesses to help them in their quest for cost
reduction i.e. Cloud Computing (CC). While there are other models that include ICT
like leasing and Bring Your Own Device (BYOD) where companies can reduce
investment costs (Lohr, 2009). This research will focus on Cloud Computing (CC).
This research therefore does not discuss comprehensively the alternative models for
ICT cost management. The research focuses the business value of CC to Old
Mutual Zimbabwe by exploring the benefits and inherent risks if management
decides to pursue this innovation.
The market research and analysis firm IDC suggests that the market for CC services
was US$16 billion in 2008 and shot to US$42 billion by 2012 (Gleeson, 2009).
Lynch, (2008) states that the cost advantages of CC is estimated to be 3 - 5 times
lower for business operations and more than 5 times for consumer operations.
According to Gartner (2008) CC will have the same level of widespread use and
growth similar to that experienced by e-business.
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The term CC is used to describe a platform and a type of application. It describes
applications that are accessible through the Internet and for this purpose large data
centres and powerful servers are used to host web applications and services (Boss,
Malladi, Quan, Legregni, Hall; 2007). The cloud is a metaphor for the Internet and is
an abstraction for the complex infrastructure it conceals. CC takes the search for
cost reduction to a new level by allowing companies to lower costs through improved
ICT asset utilization, reduced administration and infrastructure cost (Boss et al.,
2007).
Old Mutual is a major player in the global market, and at home in Zimbabwe it has
enjoyed a dominant role in the marketplace. This however has changed drastically in
the last decade with changes in Government Regulations through liberalisation,
indigenisation and new players coming onto the market. Old Mutual has lost its
market share and business has shrunk significantly. The company’s operations were
constrained to a point where for a number of years the local operations were
removed from the financial books of the parent company in the UK. There is thus a
growing need for Old Mutual Zimbabwe to re-assess its service delivery model with a
view of harnessing innovations that have a potential to enhance profitability by
managing costs.
1.1 Background of Old Mutual Zimbabwe
Old Mutual is a diversified international financial services group listed on several
stock exchanges such as the London stock exchange, Johannesburg Stock
exchange and the Zimbabwe stock exchange. The group has a reputation for
integrity, financial strength and dedication to satisfying client needs in wealth
creation and protection. Old Mutual has a solid foundation established on a core
promise which is its commitment to deliver value to its clients at all times.
Old Mutual is a leading international long-term savings and wealth management
group which provides life assurance, asset management services, banking and
insurance in 34 countries and has over 53 500 employees. The conglomerate had a
modest beginning on 17th May 1845 in Cape Town as the Mutual Life Assurance
Society of the Cape of Good Hope and has had remarkable success over the years.
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Its foundations are credited to John Fairbairn and a total of 166 signatures were
appended to its founding document a month before the launch. The Old Mutual
Group in Zimbabwe comprises a total of eight companies, representing various
financial disciplines. The group entities include OMLAC, OMIG, OMIGPI, OMSEC,
OMCUS, RM Insurance, CABS and OMSS. A recent addition, OMISO, could not
survive the heat and had to be wound down, with employees being absorbed into the
other business entities so as not to lose skills and experience that could still benefit
the business. The conglomerate’s products include individual life savings products,
pension administration, property development and management, mortgage finance,
banking, portfolio management, short term insurance and custodial services.
Old Mutual Zimbabwe offers services to Zimbabwe based clients and others in the
Diaspora. Clients include most of the large local institutions and the major
multinationals represented in Zimbabwe as well as individuals. The enterprise has
conducted business in Zimbabwe for over 110 years. In the period post 2000 the
company was not spared from the vagaries of the economy i.e. foreign currency
shortages, inflation, high interest rates etc. The green giant has also faced stiff
competition from both the established financial institutions as well as the up and
coming upstarts in the same industry.
The group has a huge ICT infrastructure with networked branches spread across the
country. Both computer and human resources are required to operate and maintain
the computer network, and over the years replacement of outdated equipment, as
well as the need to catch up with trends in technology, has resulted in huge capital
outlays.
While Old Mutual Zimbabwe has enjoyed success in the past, it is however facing
challenges. The major problem confronting the group of companies today is loss of
business and market share, both as a result of competition and the collapsed
economy. Business operations have reduced drastically from the early 2000s going
forwards, and revenues were adversely affected.
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The organisation has not been working as an integrated unit, but pockets of isolated
entities with very little to do with each sister company in the group. Computer
systems and equipment are obsolete and will require to be replaced. A lot of
changes are required to turn the company around, but this change will require
careful planning and co-ordination as the change strategy being proposed will
change both the structure of the organisation as well as the way staff work, and may
results in redundancies in the long term. Such change will have to be managed well,
and requires disciplined and committed change agents / leaders in order for it to
derive a measure of success, given that the environment around that planned
change will be changing too.
Computer equipment can either be bought outright, or leased. Alternatively, Old
Mutual can look at doing business through an outsourced ICT infrastructure – hence
the talk about CC. In the end, the idea is to find the most cost-effective and efficient
way of harnessing ICTs.
1.1.1 Role of ICT in Old Mutual
Old Mutual Zimbabwe has around 1,000 employees who require computers to
perform their work. While each business entity (there are a total of 8 in the group)
budgets for and owns its own computing assets, purchasing is done centrally and in
bulk to realize economies of scale.
The ICT department’s role is to recommend the computing devices considered
useful to the business operations, and the specifications thereof, including advising
when a device is no longer operating as expected / or is old/obsolescent and needs
to be replaced. Once equipment is purchased, it belongs to the cost centre, and
cannot be moved across entity boundaries although all belong to one Group
Company. Equipment often changes custodianship within the entity with new
equipment being allocated to senior staff, and a hand-me-down process cascading
older equipment to junior staff. This disregards utilization levels, resulting in sub-
optimal use of equipment in many areas. The purpose of this research is to identify a
computing infrastructure model within the group that could result in the optimal
utilization of resources while enhancing productivity and service delivery. This will
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have the effect of lowering operating costs as well as reducing product price on the
market.
1.2 Problem Statement
Zimbabwe imports IT equipment required to set up systems that businesses utilize to
automate their processes and speed up both product and service delivery to clients.
To be able to import equipment, a considerable outlay in capital is necessary. In a
constrained economy like that of Zimbabwe operating capital is scarce and
companies have to enforce cost reduction strategies to remain viable and
competitive.
Over the years, Old Mutual Zimbabwe has employed divergent and expensive
computer systems to address business needs and automate its processes. Each
business unit has its own standalone application system, and this has resulted in
expensive integration and interfacing solutions to make the systems to talk to each
other, and often this has failed and thus necessitating further expenses in manual
interventions. Some of the applications systems in use, notably the compen system
that services pension administration and the life business in OMLAC, are based on
out-dated database architectures – in this case flat files; which results in a system
that easily panics under disruption of power failures and link disconnections.
Old Mutual’s database has grown so big that backups or restores often take over 10
hours, disrupting normal business processes. This particular system costs in excess
of R1 million annually in licensing fees and support costs from the South African
vendor. Although the banking system used at CABS utilises the relational database
concept, it has become complex and expensive to maintain. Over the years
programming skills have dwindled and staff capable of performing such functions is
now being recruited at high cost. Group-wide, there is a serious challenge on the
status of computer hardware being used. Integration is difficult and the networks
struggle to “talk” to each other. Sharing information is therefore an uphill struggle,
and operating costs are high.
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The pursuit of efficiency and cost-effectiveness in the financial services sector
requires companies to refresh their technology platforms to enhance their service
delivery capabilities. Innovative and contemporary technology, providing an
opportunity to reduce capital costs while enhancing service delivery is needed. For
Old Mutual research has to be conducted to identify a contemporary and suitable
technology to address these challenges.
1.3 Research Proposition
This research proposes the of adopting Cloud Computing for Old Mutual Zimbabwe
which will increase its business value and competitiveness compared to the
alternative traditional enterprise setup. This research on Cloud computing focuses on
encouraging Old Mutual Zimbabwe to consider including Cloud computing as part of
their IT Strategy. It focuses on understanding the value proposition offered by cloud
computing vis-à-vis a traditional brick and mortar data centres and continuous
acquisition of computer hardware year after year. It is premised on a value
proposition that cloud computing leads to a reduction of Total Cost of Ownership
(TCO) of ICT assets, translates fixed costs to variable cost, and leads to an
improvement of business agility and ability to build world-class systems. The cloud
computing cost model will allow Old Mutual to free up budgets on infrastructure. The
new platform allows for quick delivery of innovation services through;
• Cloud enabled cost reduction: Reduction in total cost of ownership by
optimally using the hardware and software licenses. The cost gains emanate
from the fact that suppliers can leverage multiple value levers e.g. utilization,
scale, standardization and labour flexibility to provide cloud services to buyers
and drive down costs. The supplier also gains the ability to scale with demand
for peak loads and seasonal variations thus optimizing the cost model.
• ICT Investment De-risking: Investments are translated from the upfront
Capital Expense (CAPEX) to Operational expenses (OPEX) for consuming
ICT Services. This alternate sourcing strategy for ICT services provides
primary and fall-back options.
• Enhanced business agility: The infrastructure can be provisioned quickly
when required therefore improves the time to market.
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• Global Scale: Massively scalable engine allows building highly scalable
services for customers and partners.
1.4 Research Aim
To determine the business value of adopting Cloud Computing for Old Mutual
Zimbabwe
1.4.1 Objectives
1. To analyse the current and historical cost of providing ICT support services in
Old Mutual and forecast the likely gains of adopting a CC solution from 2010
to 2013,
2. To assess the ICT landscape for Old Mutual and determine the
appropriateness of adopting CC,
3. To analyse the ability of Old Mutual to meet expectations of its clients in a
cost-effective manner using CC,
4. To make a recommendation on the position Old Mutual Zimbabwe must take
with regards to CC.
1.5 Research Questions
CC is one of the most talked about technologies nowadays and has great
importance in business because of the cost and computational promises it offers.
The research on CC will be conducted in reference to Old Mutual and will seek to
answer the research questions which are:
• What is CC?
• What strategies should be considered to optimise Old Mutual’s ICT investment?
• What are the benefits and drawbacks for organisations intending to adopt CC?
• What concerns do company representatives have in making a decision to
adopt/not adopt CC?
• Does an opportunity exist to implement a CC solution in Old Mutual Zimbabwe?
1.6 Scope of the Research
This research is on analysing the business value to Old Mutual of adopting a CC
solution in its quest for ICT cost reduction. There are many aspects about ICT
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ownership models and their potential for cost reduction that lend themselves as
possible research areas. This study is not about all those models. It is focused on
CC because it is a contemporary and cutting-edge technology that must be
assessed for possible adoption by businesses that want to remain ahead of the
competition by harnessing ‘game-changing technology’ at the very early stage of the
product development cycle.
1.7 Delimitation
This research will be carried out in Harare. Restricting the research to Harare is
logical and convenient because:
• Old Mutual’s headquarters in Zimbabwe are in Harare and its strategic business
entities are also based in Harare.
• The researcher is based in Harare.
1.8 Significance of the Study
Every company must decide if CC will serve its particular needs. In order to do that,
they must evaluate the potential business value it offers and challenges involved. To
Old Mutual, this study on CC will enable executives to determine if the new
technology is a good alternative for cutting ICT costs. The research will recommend
to Old Mutual that CC is a cost effective way of harnessing ICTs and provide
Management with new ideas for consideration in their business strategies.
To the researcher the study will enhance academic knowledge and encourage a
practical application of theories and concepts learnt. It is the desire of the researcher
to contribute to the body of knowledge on computing infrastructure. Once financial
services sector firms share information and infrastructure, the public will benefit from
reduced service costs due to economies of scale and a reduction in cost structures
for business entities providing financial services to the public.
1.9 Assumptions
• The sample for the research will be representative of the whole population.
• All the required data would be made available to the researcher.
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1.10 Limitations of the study
The researcher is likely to find it difficult to access the relevant literature review due
to the specialized nature of the industry. Most of the information on this subject is
online and quite dynamic, and many sources claim authority on the subject matter.
This claim may not be verifiable. The uptake of cloud computing technologies and
services is not yet pervasive in Zimbabwe, and there are likely not to be many
general examples to cite in Zimbabwe, let alone particular cases in Harare where the
research is centred.
Old Mutual may not be readily willing to give all the required information regarding
their operations. It appears that in this competitive environment companies believe
that the winner is the best fighter rather than view issues from a collaborative
approach so as to create a win-win situation in the financial services industry. To
circumvent this constraint the researcher will also rely on a lot of secondary data and
on personal experience acquired while working for the same organisation over a
twenty-year period.
1.11 Format of study
Chapter one provides an overview of the study focusing on the statement of the
problem and the background of the issue addressed in the research. This chapter
outlines the aim of the study, objectives, and research questions. A detailed
description of Old Mutual was provided to enable the reader to gain an in-depth
appreciation of the company used in the case study.
Chapter two acquaints the reader with existing studies, what has been found and
who has done work related to CC. Chapter 2 establishes the need for the study and
likelihood of obtaining meaningful results. The different types of ‘clouds’ are
discussed and so too are the requirements for a good and systematic CC adoption
strategy.
Chapter three describes the methods that were employed during the course of the
research. It shows how the data was collected, recorded, processed and analysed.
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In chapter four findings from the research conducted are presented. The format for
the chapter follows a systematic concept where research results are tabulated,
analysed and an inference is made based on the results. A discussion of important
links follows after the presentation of results.
Chapter five has conclusions and recommendations on the potential role of CC in
Old Mutual. Suggestions are given on how Old Mutual can derive optimal benefits
from investing in CC.
1.12 Conclusion
Chapter one introduced the scope and nature of the study to guide the reader on the
researcher’s understanding of the problem to be solved. It stated the problem in the
research and outlined the study objectives. A detailed description of Old Mutual was
provided to enable the reader to gain an in-depth appreciation of the company used
in the case study.
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CHAPTER 2
LITERATURE REVIEW
2.0 Introduction
The purpose of this literature review is to provide a concise synthesis of existing
research and literature on CC. The importance of reviewing literature is highlighted
by Sekaran (2003) who states that literature creates the context from the past for the
new study to be conducted with newly obtained data. In this chapter, literature on
benefits, drawbacks and various forms of CC is reviewed. This literature review
explores the experiences of companies that have adopted CC and highlights the
need for companies to consider the impact of CC on their business in order to make
decisions about its adoption and use.
The advent of CC in recent years has sparked interest from different stakeholders IT
and Computer science, such as academics, businesses and institutions. With its
promise of a new economic model for the Information Technology department of an
organisations CC changes the way organisations invest in their IT resources. The
new model removes the need for organisations to invest a substantial sum of money
for purchase of some IT resources that are internally managed. Alternatively, the
organisation can outsource IT resource requirements to service providers. Despite
its benefits CC poses some challenges to organisations seeking to adopt it. The
challenges include lack of trust, security concerns, legal issues and challenges
related to managing organisational change.
2.1 A historical background.
August 24, 2006 will go down in history as the start of CC. On this day Amazon
made the test version of its Elastic Computing Cloud public. This offer which brought
with it flexible computing capacity, marked an important milestone in the changing
business relations between IT users and providers (Scheiner, 2008). The target of
Amazon’s new product were developers, who had no wish to hold their own IT
infrastructure who hired the services from Amazon via Internet. Nobody at this time
spoke of CC yet. The term was popularised in 2007, to which the first entry in the
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English Wikipedia from March 3, 2007 attests. Around this time, Dell tried to register
a trademark on the term. This was successful in July 2007, but the permission was
revoked only a few days later.
The scope of CC grew from simple infrastructure services such as storage and
calculation resources to include applications. Forerunners of the technology such as
application service providing and Software as a Service were included under the
designation of CC. At the bottom of these developments was the eventual shifting of
IT services away from local computers to the Internet.
2.2 Definition of Cloud Computing
According to Ried, Kisker, and Matzke (2010) CC is a standardized ICT capability
(services, software or infrastructure) delivered via Internet technologies in a pay-per-
use, self-service way. CC makes it easier to access data with several devices. The
term refers to the images of clouds that represent networks and the Internet. In
general terms CC makes data and applications available through the Internet (ibid)
and in so doing data and applications can be accessed from everywhere. Schuller
(2010) says not everything about CC is new since it is just a new way of using
existing technology.
Armbrust, Fox, Griffith, Joseph, Katz, Konwinski and Lee (2009) state that CC refers
to applications delivered as services over the Internet and the hardware and systems
software in the data centres that provide those services. When a Cloud is made
available in a pay-as-you-go manner to the public, it is called a Public Cloud and the
service being sold is Utility Computing. Private Clouds on the other hand refers to
internal data centres of a business, not made available to the public. CC is the sum
of Software as a Service (SaaS) and Utility Computing.
CC can also be described as a virtualized system and natural evolution for data
centres which offer automated systems management (Boss et al., 2007). For
organisations like Old Mutual, CC will facilitate the achievement of more efficient use
of ICT hardware and software investments. This can be achieved by breaking down
13
the physical barrier inherent in isolated systems and automating the management of
the group of systems as a single entity.
CC can be understood to be the renting of infrastructure and software, as well as
bandwidths on conditions pre-determined by service providers. These components
should be adjustable daily to meet the needs of customers while being readily
available and secure. Included in CC are end-to-end service level agreements
(SLAs) and use-dependent service invoices. Fig 2.1 below shows the components
that are combined to establish CC.
Figure 2.1: Cloud computing as it is today.
Source: Doesburg A (2009)
2.2.1 Trust and Challenges in CC adoption
CC adoption faces a number of challenges which include security, legal as well as
organisational challenges (Khajeh-Hosseini et al., 2010a). Associated with all these
challenges is the issue of trust between clients and vendors. CC calls for
organisations to trust vendors with the management of their IT resources and data.
These factors are a very big concern for an organisation with massive business
interests and high competition like Old Mutual. Trust being a critical factor in CC
adoption, this research project will focus specifically in identifying the challenges
facing organisations when seeking to adopt CC.
Of all the challenges security has received more mention. This is because “security
is both a feeling and a reality” (Schneir, 2008). Security relates to the probability of
14
different risks and how effective strategies to mitigate the perceived risks are. CC
should appeal to the feelings of potential customers and address the reality of risks
associated with it in a way that customers will feel safe and secure to use it.
2.3 Alternative Technologies to CC
It is important for Old Mutual to consider all available options before making the
move / migrating to CC. There are many routes companies can take if the much
debated cloud cannot cater for their needs. The traditional option of an in-house
server appeals to many business owners. For many companies their equipment
housed in bricks and mortar has its advantages. For others having a server in a
locked room where you can control who accesses puts many security worries to rest.
The independence that comes with making your own decisions about what to install
next, and actually implementing that decision with no resistance, is a clear selling
point. With an in-house server, every user can still access all their information
directly, even when your Internet connection is unavailable.
The Server Farm Approach: using the conventional approach increases in demand
for processing requirements are handled with a brute force approach i.e. Develop
server farms that add microprocessor units at a problem. These server farms create
new problems such as how to bring enough power to a server room and how to
remove the generated heat. Further space requirements are another problem and so
is management of the server farm to ensure an optimal return on investment (Lewis;
2012). At some point, the rationale for these local server farms runs out as the
physical and heat problems become too large. Using CC, companies can make
physical problems disappear by offloading this IT requirement onto specialised
companies.
Leasing models; the importance of powerful ICT landscapes is changing steadily.
That makes it difficult to predict the optimum utilization period of hardware. In this
regard expensive technology investment financed from cash flow or long-term loans
is not the ideal solution. An option for business is ICT leasing models where
business can continually adjust hardware capacity to their circumstances and growth
15
targets. The ICT leasing Model involves entering into a contractual arrangement with
a company, which is governed by an agreed schedule of payments over the lifetime
of the arrangement. Lease hire or operational leases help spread the capital,
insurance and maintenance costs of ICT equipment.
BYOD as an alternative; Mobile devices come in all shapes and sizes. They include
smartphones, tablets and notebooks. While mobility boosts employee efficiency by
delivering “anywhere access” to business data and systems, many security
managers have already discovered the disconcerting implications: less control than
ever over enterprise data access from a myriad of consumer devices and more
difficulty determining which devices are accessing which systems and data.
BYODs pose many business risks; some widely recognized and others less-
understood. Stolen BYODs are a top concern. There is a danger that BYODs that go
missing may contain sensitive data and very few can be remotely deleted. Also,
employers often cannot assess data breach exposure on unmanaged BYODs.
Williams (2010) says that BYOD can lead to a loss of control of a company’s data.
For example when an email is retrieved [over cellular] and opened on a BYOD,
visibility into data access is lost. When BYODs bypass inbound filters normally
applied to corporate devices, they are vulnerable to malware. BYODs that bypass
outbound filters increase the risk of non-compliance with data privacy laws and
regulatory requirements (Forbes, 2010).
2.4 Characteristics of CC
An understanding of the characteristics of CC is important and by assessing the
characteristic features of CC Old Mutual Executives can determine if the features are
worth considering and if the technology would be useful in its business model.
According to the Cloud Security Alliance, (2009) there are five essential
characteristics. Cloud services generally have the following characteristics that set
them apart from other technology providers;
• Consumer can access the services when needed, without the human interaction
with the service provider i.e. On-demand-self-service,
16
• It has capabilities over the network and accessed through standard mechanisms
i.e. Broad network access,
• The computing resources of the provider are pooled to serve multiple consumers
which are using a multi-tenant model, with various physical and virtual resources
dynamically assigned, depending on consumer demand i.e. Resource pooling,
• Services can be rapidly and elastically provisioned i.e. Rapid elasticity and
• CC systems automatically control and optimize resource usage by providing a
metering capability to the type of services (e.g. storage, processing, and
bandwidth) i.e. measured service.
It appears from the characteristics of CC that it can be a key enabler to Old Mutual
meeting its IT Objectives which are;
• To provide thought leadership (To Innovate, Capture new business and Grow
the business )
• To improve Customer Service (Responsiveness and flexibility)
• To improve Cost efficiency (Reduce costs)
• To de-risk the IT Environment
2.4.1 Cloud Computing Pros and Cons
Service providers are responsible for installing and maintaining core technology
within the cloud. Customers prefer this because it limits management burden but
customers cannot directly control system stability and are highly dependent on the
service provider instead. CC systems are designed to track system resources,
enabling providers to charge customers according to the resources each consumes.
Some customers will prefer the metered billing approach to save money, while
others prefer a flat-rate subscription to ensure predictable monthly or yearly costs.
Using a CC environment generally requires organization’s to send data over the
Internet and store it on a third-party system. The privacy and security risks
associated with this must be weighed against alternatives (Lewis; 2012).
CC is more an evolution than a revolution. Existing technologies e.g. grid computing,
or adaptive computing mark the infrastructure path leading to CC. Application service
17
provision and Software-as-a-Service signify growth towards the provision of
programmes. Fig 2.2 below shows trends leading to the establishment of CC.
Figure 2.2: Trend leading to the development of Clo ud Computing.
Source: Ried, Kisker, and Matzke (2010)
2.5 Cloud Computing Service Models
There are three different levels of services models that Old Mutual could choose
from and these range from the lowest service model called Infrastructure as a
Service (IaaS), and build up via Platform as a Service (PaaS) to Software as a
Service (SaaS) (Schuller, 2010). Each level adds extra functionality and abstraction
of the technical details of the services which are offered. Figure 2.3 below shows the
different CC stacks.
18
Figure 2.3: Cloud computing stacks.
CC stack (Schuller, 2010)
Infrastructure as a Service (IaaS): according to Murphy, Abraham, Fenn and
Goasguen (2009) laaS is the lowest layer where users use computing resources
such as databases, memory and storage from an IaaS provider to deploy and run
their applications. IaaS gives users more flexibility than PaaS as it allows the user to
deploy any software stack on top of the operating system. Amazon Web Services’
EC2 and S3 are popular IaaS examples. Figure 2.4 below lists market players in
each of the IaaS areas.
Figure 2.4: Market players in different IaaS areas
Source: Murphy, Abraham, Fenn, and Goasguen, 2009
19
IaaS helps companies to move their physical infrastructure to the cloud with a level
of control similar to what they would have in a traditional on-premise datacentre.
IaaS provides the closest resemblance to the in-house datacentre compared to other
services types. Pricing model for IaaS services may be based on $/size of stored
data, $/amount of incoming data traffic, $/amount of outgoing data traffic and
$/number of specific http requests.
Platform as a Service (PaaS) is the layer where applications are developed using a
set of programming languages and tools that are supported and provided by a PaaS
provider. According to Boniface, et al (2009) it provides developers with a high level
of abstraction that allows them to focus on developing their applications. Developers
can provide their customers with a custom developed application. This removes the
hassle of defining and maintaining the infrastructure for developers. Similar to the
SaaS model, customers do not have control or access to the supporting equipment
used to host their applications. Google App Engine and Microsoft Azure are popular
PaaS examples.
Figure 2.5: Market players in PaaS areas
Source: Murphy, Abraham, Fenn, & Goasguen, 2009
20
Pricing in this model varies by storage, number of queries, amount of processed
data, user licenses and support options.
Software as a Service (SaaS): is a CC layer where users make use of a web-
browser to access software that others have developed, maintain and offer as a
service over the web. Users do not have control or access to the underlying platform
and equipment that is being used to host the software. Sales force’s Customer
Relationship Management (CRM) and Google Gmail are examples that use the
SaaS model (Armbrust, et al; 2009). In Zimbabwe, 23rd Century Systems provides its
clients with the Cumulus offering, which gives them access to the SAP ERP on the
web, without need to purchase servers and licensing of the application for each
company using the software. This reduces operating costs as individual SAP
installations are expensive to procure and run.
Figure 2.6: Market players in SaaS areas
Source: Murphy, Abraham, Fenn and Goasguen (2009)
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2.5.1 Cloud Storage Pricing
Most cloud storage providers determine pricing using the following factors:
• Total amount of stored data
• Amount of data transferred to storage cloud
• Amount of data transferred out of storage cloud
• Number of specific http requests
Table 2.1 shows as an example, the pricing between Amazon S3 and Rackspace
Cloud Files storage is compares.
Table 2.1: Amazon S3 and Rackspace Cloud Files stor age pricing comparison
Boniface, et al., 2009
2.5.2 Which Pricing Model to Choose?
Choice of pricing model depends on customer requirements (Boniface, et al., 2009).
The on-demand model is the right choice for customers who cannot estimate their
computing resource needs. Popular uses for on-demand computing include overflow
capacity for companies that host their own infrastructure and use Amazon only when
additional capacity is required. This model also fits well with start-ups and smaller
companies with limited funds, because they can pay for services as they grow. The
prepaid model provides cost benefits when a company can estimate its long-term
demand for CC services. This model works particularly well for larger organizations
that can estimate required capacity and can afford to make an initial investment.
22
Prices for CC resources constantly decrease across multiple providers. As more
providers enter the market, competition forces providers to offer a wider range of
price options in order to reach more customers. Table 2.2 below shows the trend in
pricing for CC resources.
Table 2.2: Price Trends
History of Amazon EC2 computing costs (based on a “small” Linux EC2 instance –
1.7GB RAM, 1CPU, 160GB storage – in the U.S. East region)
2.6 Deployment of CC
Three different service models can be deployed for Old Mutual. These vary from the
public Internet to a private data centre. Figure 2.7 shows the different deployment
strategies (Joint, 2009).
Fig 2.7: Cloud Computing Deployment models
Source: (Joint, 2009).
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Public Cloud deployment strategy uses the publicly available Internet to deliver
services to users. The advantage of this deployment type is that services are
available from any Internet connection. A downside is security. Services like Gmail
and Azure are provided through the public cloud (Armbrust, et al; 2009).
Private Cloud deployment strategy can be compared with the traditional in-house
hosting of a service. However, it uses technologies on which CC is based such as
virtualization to provide advantages to the organization (Armbrust, et al., 2009).
A community cloud is like a private cloud but is shared among a community of
organizations. This is done to share the costs and risks of running an own cloud.
These clouds can be found in shared service centres used by multiple organizations
(Buyya, 2009).
A hybrid cloud is a CC environment in which an organization provides and manages
some resources in-house and has others provided externally. For example, an
organization might use a public cloud service for general computing but store
customer data within its own data centre (Cole; 2009).
2.7 Operational excellence through Cloud Computing
Many business executives are identifying opportunities to reduce costs and pursuing
various ways to achieve more efficient and flexible business processes. Clouds are
platforms for running applications just like mainframes, servers and personal
computers. However, clouds are faster, extremely powerful, scalable and more
accessible than other computing platforms. A smaller percentage of executives seek
to use clouds to improve their decision making processes. Through this and more
CC is changing the way (processes) and efficiency through which organisations
conduct business in many ways.
24
Figure 2.8: Operational excellence through Cloud Co mputing
Source: Armbrust, et al (2009)
2.7.1 The Cloud’s Economic appeal
The economic appeal of CC is considered to be its ability to convert capital expenses
to operating expenses (Armbrust et al; 2009). Businesses using CC pay differently
depending on the agreement between them and the service providers. Usually
service providers have detailed costing models which are used to bill users on pay-
per-use basis (Khajeh-Hosseini et al; 2010b). The short term billing model is used
very frequently in business. Armbrust (2009) describes the short term billing model
as one of the most interesting and novel feature of CC.
2.7.2 Cloud Computing and Cost
The top reason organisations initiate CC is to save money. Bargain prices on cloud
services are a big part of their allure. Some savings from CC include eliminating the
cost of servers, removal of software licences, no maintenance fees, removal of
requirements for space to house servers and benefits of replacing capital expenses
low pay-for-use operating expenses. Considering all these the financial appeal of CC
25
is quite apparent. Up to this point in the growth of CC organisations are pursuing at
least six ways to reduce ICT costs by using clouds:
• Substitution savings: Organisations are switching from using servers to
less costly cloud services. According to Doesburg (2009) a state-owned
postal service i.e. New Zealand Post, targets to save NZ $2 million by
migrating e-mail and messaging applications to a cloud.
• Infrastructure avoidance savings: Companies are choosing to use cloud
services instead of buying equipment or licensing conventional software.
Smug Mug, a company with annual revenues of around US$12million,
estimates it has saved $500,000 by using clouds computing (Guynn,
2007).
• Savings on scarce ICT resources: when skilled ICT labour or equipment is
difficult and expensive to come by cloud services are an attractive option
to manage costs. This is especially the case in Zimbabwe, where a lot of
skilled personnel have migrated to better-performing economies abroad,
and importation of ICT equipment is generally expensive, especially when
a company standardises of branded products, which perform better and
last longer. Old Mutual has standardised on HP hardware, and a Microsoft
Windows software operating platform. Both the hardware and software
licenses are pricy.
2.7.3 Infrastructure consolidation
• Savings: Organisations running large data centres are converting to cloud
architecture and consolidating their operations. In October, 2009 the U.S.
Department of Defence reduced the number of data centres it operates from
194 to 14 when it introduced a CC platform (Miller, 2009).
• Energy savings: in countries such as Australia, Brazil, France and Japan
cutting energy costs provides significant motivation for pursuing clouds. Corus
Automotive Engineering Group expects to reduce power usage and cooling
requirements by 40% by using a private cloud (Clark and Ravella, 2009). This
opportunity to save power is particularly key to Zimbabwean companies
because power outages are frequent and electricity prices are high.
26
2.7.4 Efficiency and productivity improvements
Using a cost benefit analysis cloud services provide more opportunities to save
money than conventional technologies. According to Miller (2009), many executives
agree that CC has a high potential to permanently lower operating costs. The UK
government estimates cloud based technologies used by Government will enable
£3.2 billion in operational savings. These savings are real and in a competitive
environment Old Mutual can stay ahead of the pack by harnessing cloud services.
2.7.5 Greater agility
Clouds offer highly flexible resources and are scalable because of their technical
design. They can be summoned quickly when needed and can be expanded for use
by assigning more servers to a job, then reduce or disappear when no longer
needed. That makes clouds conducive for use in seasonal or temporary work, for
finishing tasks at lightning speed and processing vast amounts of data (Gruman,
2008).
ICT executives speak highly of the agility CC provides them. CC enables faster
implementation of systems that helps businesses to be competitive. Businesses
want to use clouds to meet peaks in traffic on web sites while maintaining fast
response times. The New York Times was unable avail its archive of 15 million news
stories to its customers until it used a public cloud service to convert articles to PDFs
(Gruman, 2008). These benefits from applications of CC are providing real business
value and organisations are eager to use clouds to support their business processes,
especially when they link different organisations.
2.7.6 Integrating operations
While there is concern over how to make more secure and issues on integrating
clouds with older systems, and the risk of slow response times the most commonly
cited use for CC is that of integrating different organisations. The advantages of
clouds as platforms i.e. their ability to expand as usage increases, and convenience
of providing a single uniform process that can be accessed by people in different
organisations, whether at their desk or on the road, have stirred interest in the
technology.
27
According to Smith (2009) in Brazil many executives are exploring various platform
process standardisation opportunities. Among the platforms identified are:
• Logistics platforms: supply chain agents, whether they are shipping and
transportation companies, manufacturers or retailers, supports information
exchange and common processes among its internal and external stakeholders.
Clouds provide a low cost way to provide expandable logistics platforms. One
that establishes uniform processes across the supply chain and common
accessible methods for entering data. China Ocean Shipping Company the
world’s second largest sea shipping business is one organisation that is creating
such a platform (Smith; 2009).
• Franchise operations platforms: companies that provide franchises need ICT to
track and manage business relationships with franchisees. Some of these
companies are turning to cloud services to do it develop a mutually beneficial and
integrated service relationship. Papa Murphy’s Pizza, a U.S. chain with 1,100
stores used cloud services to build a tool for selling franchises that is being
expanded to store operations. The cloud-based system provides data on
inquiries, contract status, store construction and operations. Field operation
directors can report and review store data on their smartphones to determine
which stores require marketing support or operational help (Smith; 2009).
• Platform for distributing Media: Movies, television shows and music require large
amounts of computer storage. The entertainment industry is using cloud
platforms to store and distribute content while Walt Disney is designing a cloud-
based system to provide consumers with instant access to films or TV shows on
cable, computers and smartphones (Smith; 2009). Warner Bros. is developing a
digital supply chain for storing and distributing movies and TV shows (Accenture;
2008).
• Platforms for managing patient information: Clouds offer the speed, capacity and
accessibility needed to share data among health care stakeholders including
28
doctors, insurers and government. An early example is the Mayo Clinic which is
using cloud services where patients can store and access medical information. In
the United Kingdom, the National Health Service has set up a private cloud-
based service for storing and sharing medical images (Wan et al ; 2009).
2.7.7 Better decisions
Most executives are interested in using clouds to make decisions. However, they
appear divided over its importance compared with reducing costs and supporting
processes. In developed countries the health and public service sector, over half say
improved decisions will be one of the most important long-term benefits they receive
from the technology. Some companies have already started using CC as a key
decision making tool. This includes;
• Analytics: cloud powered analytical tools are used to derive insights from large
quantities of data and images. Clouds provide a means to quickly analyse the
huge collections of customer, operational and scientific data they accumulate on
a pay-as-needed basis. Some marketers are using Microsoft cloud services to
analyse promotional images and evaluate how visually effective they are to
customers (Amato-McCoy; 2009).
• Financial services: the cloud is being used by financial organisations to provide
new financial information products that require speed, high analytical capabilities
and rapid scalability. NASDAQ is launching a “Data-on-Demand “service to
provide investors with quick access to historical data on stocks (Amato-McCoy;
2009).
• Media: The cloud is providing and enabling new delivery channels for video and
traditional print publishers. Many organisations use YouTube to show training and
marketing. Some companies like Best Buy and Sonic have partnered to provide
solutions to deliver DVDs directly to consumers’ television sets personal
computers and smartphones (Lohr; 2009).
2.7.8 Expanding to new markets
Executives forecast cloud computing will be useful for helping their companies to
expand into new markets. Clouds help companies to expand in at least four ways:
29
• Small and medium sized companies: GE Healthcare has introduced a service
that allows physician groups to manage the medical side of their practice by
obtaining and sharing data with other medical caregivers, access decision
support tools and compile quality of care reports. The service enables patients
to schedule appointments, request prescriptions and obtain their lab results
(Hurwitz; 2010).
• Market Expansion: Xiwang, Chinese food-processing company that supplies
sugars and corn starch to food manufacturers is using CC to support its
expansion into the consumer market without large upfront investments in ICT.
It is using a cloud-based solution that analyses customer data uploaded by
employees in its stores, warehouses and delivery routes across China.
Besides helping the company expand, the service has reduced costs of
market penetration. It spends 60,000 to 80,000 RMB annually for services
provided which is less than the cost of maintaining the in-house alternative
(Allan et al 2010).
• New company purchases: Companies that grow by buying other firms must
excel at integrating them. The faster they purchase, the harder it can be for
ICT platforms to keep pace. Brady Corporation, a $1.3 billion conglomerate
that has acquired 30 companies in the last few years, found it took too long to
integrate and standardise systems with server-based software. Brady
selected collaboration software services to help it infuse and link its
acquisitions at the required speed (Nichols; 2010).
• Company expansion: one company, MOTECH Automotive, a chain of
automotive service centres has used CC services to open two new branches.
A faster access to back-office services means the company can set up a new
automotive centre in a few weeks, instead of the months needed previously
(Murdoch et al 2009). The lesson in this example is that a company does not
need to be named Google, Microsoft, or Amazon to use CC to outpace
competition. Large and small organisations can find ways to deploy CC
technology that will help them expand and attract business from rivals.
30
2.8 Cloud Computing Adoption Decision
CC is also about how ICT is provided and used and not only about technological
improvements of data centre (Creeger, 2009). Enterprises must consider the
benefits, drawbacks and other effects of CC on their enterprises and usage practices
before adopting it. The adoption of CC is as much dependent on the maturity of
organizational and cultural processes as the technology per se (Fellowes, 2008).
The decision to adopt CC is challenging because of the range of practical and
organisational culture reasons. Not all enterprises will outsource their whole back-
end computing requirements to cloud providers. Rather, they will establish a
computing environment based on dedicated servers, private clouds and possibly
more than one public cloud provider (Khajeh-Hosseini et al; 2010c). How the
adoption to CC is managed does not only depend on technical issues but also on
socio-technical factors (i.e. cost, confidentiality and control) and constraints derived
from existing business models. Hence, the challenges that enterprises must address
before CC adoption are:
i. to provide accurate information on costs of cloud adoption;
ii. to support risk management; and
iii. to ensure that decision makers can make informed trade-offs between the
benefits and risks
2.8.1 Migrating to Cloud - Systems and application migration
For business start-ups migration of applications is not a challenge as the
organisation starts by using CC from the start. On the other hand, businesses which
are already established, like Old Mutual, have a large number of systems and
applications that are a result of a long period of time in business. In most cases
these systems have been developed and depend on a number of different
technologies, are owned by different departments, and have complex dependencies
between the systems and the data they use. The business processes of the
organisation evolve to make use of the systems and are dependent on these
systems.
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The development and deployment and use of IT Systems and resources are affected
by organisational politics (Forbes, 2010). For CC, migrating systems and
applications poses a challenge to organisations. The challenges include IT policy
formulation, organisational politics and culture. It also includes identifying the system
dependencies and how the migration to cloud will affect these dependencies and the
work processes in place. Other challenges involved with migrating systems and
applications to the cloud are security, compliance, and service level agreement
(SLA) management.
2.9 A Strategic Approach to Cloud Implementation
Before Old Mutual undertakes to implement a cloud solution there is need to
approach the subject in a strategic manner. Old Mutual must establish strategic
direction which begins with low-risk applications or pilots and draw on lessons
learned for future endeavours to capitalise on potential benefits of cloud-based
services. Peng et al (2010) identify three key steps that are to be followed in
implementing a cloud solution. These are establishing a strategic direction,
implementing a cloud solution as a structured project and review the Implementation.
2.9.1 Establish a strategic direction
• Assess suitable business needs to determine information types and business
processes that will benefit the most from cloud-based services and related
technical impacts,
• Consider triggers and timing, identifying upcoming initiatives which present
opportunities for the use of cloud-based services,
• Make due consideration to the financial impacts including whole of life costs
and changes to capital/operational expenditure, and ensure they are
reflected in the organisation’s financial statements,
• Consider organisational capability - considering the strategic impact to the
organisation structure and skills sets and have a plan to mature capabilities
in targeted areas,
32
• Manage change - obtaining senior executive sponsorship and engaging
stakeholders to address resistance and ensure successful take-up of cloud-
based services and
• Review governance - to ensure controls are adequate for CC.
2.9.2 Implement a cloud solution as a structured pr oject
• Build a business model to provide context and form the basis for functional,
performance and resource requirements,
• Assess risks and determine suitable management strategies,
• Capture system requirements to determine standards required, performance,
manageability, security and compliance,
• Draw up a business case to outline the business rationale and an assessment
of options,
• design an exit strategy which considers continuing business operations,
disposition of data and exit costs
• develop and define contractual terms before approaching the market,
• Select a provider and be sure to verifying the providers service levels, costs,
reputation and capability,
• phase the implementation ensuring sufficient resources to prepare
infrastructure and manage organisational change and
• Prepare for continuing operations, ensuring sufficient in-house resources will
be in place for on-going operations.
2.9.3 Review the Implementation
• Conduct a periodic risk assessments for information held in the cloud,
• document lessons learned and apply to future cloud-based services and
• Prioritise any new business changes.
2.10 Critical Success Factors (CSF) for a cloud pro ject
An analysis of Critical Success Factors (CSFs) can be useful in determining how well
each option compares against the project investment options and benefits criteria.
33
CSFs are defined as attributes that are used to determine the successful delivery of
the programme and which the available options are assessed against (Wan,
Greenway, Harris and Alter (2010). CSFs will naturally vary from project to project
and it is suggested that organisations consider the CSFs for each project on a case
by case basis and involve key stakeholders in determining the CSFs. An example of
CSF high level analysis is shown in table 2.3 below.
Table 2.3: CSF high level analysis
Key CSFs Description
CSF1:
Business needs
Identify how the option meets investment objectives, business
needs and service requirements.
CSF2:
Strategic fit
Describe how well the option aligns with the company’s ICT
strategic plan and key elements of their forward work plan.
CSF3:
Value for Money
Identify the option’s value for money.
CSF4:
Achievability
Describe whether the option is considered to be achievable from the
perspective of the organization’s change management/adoption
capabilities.
Also whether the organization possesses the requisite skills to
implement the option and if key stakeholders support the option.
CSF5:
Vendor capability
and capacity to
deliver services
A key element in any CC proposal is an assessment of the CC
vendor capability and capacity to deliver contracted services.
This assessment should consider the competitiveness of the
specific segment(s) of the cloud market (e.g. IaaS, SaaS and PaaS)
and whether market offerings are likely to provide a cost-effective
solution.
2.11 Conclusion
Based on the literature we can see three different service models which build on
each other and share some characteristics i.e. Agility, Multi-tenancy, scalability, pay
as you go, any device, any location. The lowest form of CC can be found in the
Infrastructure as a Service, in which a flexible and scalable infrastructure is offered at
a pay per use price. The next level is Platform as a Service in which much
functionality is offered with the constraints of the selected technology. The third level
34
is Software as a Service and this layer offers a complete standardized software
application to the user.
Lately there are also thoughts on Business Process as a Service (BPaaS) which
offers the execution of a whole process as a service. This service is visible in the
outsourcing world and in that arena is known as Business Process Outsourcing
(BPO) (Norta, 2009). In this research the BPO/BPaaS subject is placed out of scope
since it is not completely based on the characteristics such as virtualization and
Internet technology of CC.
35
CHAPTER 3
METHODOLOGY
3.0 Introduction
This chapter presents the methodology used to conduct research for this
dissertation. It gives a detailed description of the research design, determination of
target population, sampling procedure and sample size of the study. It outlines the
methods used in data collection, analysis and presentation. Issues pertaining to
validity, reliability and limitations of the study are outlined.
3.1 The research process
Research process provides the necessary foundations and skills in locating
information to complete an effective research. This research follows the steps
outlined below;
Figure 3.1: The research process
Source: Sekaran (2003)
All the information from the literature review and data analysis is
synthesised into a comprehensive report
Write Research Report
Identifying the research topic
Defining the research problem
Setting the research questions
Determining research methodology
Data Collection
Information analysis and interpretation
Identify the general area of interest
Read and discuss the topic to build a deep knowledge base.
Determining the questions to ask that will provide information for the research.
Reflect on what is already known about the topic, what remains to be explored, and
what is of interest to the researcher.
Determining the instruments that will be used to collect data gather information for the
research.
Using mathematical techniques to convert data into
information for the report
Conduct a literature Review
36
3.2 Research Design
Bhattacharya (2003) defined a research design as the plan and strategy of
investigation conceived to obtain answers to research questions and to control
variance. The research design provides the outline for reaching the objectives of the
research and answering the questions originating from the management problem. He
identifies three types of research design as exploratory, descriptive and casual
design.
This researcher used a descriptive study in an attempt to explain the characteristics
of the ICT management model that exists in Old Mutual. A descriptive research
design is used because it is a scientific method which involves observing and
describing the behavior of a subject without influencing it in any way. It is a valid
method for researching specific subjects and as a precursor to more quantitative
studies.
3.3 The Research Philosophy
Two schools of research philosophy namely the positivism (quantitative research)
and the phenomenology (qualitative research) exist (Zikmund, 2000). The positivist
philosophy involves the use of quantitative or numerical value measurements and
statistical analysis of measurements to examine data. According to Wilson (2003),
quantitative data is characterised by more structured data, a larger sample than
qualitative research, data that can provide answers that will quantify the incidence of
particular behaviour in the populations under consideration.
Phenomenological philosophy uses qualitative research, which analyses loosely
structured data, mainly verbal data rather than measurements. Analysis is subjective
and diagnostic (Market Research Survey, 2003). According to Housden (2003),
qualitative data is characterised by unquantifiable data that is not representative of
larger populations and unstructured data collection techniques.
The researcher used a quantitative research approach as it was the objective
method to produce reliable results in assessing the objectives of the research.
Strength in numbers characterizes the many advantages of quantitative research.
37
Utilizing a series of tests and techniques, quantitative research yields data that is
projectable to a larger population. Quantitative research allows the results to be
replicated and compared when assessing reliability.
3.4 Target Population
According to Burns and Bush (2003) the population is the entire group under study
as specified by the research project. Housden (2003) defines population as the total
number of people in any defined group of interest. The researcher assessed the
benefits of adopting CC in Old Mutual Zimbabwe. As such the target population were
Old Mutual staff in the different subsidiaries. The researcher targeted 75 potential
respondents, mainly from ICT sections and executives in the companies. The
respondents chosen had either the technical knowledge to advise the company on
CC or they were in executive positions that would contribute to making a decision on
whether to adopt/not adopt the technology.
3.5 Sampling Strategy
Burns and Bush (2003) define a sample as a subject of the population that represent
that entire group. There are two broad sampling methods namely probability
sampling and non-probability sampling.
• Probability sampling’s key characteristic is that every member of the population of
interest has a known chance of being selected independent of any subjective
selection by the researcher (Housden, 2003). The benefit is that the results can
be projected onto the population as a whole subject to a known sampling error.
• Non-Probability Sampling involves a subjective selection of respondents
(Housden, 2003). The advantages include lower cost, small sample sizes and
ability to target important respondents (Housden, 2003).
The researcher used a Non-Probability Sampling strategy i.e. the judgemental
sampling technique. Judgmental sampling is a non-probability sampling technique
where the researcher selects respondents based on their knowledge and
professional judgment. This type of sampling technique, also known as purposive
sampling is used in cases where the specialty of an authority can select a more
representative sample that can bring more accurate results than by using other
38
probability sampling techniques. The process involves purposely handpicking
individuals from the population based on the researcher’s knowledge and judgment.
3.6 Data collection instruments
Questionnaires were used in this research. Housden (2003) defines questionnaires
as a structural data collection mechanism involving a range of question formats and
completed orally or in print. Survey questionnaires were used to collect primary data.
Questionnaires were selected because they solicit information suitable for research
analysis.
3.6.1 Questionnaire Construction
The questionnaire contained closed questions. This was necessary to enable the
researcher to gather quantitative data. Closed questions require less interviewer
skill, take less time and are easier for the respondent to answer. The questions were
designed to extract the most important and relevant information from respondents.
The Questionnaire is composed of questions seeking the opinion of respondents on:
• the concerns stakeholders have about a possible engagement of CC,
• the drivers to considering a CC solution,
• the CC model that would be preferable to Old Mutual (Private, Public, etc.),
• the type (SaaS, PaaS etc.) of cloud service Old Mutual will likely use,
• the willingness to outsource IT services,
3.7 Pilot Study
Ten (10) questionnaires were distributed as part of the pilot survey. The purpose of
pilot questionnaires was to test the questions for content and understanding. This
also served to assess the time it would take to complete the questionnaire and to
ensure that the instructions were clear and easy to follow. The respondents included
ICT personnel and executives. The respondents to the pilot questionnaire confirmed
that the questions were understandable. The questionnaire took them a maximum of
30 minutes to complete.
39
3.8 Administration of Questionnaires
A structured questionnaire was electronically distributed to the respondents. The
electronic questionnaire had several advantages including:
• The distribution cost was reduced through using e-mail as a distribution
medium;
• The confidentiality of respondents safeguarded; and
• The electronic structure of the questionnaire was made simple to extract as
much information as possible.
The disadvantages included:
• Respondents could consult a third party without the researcher’s knowledge
which is most unlikely in this research as respondents are experts in the field
and the questionnaire was tested on respondents of similar profession; and
• Questionnaires offered little or no chance to clarify any questions or concerns
that the respondents had. However, respondents in this study were
encouraged to seek clarity with the researcher.
The questionnaire was distributed with a consent statement that included:
• Information on the relevance of the study being undertaken;
• An assurance of confidentiality on ID and opinion of respondents and
• Researcher’s contact details in case difficulties were encountered.
3.9 Data Analysis
The researcher edited, arranged and coded data found in the study to facilitate
identification and analysis. Editing was first carried out manually, as this rectified
mistakes made from questionnaires. Microsoft packages were utilized by the
researcher as an analysis tool to tabulate and make graphical presentations of the
data using bar graphs and tables.
3.10 Validity and reliability
According to Cooper and Schindler (2003), validity is the extent to which a test
measures what we actually wish to measure. They also state that reliability, on the
other hand, has to do with the accuracy and precision of a measurement procedure.
40
Data collected was cross checked for the purposes of reliability. Due care was taken
to ensure the research findings were as reliable as possible and also that the
information serves the purpose for which it was gathered.
3.11 Conclusion
This chapter outlined the study’s research process. Primary data was collected from
an explorative structured questionnaire that provided a broad overview of the
opinions of ICT personnel and executives in Old Mutual. The next chapter presents
the results of the study.
41
CHAPTER 4
FINDINGS AND ANALYSIS
4.0 Introduction
This chapter presents the findings from this research. In analysing information
gathered, a number of tools have been used to make the information more
understandable. Illustrations are given as graphs, charts and tables to describe the
findings. This study is composed of questions seeking the opinion of respondents on:
• The concerns stakeholders have about a possible engagement of CC,
• The key drivers to considering a CC solution,
• The CC model that would be preferable to Old Mutual (Private, Public, etc.),
• The type of cloud service (SaaS, PaaS, etc.) Old Mutual will likely use and
• The willingness to outsource IT services.
4.1 Response Rate and Respondents Analysis
4.1.1 Response Rate
Of the 75 questionnaires sent out electronically 60 were returned giving an 80%
return rate. The response rate was sufficient to enable an analysis of the
questionnaires that reflects adequately the sentiments of the sample population.
4.1.2 Analysis of Respondents
Table 4.1: Sex of respondents
Frequency Percent
Cumulative
Percent
Male 34 56.7 56.7
Female 26 43.3 100.0
Total 60 100.0
An analysis of respondents in the study showed that there were 56.7% males
compared to 43.3% female respondents.
Chart 4.1: Age Analysis
A majority of the respondents (57%) are aged below 30 years. People in this age
range are more likely to be receptive to contemporary technologies compared to
those in age range above 40 years comprising 33% of the respondents.
discussion on CC will most likely be
research is about establishing if Old Mutual’s business processes are permeable to
new innovation. With a mostly young base of employees the diffusion of innovation in
the company may be possible and organizati
0%
10%
20%
30%
40%
50%
60%
Less than 30
Series1 57%
42
An analysis of respondents in the study showed that there were 56.7% males
compared to 43.3% female respondents.
Age Analysis of respondents
respondents (57%) are aged below 30 years. People in this age
range are more likely to be receptive to contemporary technologies compared to
those in age range above 40 years comprising 33% of the respondents.
discussion on CC will most likely be considered a relevant and new age topic. The
research is about establishing if Old Mutual’s business processes are permeable to
new innovation. With a mostly young base of employees the diffusion of innovation in
the company may be possible and organizational culture barriers can be overcome.
Less than 30 30-40 41-50 above 50
10% 10% 23%
An analysis of respondents in the study showed that there were 56.7% males
respondents (57%) are aged below 30 years. People in this age
range are more likely to be receptive to contemporary technologies compared to
those in age range above 40 years comprising 33% of the respondents. As such a
considered a relevant and new age topic. The
research is about establishing if Old Mutual’s business processes are permeable to
new innovation. With a mostly young base of employees the diffusion of innovation in
onal culture barriers can be overcome.
above 50
Chart 4.2: Educational Level attained
A majority of respondents in the survey (96.7%) have the equivalent of a college
level education. This is important in the research since an understanding of
technology and needs assessment for organisations
using the educational level criteria points to an organisation that has a fertile
atmosphere to adopt new approaches to doing things. In a world where change is
the only constant, college trained employees has a higher mental aptitude to provide
a human resource base needed to manage the implementation of new systems.
Respondents by Management level
As the aim of the survey was to
determine the appropriateness of adopting
were business managers such as chief executive officer, finance director,
managers and information tec
position in organisation in procurement and funding of I
managers were preferred due to their understanding of technology and needs
assessment for organisations.
0
10
20
30
40
50
60
70
High School
Percent 3.3
43
Educational Level attained by respondents
A majority of respondents in the survey (96.7%) have the equivalent of a college
This is important in the research since an understanding of
technology and needs assessment for organisations. An analysis of the respondents
using the educational level criteria points to an organisation that has a fertile
atmosphere to adopt new approaches to doing things. In a world where change is
tant, college trained employees has a higher mental aptitude to provide
a human resource base needed to manage the implementation of new systems.
Management level
As the aim of the survey was to assess the ICT landscape for Old Mutual and
determine the appropriateness of adopting CC adoption, the targeted respondents
were business managers such as chief executive officer, finance director,
managers and information technology managers. These preferable due to their
position in organisation in procurement and funding of ICT projects, while technical
managers were preferred due to their understanding of technology and needs
assessment for organisations.
High School College Degree Masters
23.3 66.7 6.7
A majority of respondents in the survey (96.7%) have the equivalent of a college
This is important in the research since an understanding of
. An analysis of the respondents
using the educational level criteria points to an organisation that has a fertile
atmosphere to adopt new approaches to doing things. In a world where change is
tant, college trained employees has a higher mental aptitude to provide
a human resource base needed to manage the implementation of new systems.
assess the ICT landscape for Old Mutual and
adoption, the targeted respondents
were business managers such as chief executive officer, finance director, divisional
preferable due to their
T projects, while technical
managers were preferred due to their understanding of technology and needs
Masters
Chart 4.3: Position occupied by
The majority of respondents in the study where I
These comprised 66.7% of respondents while
33.3% of the respondents.
because they guide the strategic direction of the company.
review many executives are looking for ways through which they can lower operating
costs while improving business processes.
It is also very important to note the views of technical I
that are going to be greatly affected by the adoption of
are used to having control over different aspects of organisation I
operations and management. These departments controlled such things as I
procurement, ICT asset management, security control and billing (Khajeh
et al., 2010a). With CC this is about to change.
losses for many ICT staff as the services they offer will be transferred to the cloud
provider. A reduction in staff costs is one of the widely touted benefits of CC
computing but this benefit is not always received well in all quarters.
the perception of employees to CC where technical opinions are obscured by
emotional opinions.
0
10
20
30
40
50
60
70
Executives
Percent 13.3
44
Position occupied by respondents in Old Mutual
The majority of respondents in the study where ICT staff in various Old Mutual Units.
comprised 66.7% of respondents while managers and executives comprised
33.3% of the respondents. It Is Important to have executive inpu
they guide the strategic direction of the company. As shown in the literature
review many executives are looking for ways through which they can lower operating
costs while improving business processes.
is also very important to note the views of technical ICT staff as they are the ones
that are going to be greatly affected by the adoption of CC. These I
are used to having control over different aspects of organisation I
erations and management. These departments controlled such things as I
T asset management, security control and billing (Khajeh
this is about to change. CC has a potential to lead to job
staff as the services they offer will be transferred to the cloud
provider. A reduction in staff costs is one of the widely touted benefits of CC
computing but this benefit is not always received well in all quarters.
loyees to CC where technical opinions are obscured by
Executives Management Staff
13.3 20 66.7
T staff in various Old Mutual Units.
anagers and executives comprised
nput in the survey
As shown in the literature
review many executives are looking for ways through which they can lower operating
T staff as they are the ones
. These ICT departments
are used to having control over different aspects of organisation ICT infrastructure
erations and management. These departments controlled such things as ICT
T asset management, security control and billing (Khajeh-Hosseini
CC has a potential to lead to job
staff as the services they offer will be transferred to the cloud
provider. A reduction in staff costs is one of the widely touted benefits of CC
computing but this benefit is not always received well in all quarters. This may affect
loyees to CC where technical opinions are obscured by
Chart 4.4: Respondents by organization size
Based on the organisation size the
employees, 3.3% represented a company with
from a company with above 250
complexity of adopting CC
businesses are large enough to enable economies of scale to be enjoyed from
adopting cloud computing. Old Mutual and its subsidiaries are large enough to even
consider the issue of adopting a private cloud.
4.2 Alternative models to Cloud Computing
The researcher sought the opinions of respondents on various issues relating to
alternative ICT equipment usage models to CC. This question sought to assess the
levels of concern that respondents had on issues relating to cost, security, control of
business data, privacy and integrity of services.
0
10
20
30
40
50
60
70
80
90
100
1-9 employees
Percent 3.3
45
Respondents by organization size
on the organisation size the 3.3%represented a company with between
3.3% represented a company with 50 – 250 employees
above 250 employees. These results show the level of
CC that is to be expected. They also show that the
businesses are large enough to enable economies of scale to be enjoyed from
cloud computing. Old Mutual and its subsidiaries are large enough to even
consider the issue of adopting a private cloud.
Alternative models to Cloud Computing
The researcher sought the opinions of respondents on various issues relating to
T equipment usage models to CC. This question sought to assess the
levels of concern that respondents had on issues relating to cost, security, control of
business data, privacy and integrity of services.
9 employees 50-250 employees over 250
employees
3.3 3.3 93.3
3.3%represented a company with between 1- 50
employees and 93.3% were
. These results show the level of
They also show that the
businesses are large enough to enable economies of scale to be enjoyed from
cloud computing. Old Mutual and its subsidiaries are large enough to even
The researcher sought the opinions of respondents on various issues relating to
T equipment usage models to CC. This question sought to assess the
levels of concern that respondents had on issues relating to cost, security, control of
46
Chart 4.5: Main concerns with regards to leasing mo dels?
The respondents considered all aspects to be very important. However, they rate
availability of services the highest with (88%) followed by integrity of services at
(86%). The respondents rated their concern with costs at 43% which is very low
compared to other aspects. In leasing models the respondents were not too
concerned with issues of losing control of data and confidentiality.
Chart 4.6: Cconcerns with regards to BYOD?
47
A majority of respondents did not feel the cost element was significant in BYOD
(88%). Their major concern on this was the loss of control (77%) in services and
data and the integrity of services (60%). Many respondents did not appear to think
BYOD had more significant concerns than CC. However the results confirm an issue
shown in the literature review that BYODs pose a number of business risks some
widely recognized and others less-understood. BYOD is discredited largely for its
contribution to losing control of a company’s data.
4.3 Cloud adoption and control challenges
Chart 4.7: Drivers for engaging cloud computing
The respondents expressed that there are a number of reasons that necessitate a
consideration for CC. The reasons from the survey include increasing capacity and
business performance (92%), optimization of ICT infrastructure (78%), business
continuity (78%), flexibility and scalability (60%). CC with its different deployment
and delivery models offers a number of benefits to businesses (Voona and
Venkantaratna; 2009). These benefits are such as: economies of scale resulting in
low-costs of ICT infrastructure, low maintenance costs and low ICT administration
48
costs. Other benefits are, improved of performance as a result of having access to
dynamic and scalable computing, memory and storage capabilities based on
demand. CC offers easier data monitoring, quick incident response, and low costs to
undertake security measures.
The biggest driver for cloud adoption for most organisations has been found to be
the need for flexible and scalable ICT resources, followed by the need for resource
optimisation. The findings suggest that costs is not the biggest driver by itself but
rather through the other benefits of adopting cloud computing costs may be reduced.
Chart 4.8: Respondents’ concerns about adopting CC ?
According to survey 88% of respondents cited a lack of liability for service providers,
with 55% citing confidentiality, 78% loss of control, 84% integrity of services and
82% privacy as a the major concerns in making a decision on. It appears there are
several aspects of concern when people make a consideration for adopting CC or
not. The concerns are much more pronounced than those shown in the concerns for
leasing models and BYOD.
CC has created a fundamental shift in how information technology infrastructure is
managed changing both the business and technology sides of ICT. But, as with any
major change in history, there are supporters and sceptics. Transferring enterprise
49
ICT to the cloud is a complex task that includes both technical and organizational
challenges. The cloud is a new paradigm that does not have a clear one-sentence
definition. It includes multiple factors, and therefore transformation to a cloud-based
process may seem confusing and this complexity paired with uncertainty creates
organizational cloud-adoption barriers.
4.4 Barriers to adopting Cloud Computing
Cloud adoption barriers represent business, technical and organizational challenges.
The impact of organizational challenges is difficult to quantify, but such challenges
can be critical in the decision-making process. Cloud advocates face substantial
resistance, as employees inside organizations might be reluctant to embrace cloud-
transformation and make this crucial technology shift.
4.4.1 Loss of Control
An analysis of all ICT ownership models the respondents where very concerned with
the issue of loss of control over their business data i.e. lease systems (60%), BYOD
(77%) and cloud computing (64%). Loss of control factors can be subdivided into two
types: technical loss of control, and organizational loss of control.
• Technical loss of control includes such factors as access control, software
versions and updates, and control over the timing of technical operations such
as data backups and restores, and is partially related to the data security
issues discussed above. To address technical loss of control challenges, a
cloud provider should offer tools that provide full visibility into all cloud
operations related to the company’s assets.
• Organizational loss of control is related mostly to human factors that create
barriers for CC. These factors include the fears of some individuals of losing
influence in the organization, the fear of job loss if the cloud transformation
will functionally affect specific positions and the simple inability to embrace
change. The fear of losing control is common and applies not only specifically
to the CC shift but also to other organizational changes.
50
4.4.2 Change Management
Another problem is that some organizations are just not ready to accept changes, or
are very slow to implement these changes. Therefore, it is important to ensure the
support of top management in order to implement change. Organizational loss of
control is a complex issue, and is difficult to measure because organizations are
typically reluctant to disclose these types of management problems. In this research
the majority of respondents where ICT staff in various Old Mutual Units. These
comprised 66.7% of respondents while managers and executives comprised 33.3%
of the respondents. This shows that there was a fair representation in getting the
views of senior managers in the company.
Judging by the literacy levels of the respondents change management will not be a
very big issue. A majority of respondents in the survey (96.7%) have the equivalent
of a college level education. This is important in the research since an understanding
of technology and its benefits are considered an important aspect in the research.
4.4.3 Security Concerns
The research findings have shown that personnel with technical understanding of
technology as well as those without all consider security to be a significant factor in
cloud adoption. This may be due to the emphasis placed on security by technical
personnel in the organisation infrastructure as well as the security awareness
programs and training.
Cloud computing needs to appeal to the feelings of the customers and address the
potential security risks in a manner that clients will feel safe and secure. By
addressing security customers will feel safer and secure and hence trust cloud
service providers. Old Mutual must thus scout for a service provider who gives
guarantees on the level of investment they will put on ensuring the security of Old
Mutual’s information.
51
4.4 Preferred Cloud Model
Respondents were asked to state the layer of the cloud that would be ideal to
approach in Old Mutual’s case.
Table 4.2: Preferred Cloud Model
Frequency Percent
Cumulative
Percent
SaaS 10 16.7 16.7
PaaS 28 46.7 63.3
IaaS 6 10.0 73.3
Security services 12 20.0 93.3
No response 4 6.7 100.0
Total 60 100.0
The majority of respondents 46.7% preferred that the PaaS model be considered for
use by Old Mutual. It must be stated, however, that a review if literature shows that
for the foreseeable future, all three major delivery models (IaaS, PaaS, and SaaS)
will be in use. It is likely that market share for IaaS is going to drop as customers
realize that there is more value and resource-savings from software and platform
services rather than infrastructure. However, some technical factors and
dependencies will keep IaaS cloud services afloat for some time to come
52
4.5 Security of business data
Table 4.3: Security of business data in Cloud Compu ting
Respondents were asked to state their thoughts on security of business data in
Cloud Computing.
Frequency Percent
Cumulative
Percent
Yes 48 80.0 80.0
No 12 20.0 100.0
Total 60 100.0
A majority of respondents, 80%, stated that there was security of business data in
cloud computing. This may have come from an awareness of the investment CC
service providers are putting in securing their services.
4.5.1 Disaster recovery options
Respondents were asked to state the disaster recovery options are of interest that
were of interest to them and would be suitable to use for Old Mutual.
Table 4.4: Disaster recovery options
Frequency Percent
Cumulative
Percent
Fully outsourced disaster recovery and business
continuity 16 26.7 26.7
Contingency plan based on internal resources 44 73.3 100.0
Total 60 100.0
A majority of the respondents, 73.3% indicated that they preferred a contingency
plan based on the company’s internal resources. Of the many challenges that
adoption faces security, legal and organisational challenges are prominent (Khajeh
Hosseini et al; 2010a). Associated with all these challenges is the issue of trust
between clients and vendors. It appears the respondents do not trust vendors in the
event that a data recovery exercise has to be conducted.
4.6 Preferable Cloud computing solution
Respondents were asked to state the most suitable CC solution for Old Mutual
according a given CC taxonomy.
Chart 4.9: Most suitable
Sixty percent (60%) of the respondents indicated that they prefer to have a private
cloud in the event that Old Mutual adopts
respondents are concerned about the data security aspect in their business
operation. Data security is by far the most challenging barrier to cloud adoption. Data
is the most precious corporate asset, and companies want to know that their data is
safe. Companies feel confident when they store data internally because they have
full control over it. Although there is no guaranty that data is better protected
internally comparing to public cloud. In fact, there is a possibility that data could be
0
10
20
30
40
50
60
Public cloud
Percent 16.7
53
A majority of the respondents, 73.3% indicated that they preferred a contingency
plan based on the company’s internal resources. Of the many challenges that
adoption faces security, legal and organisational challenges are prominent (Khajeh
2010a). Associated with all these challenges is the issue of trust
between clients and vendors. It appears the respondents do not trust vendors in the
nt that a data recovery exercise has to be conducted.
Preferable Cloud computing solution
Respondents were asked to state the most suitable CC solution for Old Mutual
according a given CC taxonomy.
Most suitable cloud solution
Sixty percent (60%) of the respondents indicated that they prefer to have a private
cloud in the event that Old Mutual adopts CC. This indicates that a majority of the
respondents are concerned about the data security aspect in their business
Data security is by far the most challenging barrier to cloud adoption. Data
is the most precious corporate asset, and companies want to know that their data is
safe. Companies feel confident when they store data internally because they have
ver it. Although there is no guaranty that data is better protected
internally comparing to public cloud. In fact, there is a possibility that data could be
Private cloud Partner cloud Federation of
clouds
60 3.3 20
A majority of the respondents, 73.3% indicated that they preferred a contingency
plan based on the company’s internal resources. Of the many challenges that CC
adoption faces security, legal and organisational challenges are prominent (Khajeh-
2010a). Associated with all these challenges is the issue of trust
between clients and vendors. It appears the respondents do not trust vendors in the
Respondents were asked to state the most suitable CC solution for Old Mutual
Sixty percent (60%) of the respondents indicated that they prefer to have a private
. This indicates that a majority of the
respondents are concerned about the data security aspect in their business
Data security is by far the most challenging barrier to cloud adoption. Data
is the most precious corporate asset, and companies want to know that their data is
safe. Companies feel confident when they store data internally because they have
ver it. Although there is no guaranty that data is better protected
internally comparing to public cloud. In fact, there is a possibility that data could be
even safer in the public cloud because public cloud providers may possess higher
level of data security expertise comparing to their customers.
In this model the cloud resources are not shared by unknown third parties. The cloud
resources in this model may be located within the client organisation premises or
offsite. In this model the clients’ securi
affected though this offering does not bring the benefits associated with reduced
capital expenditure in IT infrastructure investments.
4.7 Pricing of Cloud computing services
Respondents were asked to state a pricin
thought would be suitable for Old Mutual.
Chart 4.10: Suitable pricing model
Eighty percent (80%) of the respondents indicated that they preferred to have
monthly charges for cloud services.
market which have pricing models
and makes it difficult to estimate the real financial benefits of
troublesome for non-technical peop
the complexity of pricing models.
Pricing differences across cloud providers include charges for data storage, CPU,
memory, IP address, domain name service
0
20
40
60
80
Percent
54
even safer in the public cloud because public cloud providers may possess higher
rity expertise comparing to their customers.
In this model the cloud resources are not shared by unknown third parties. The cloud
resources in this model may be located within the client organisation premises or
offsite. In this model the clients’ security and compliance requirements are not
affected though this offering does not bring the benefits associated with reduced
capital expenditure in IT infrastructure investments.
Pricing of Cloud computing services
Respondents were asked to state a pricing model for cloud services that they
thought would be suitable for Old Mutual.
pricing model for cloud services
Eighty percent (80%) of the respondents indicated that they preferred to have
monthly charges for cloud services. There are many different cloud offerings on the
pricing models that differ considerably. This creates uncertainty
and makes it difficult to estimate the real financial benefits of CC. This uncertainty is
technical people, who could be confused and scared away by
the complexity of pricing models.
Pricing differences across cloud providers include charges for data storage, CPU,
memory, IP address, domain name services and load balancing
Annual Monthly Daily
Percent 16.7 80 3.3
even safer in the public cloud because public cloud providers may possess higher
In this model the cloud resources are not shared by unknown third parties. The cloud
resources in this model may be located within the client organisation premises or
ty and compliance requirements are not
affected though this offering does not bring the benefits associated with reduced
g model for cloud services that they
Eighty percent (80%) of the respondents indicated that they preferred to have
There are many different cloud offerings on the
considerably. This creates uncertainty
. This uncertainty is
le, who could be confused and scared away by
Pricing differences across cloud providers include charges for data storage, CPU,
s and load balancing among others.
55
There is no single standard for cloud services pricing and it can be complicated to
compare prices between providers head-to-head. It is also difficult to predict future
prices with specific providers and once company is locked in with one cloud provider,
it is not easy to move an entire infrastructure to other clouds.
As shown in the literature review the choice of pricing model depends on customer
requirements (Boniface, et al., 2009). This model suitable for Old Mutual is the
prepaid model which provides cost benefits when a company can estimate their
long-term demand for computational resources. This model works particularly well
for larger organizations that can estimate required capacity and can afford to make
an initial investment.
Significant labour costs, primarily associated with hardware facilities, database and
ICT administrational tasks can be saved if a company moves its whole IT
infrastructure to the cloud.
4.8 Cloud Computing and Cost
Old Mutual Zimbabwe has a total of 80 servers valued USD1, 600,000. Between
2009 and 2013 the company has been spending on average USD53, 600 per annum
to replace servers that are either obsolete or have been damaged. The table below
shows the servers that were replaced between 2009 and 2013.
Table 4.6: Server Replacement costs 2009 - 2013
2009 2010 2011 2012 2013
Wear and Tear 10 2 1 6 2
Damaged /
Crashed 2 1 1
Total 20 0 1 6 0
Cost (USD)
150,000.00
30,000.00
20,000.00
56,000.00
13,800.00
The costs incurred by Old Mutual on this equipment can be avoided if it adopts CC.
Some savings from CC include eliminating the cost of servers, removal of software
56
licences, staff costs, no maintenance fees, removal of requirements for data centre
space, and the benefits of replacing a large up-front capital expense with a low, pay-
for-use operating expense. Significant labour costs, primarily associated with
hardware facilities, database and ICT administrational tasks can be saved if a
company moves its whole ICT infrastructure to the cloud.
57
CHAPTER 5
CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
Conclusions and recommendations drawn from the study are shown in this chapter.
As the previous chapters have demonstrated, a successful CC adoption must focus
on the areas of trust, security, legal and compliance, and organisational issues. This
chapter integrates the critical issues from the previous chapters into a roadmap for
successful CC adoption project.
5.1 A Discussion of the Research Proposition
The research findings presented indicated that, the adopting of Cloud Computing for
Old Mutual Zimbabwe will increase its business value and competitiveness over its
rivals. There was a positive co-relationship of the findings and the proposal. The
research findings have supported the proposition that cloud computing leads to a
reduction of Total Cost of Ownership (TCO) of ICT assets, translates fixed costs to
variable cost, and leads to an improvement of business agility and ability to build
systems of a global class. The research supports the notion that the cloud computing
cost model will allow Old Mutual to free up budgets on infrastructure and the platform
will allow the company to deliver innovation services quickly.
5.1 Conclusion
Cloud computing is a powerful innovation expansive data processing systems. It is
expandable, reliable and widely available. Cloud computing has big self-managed
server pools which reduces the overhead and eliminates management headache.
Cloud services can grow and shrink according to need. Cloud computing is
particularly valuable to businesses, where affordable ICT tools are critical to helping
them become more productive without spending much money on in-house ICT
technical equipment.
58
• Drivers to Cloud Adoption
The biggest driver for cloud adoption for most organisations has been found to be
the need for flexible and scalable IT resources, followed by the need for resource
optimisation. The findings suggest that cost is not the biggest driver by itself but
rather through the other benefits of adopting cloud computing costs may be reduced.
• Cloud business case
Old Mutual must develop a business case that considers the available options from a
range of differing cloud computing approaches to e. The company’s capacity to
adapt business processes and support the introduction of changes in culture will be
important considerations in the evaluation of options. The outcome will be a shortlist
of options for analysis and comparison using cost-benefit analysis (CBA).
• Challenges related to cloud adoption and control
Migrating to Cloud is a lengthy process that involves both technical and
organizational challenges. As with the introduction of other technologies, cloud
computing has experienced considerable adoption resistance, and cloud proponents
should be prepared to overcome resistance in their organizations. Complexity paired
with uncertainty creates organizational cloud adoption barriers.
• Cloud delivery models
For the foreseeable future, all three major delivery models i.e. IaaS, PaaS, and SaaS
will continue to be available on the market. It is likely that IaaS market share is going
to steadily drop as customers realize that there is more value and resource-savings
from software and platform services rather than infrastructure. However, certain
technical factors and dependencies will keep IaaS cloud services afloat for some
time to come.
• Public Cloud Domination
Based on research the public cloud computing model is likely to become dominant
for serving computing resources. This does not mean companies will stop using
private clouds but that, in the long term, private and hybrid cloud market shares are
59
likely to continuously drop, and these cloud models will most likely be used only for
specific business cases.
• Cloud Services Pricing
Cloud market competition is becoming intense, and providers are pressed to
aggressively reduce service prices. A competitive and uncertain market with many
existing market players and continuous market entrances leads to high market
volatility. In such a volatile market, long-term customer commitment is key to a
company’s success. Cloud providers offer lucrative deals to lock customers in
because of these benefits.
• Security Concern in Cloud Computing
Security is the most serious barrier to the engagement of cloud computing. However,
there are other adoption challenges which include.
1. Data security concerns
2. Cost uncertainty
3. Loss of control
4. Reliability concerns
5. Reduced data portability
6. Reduced software compatibility
7. Reduced performance
8. Lock-in fears
Organizational challenges are hard to quantify, but such challenges are critical in the
decision-making process.
5.3 Recommendations
In the introductory chapter it was stated that Old Mutual’s database has grown so big
that backups or restores often take over 10 hours, disrupting normal business
processes. This system in use presently costs in excess of R1 million annually in
licensing fees and support costs from the South African vendor. Further. At a Group
60
level, there is a serious challenge on the status of computer hardware being used.
Integration is difficult and the networks struggle to “talk” to each other. Sharing
information is an uphill struggle, and operating costs are high. The challenges being
experienced require the company to pursue efficiency and cost-effectiveness. Old
Mutual must refresh its technology platforms to enhance service delivery capabilities.
Innovative and contemporary technology, providing an opportunity to reduce capital
costs while enhancing service delivery is needed. This research has therefore
determined that Cloud Computing will be a suitable innovation for the Old Mutual
service delivery platform.
From the analysis and discussion of the research findings and the reviewed literature
and conclusion made above, the following recommendations are suggested so that
Old Mutual is positioned to compete optimally using the strengths of IT innovations
and engagement. Old Mutual should;
1. Seriously consider the adoption of cloud computing as its preferred model
of ICT procurement and utilisation, in order to reduce operating costs and
increase flexibility in product development and marketing.
2. Establish a core team to define a strategic roadmap and framework for the
implementation of cloud computing. The roadmap should describe the
implementation approach for the cloud solution, including how to go to the
market, the project management governance structures and other key
control and assurance processes.
3. Old Mutual must prepare an exit strategy to migrate from its current ICT
Model to cloud computing. The exit strategy is important since it
documents the company’s contingency plan to migrate records securely to
the alternative solution. The strategy must factor in the extensive
investment Old Mutual currently has in IT assets and thus be phased to be
implemented in a period that will permit Old Mutual to derive maximum
returns from its current investment.
4. Old Mutual must immediately begin a process of conscientising staff on
the inevitability and business scope for introducing cloud computing.
61
5. A high level risk analysis should be undertaken to identify the major risks
and potential mitigating actions associated with cloud computing options.
Risks should be ranked according to Old Mutual’s established risk
management procedures
6. Old Mutual should consider collaborating with other financial institutions in
order to influence cloud service providers to tailor products and services
suitable for the financial sector in order to foster standardisation which in
turn will further reduce cost of such services, while reducing complexity.
5.4 Recommended areas for further research
To satisfy the goals and requirements outlined in this research and to overcome the
many resultant obstacles, a set of research issues that need to be addressed in
future are identified. There are three broad categories of CC areas open for
research;
• Fundamental research i.e. research required to map out the precise
functionalities required from the cloud in Old Mutual. It is recommended that
suitable models of CC for the financial sector be studied in order to derive
optimum value to the implementation of this important aspect of ICT
infrastructure in Zimbabwe.
• Extending research i.e. research that builds up on this research that has been
conducted. This is the first research that has been done on CC in Old Mutual.
To reach the full promises of CC in the company, many aspects have not yet
been developed. Prominent among these are the possibility and benefits of
open inter-operation across cloud solutions at IaaS, PaaS and SaaS levels.
Also managing multi-tenancy at a large scale and in heterogeneous
environments needs to be understood and applied within the context of the
company. Some areas like dynamic and seamless elasticity from in-house
cloud to public clouds present an opportunity for further research. Research is
needed in Old Mutual on the many associated legal problems concerning
security and privacy in CC. These challenges are opportunities towards a
more powerful cloud ecosystem.
62
• Application Research i.e. Old Mutual use case-specific research that defines
underlying capabilities the Old Mutual cloud must satisfy to fulfil at least the
minimum quality relevant for the Old Mutual use case. Many long known ICT
challenges continue and may be enhanced in a cloud environment. The
challenges include high volume data transmission issues in cases of
inadequate bandwidth, problems with trust, security and privacy (legal as well
as technical issues), varying capabilities in elasticity and scaling. These
problems are in a way research challenges and overcoming them provides
Old Mutual with an opportunity to exploit the market.
63
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APPENDICES
APPENDIX 1 : QUESTIONNAIRE
COST-EFFECTIVE OWNERSHIP OF ICT INFRASTRUCTURE, EQUIPMENT AND
SYSTEMS IN THE FINANCIAL SERVICES SECTOR (A CASE OF OLD MUTUAL)
Dear Respondent,
My name is Tawanda Shumba. I am a finalist Masters in Business Administration (MBA)
student with the Graduate School of Management at the University of Zimbabwe and am
conducting research on the possibility of adopting CC in Old Mutual Zimbabwe’s ICT
operations. Everything discussed hereunder is for academic purposes only and views of
respondents will be treated as confidential. You will however have access to the findings
once the research is finalised, if this is of interest to you. Responding to the questionnaire is
expected to take 30 minutes of your time. Responding to the questionnaire will be on
voluntary basis and you are free to withdraw at any time. Your assistance in this regard is
much appreciated.
For any clarification you might require in respect of this research please contact this
researcher on mobile +263772225328 or via e-mail, address [email protected]
SECTION A: DEMOGRAPHIC SECTION
GENDER M F AGE <30 30-
40
41-
50
>50
EDUCATION High College Degree Masters Doctoral
YEARS OF EXPERIENCE <5 5-10 11- 16- >21
POSITION Top Management Middle
Management
Lower
Management
Administrative/
Non Managerial
67
SECTION B: COMPANY INFORMATION
Subsidiary
Subsidiary type Y/N
Banking
Insurance
Property
Investment
Support services
Other (specify)
1. What is the size of the enterprise you represent?
1-9 Employees
10-50 Employees
50-250 Employees
Over 250 Employees
2. Has the number of employees been increasing or decreasing since 2009?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
SECTION C: ICT USAGE AND REQUIREMENTS
3. What are the main uses of ICT gadgets?
Uses
Programming
Analysis
Customer interface
Data Storage
Electronic formula calculations
Research and correspondence
Banking services
Other (specify
68
SECTION D: KNOWLEDGE OF ALTERNATIVE ICT MODELS
4. Do you know any company that has started using any of these models in Zimbabwe?
Cloud Computing Leasing Model Bring your Own Device (BYOD)
Name Of
Company
Name Of
Company
Name Of
Company
5. Have any companies approached your company with a proposal to offer any of these services?
a) CC (Y/N) ___________
b) Leasing Model (Y/N) ___________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
If yes name the company in 4 above companies?
_________________________________________________
6. What has been their proposed pricing model?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
7. What are your main concerns with regards to CC?
Answer Options Not
Important
Medium
Importance
Very
Important
Privacy aspects
Service availability
Integrity of services
Confidentiality company data
69
Loss of control of data
Absence of liability of providers in case of security incidents
Inconsistency between trans national laws and regulations
Cost
8. What are your main concerns with regards to Leasing Models?
Answer Options Not
Important
Medium
Importance
Very
Important
Privacy
Availability of services
Integrity of services
Confidentiality of corporate data
Loss of control of services and/or data
Lack of liability of providers in case of security incidents
Inconsistency between trans national laws and regulations
Cost
9. What are your main concerns with regards to BYOD?
Answer Options Not
Important
Medium
Importance
Very
Important
Compromised Privacy
Unsure about availability of services
Integrity of services by service providers
Level of confidentiality of corporate data
Possible loss of control of services and/or data
Low/no liability of providers in case of security incidents
Inconsistency of trans national laws and regulations
Cost
SECTION D: CHANGE DRIVERS
10. What are the reasons behind your possible engagement in the CC area?
Not
Important
Medium
Importance
Very
Important
Elimination of economic/expertise barriers constraining the modernisation
of business processes by the introduction of Information Technology
70
Removal of capital expenditure in hardware, software, ICT support,
Information Security by outsourcing infrastructure/platforms/services
The promise of flexibility and scalability of ICT resources
Extending computing capacity and business performance
Diversifying ICT systems
Wholesome optimisation of ICT infrastructure through automated
management of virtual machines
Business continuity and disaster recovery potential
Assessing the feasibility and profitability of new services (i.e. by developing
business cases into the Cloud)
extending redundancy to improve availability and resilience
Marginal profit and marginal costs control
Other (please specify)
14. Which solution do you see as the most suitable for your company, according to this possible
CC taxonomy?
Answer Options
Public Cloud (owned and managed by an unrelated business)
Private Cloud (owned and managed internally)
Partner Cloud (owned and managed by a trusted partner)
A federation of clouds provided by various sources (partner, private, etc).
Other
15. Which “layer” of the Cloud would you be most likely to approach?
Answer Options
Individual software packages (SaaS)
Complete operating system and software package available via cloud services (PaaS)
Just infrastructure services such as storage, network capacity etc. (IaaS)
Security services in the cloud
Other (please specify)
71
SECTION D: CLOUD SECURITY
16. Do you think Business data will be secure if the company uses CC?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
17. Which of the following disaster recovery options are of interest to you?
Answer Options
outsourced disaster recovery
contingency plan based on internal resources
Other (please specify)
18. Which IT services/Applications supporting business processes are most likely to be
outsourced to a CC service provider?
Answer Options
Payroll
Human Resources
Procurements
CRM/Sales Management
Accounting and Finance
Project management
Application development on the cloud
Anonymised data analysis
Other (please specify)
72
SECTION E: BENEFITS OF CC
19. Please rate how important the following benefits are to your organisation’s decision to use or
explore cloud services?
Answer Options Low Medium High
Lowering up-front IT costs / capital expenditures
Avoiding and lowering cost of maintaining own IT infrastructure
Enables and strengthens communication and collaboration between
individuals
Establishes platforms for standardised, efficient business processes
Makes possible new ways to engage and interact with customers
Makes possible the provision of ICT services where IT infrastructure,
resources or labour is limited
Enables the development of new or improved services / products more
quickly
Changing of business processes more rapidly is enabled
Improving analytical functionalities and capabilities
Makes possible processes that are not otherwise cost-effective or feasible
Exchanging data more efficiently with outside organisations
Establishing uniform processes in different regions
Enables developing of products / services that were not possible before
Reducing energy consumption
20. What do you see as CC’s greatest potential for your organisation in the next five years?
Answer Options
CC enable scalability, faster response, flexibility and responsiveness
significantly lower operating costs
Makes possible new, innovative processes / service innovation
Improve decision making
Expand operations to new markets
21. Please rate how concerned your organisation is about the following issues when it comes to
using public cloud services:
Answer Options Low Medium High
Data security / privacy / confidentiality issues
Reliability / uptime / business continuity issues
73
Compliance with legal, regulatory and auditing requirements
Integration with existing systems
Legal or regulatory ambiguity
Service level agreements / guarantees / contract issues
Maturity of CC market
Loss of control / ownership of IT
Lack of industry standards
Cost and time to migrate to cloud
Features, functionality and performance
Uncertainty around ROI
Lack of executive or user support
Resistance by IT managers and staff
22. Are you willing to obtain cloud services from foreign providers with data centres outside your
country?
Yes No
23. To what extent would the following factors speed up your organisation’s adoption of CC?
Answer Options Not
Important
Medium
Importance
Very
Important
Increasing/emerging evidence CC significantly lowers business or IT
costs
Increasing evidence of other CC benefits besides lower costs
More pronounced guarantees in contracts and service level
agreements
Increasing executive support for CC initiatives
Set up of standards for cloud-related technologies
Increasing use by leading companies in your industry
Creation of industry clouds (a cloud built by a consortium of companies
in an industry)
Increasing appreciation of executives of what is CC
Strong governance practices for making decisions on CC
increasing availability of cloud services from well-known service
providers
THANK YOU AND GOD BLESS!
Regards,
Tawanda Shumba
Student Number R093313Y
74
APPENDIX 2: ICT RESOURCES ASSESSMENT SHEET
SUBSIDIARY / BUSINESS ENTITY: _____________________ ________
11. How many computers are on your asset list? What is their current total book value?
Quantity ___________________ Value _____________________
12. How many servers are on your asset list? What is their current total book value?
Quantity ___________________ Value _____________________
13. How many servers has your company replaced since 2009?
2009 2010 2011 2012 2013
Normal Wear and
Tear
Damaged/ Crashed
Total
Cost (US$)
14. What are the establishment ICT requirements at optimal capacity?
ICT requirement No
Computers
Laptops
Serves
Projections
Accessories
THANK YOU AND GOD BLESS!
Regards,
Tawanda Shumba
Student Number R093313Y
