Cloud Computing in Support of Supply Chain Information System Infrastructure: Understanding When to go to the Cloud

• Author: Casey G. Cegielski,Benjamin T. Hazen,Yun Wu,Dianne J. Hall
• Date: 01 July 2013
• DOI: http://doi.org/10.1111/j.1745-493x.2012.03287.x
• Published date: 01 July 2013

CLOUD COMPUTING IN SUPPORT OF SUPPLY CHAIN

INFORMATION SYSTEM INFRASTRUCTURE:

UNDERSTANDING WHEN TO GO TO THE CLOUD

YUN WU, CASEY G. CEGIELSKI, BENJAMIN T. HAZEN AND DIANNE J. HALL

Auburn University

Research suggests that there are other, more granular factors within the

domain of innovation diffusion theory that influence the adoption of

technological innovations. In this study, the circumstances that affect a

firm’s intention to adopt cloud computing technologies in support of its

supply chain operations are investigated by considering tenets of classical

diffusion theory as framed within the context of the information process-

ing view. We posit that various aspects of an organization and its respec-

tive environment represent both information processing requirements and

capacity, which influence the firm’s desire to adopt certain information

technology innovations. We conducted an empirical study using a survey

method and regression analysis to examine our theoretical model. The

results suggest that business process complexity, entrepreneurial culture

and the degree to which existing information systems embody compatibil-

ity and application functionality significantly affect a firm’s propensity to

adopt cloud computing technologies. The findings support our theoretical

development and suggest complementarities between innovation diffusion

theory and the information processing view. We encourage other scholars

to refine our model in future supply chain innovation diffusion research.

The findings of this study might also be used by industry professionals to

aid in making more informed adoption decisions in regard to cloud

computing technologies in support of the supply chain.

Keywords: cloud computing; cross-functional interfaces; electronic commerce; tech-

nology management; regression analysis; survey methods; diffusion of innovation;

information processing view

INTRODUCTION

The diffusion of low-cost information technology

(IT) continues to marshal the world’s population into

the information era. As firms look for ways to

enhance competitive advantage via leveraging their

supply chains (Barney, 2012; Hunt & Davis, 2012;

Priem & Swink, 2012), various IT solutions have been

shown to improve management effectiveness and,

subsequently, supply chain process performance

(Fawcett, Wallin, Allred, Fawcett, & Magnan, 2011;

Lai, Li, Wang, & Zhao, 2008; Paulraj & Chen, 2007;

Sanders, 2005; Weber & Kantamneni, 2002). How-

ever, as with any resource that is imitable, substitut-

able and no longer rare, simply adopting an off-the-

shelf technology might enhance performance but will

likely not induce a long-term competitive advantage

(Barney, 1991; Kros, Richey, Chen, & Nadler, 2011;

Paulraj & Chen, 2007; Wade & Hulland, 2004).

Indeed, IT should complement an organization’s exist-

ing resources and business processes if it is to greatly

enhance an organization’s standing within the com-

petitive landscape (Hazen & Byrd, 2012; Nevo &

Wade, 2010; Ray, Mahanna, & Barney, 2005). Thus, it

is important that firms choose to adopt only those

technologies that align with their supply chain

management strategy and enable them to generate

Acknowledgments: An earlier version of this paper was presented

at the Fifteenth Annual Conference of the Southern Association

for Information Systems on March, 2012, Atlanta, Georgia. The

views expressed in this article are those of the authors and do

not reflect the official policy or position of the United States Air

Force, Department of Defense, or the US Government.

July 2013 25

exclusive capabilities that can be used to enhance

business performance. The unique circumstances sur-

rounding the information needs of each firm suggest

that not every technology is suitable for every firm.

Distinctive aspects of the firm’s business processes,

organizational culture and existing information sys-

tems should thus significantly influence a firm’s deci-

sion to adopt a new IT (Archer, Wang, & Kang, 2008;

Huang, Gattiker, & Schroeder, 2010). In this study,

we investigate how such factors affect an organiza-

tion’s propensity to adopt cloud computing technolo-

gies for managing the supply chain.

Cloud computing is a virtualized IT resource and

can take the form of software as a service (SaaS),

infrastructure as a service (IaaS) and/or platform as a

service (PaaS). Cloud technologies are dynamically re-

configurable, meaning that they can often be tailored

to meet the specific needs of the adopting organiza-

tion (Vaquero, Rodero-Merino, Caceres, & Lindner,

2008). Therefore, cloud computing may offer several

advantages over traditional information systems,

including the ability to be deployed rapidly while

remaining scalable to meet future, and often unantici-

pated, computing needs (Aymerich, Fenu, & Surcis,

2008). These advantages offered by cloud computing

help organizations to maintain alignment between

ever-evolving supply chain initiatives and IT, thus

enhancing firm agility (Vickery, Droge, Setia, & Sam-

bamurthy, 2010). Agility refers to an organization’s

ability to sense, adapt, respond and perform well in

the face of rapidly changing environments (Samba-

murthy, Bharadwaj, & Grover, 2003; Tallon & Pinson-

neault, 2011) and may be one of the greatest benefits

that firms might realize via using cloud technologies

for supply chain applications (Greer, 2009).

In recent years, a host of providers has begun to

offer cloud-based resources that may be useful for

managing the supply chain and enhancing agility

(Thomas, 2008). For instance, well-established tech-

nology service providers such as Amazon, Google and

IBM offer cloud products that allow organizations to

quickly scale systems to meet their needs for capacity,

collaboration and coordination without sacrificing

control or paying for additional, unneeded capacity

(Lohr, 2007). In addition, the rapidly expanding

demand for cloud products has created an emerging

industry that has attracted several new market

entrants. For example, Salesforce.com now offers a

wide variety of cloud-based customer relationship

management applications. Once a service contract is

initiated, their service is almost immediately available

to users, who do not need to install and integrate the

actual software onto current systems This may not

only save a great deal of time and resources, but users

from across an organization may also access their data

from any Web browser.

Although practical industry developments related to

cloud computing in support of supply chain opera-

tions continue to proliferate at a rapid pace, there is a

dearth of academic research that explains its

application from a theoretical perspective. A review of

the published research reveals that much of the extant

literature regarding cloud computing tends to focus

on either exploring the architectures and applications

of the cloud environment or proposing various oppor-

tunities and obstacles for firms considering cloud

computing (Armbrust et al., 2009; Buyya, Yeo, & Ve-

nugopal, 2008; Fox, 2009; Yeo, Venugopal, Chu, &

Buyya, 2009). Absent from the literature is a thorough

understanding of the circumstances that drive firms to

adopt cloud computing to meet their information

needs, especially in the supply chain domain. Further-

more, research is limited regarding the critical aspects

of cloud computing adoption from within a sound

theoretical basis. In this study, we help to fill these

gaps by examining factors that might affect a firm’s

intention to adopt cloud computing from a theoreti-

cally grounded perspective.

Previous research within the domain of classical dif-

fusion theory indicates that characteristics perceived to

be specific to a particular technological innovation,

such as cloud computing, might provide a basis for

explaining a firm’s decision as to whether or not to

adopt the innovation (Rogers, 2003). However, recent

research suggests that there may be other, more granu-

lar factors within the domain of innovation diffusion

theory that influence the adoption of innovations like

cloud computing by organizations. For instance,

Melville and Ramirez (2008) suggest that research

should examine technological innovations through

the lens of the information processing view and argue

that various aspects of an organization and its respec-

tive environment create different information needs

that may influence the adoption of IT innovations. In

addition, there is a specified need for greater theory

development in the supply chain management litera-

ture (Carter, 2011; Fawcett & Waller, 2011). Such

need is purported to be satisfied, in part, by combin-

ing theories orthogonally to provide greater insight

into a phenomenon (Choi & Wacker, 2011). In this

study, we seek to enhance such theoretical develop-

ment by examining organizational adoption of cloud

computing through the combined lenses of classical

diffusion theory and the information processing view.

In doing so, this research provides academicians and

practitioners alike with an enhanced understanding as

to under what circumstances a firm might be more

inclined to adopt cloud computing technologies for

supply chain applications. Therefore, the general

research question examined in this study is: In what

circumstances are organizations more apt to adopt

cloud computing?

Volume 49, Number 3

Journal of Supply Chain Management

26