Digital Innovation Dynamics On Organizational Adoption: The Case Of Cloud Computing Services

Guillermo B. Vazquez

Understanding the dynamics of innovative technologies is a continuing challenge for many organizations. One of these new technologies, cloud computing, offers a cost-effective mechanism for small and midsize enterprises (SMEs) to leverage the business value of information systems and technology.

SMEs have limited budgets, resources, and time to implement new technologies, so they need to ensure that their investments are trustworthy and enable the overall organization to embrace cloud computing without difficulty.

Cloud computing services offer advantages to SMEs including lowering the cost of entry for new technology and providing immediate access to hardware and software, and these resources can provide a platform for innovation and scalability.

Advances in handheld technologies such as tablets and smartphones can accelerate the implementation of cloud computing solutions. This provides a unique opportunity for SMEs to strengthen their collaborative networks and expand their operations into global markets with innovative information and communications technology (ICT) solutions.

Despite SMEs’ financial and resource limitations, their autonomy (compared with larger corporations) can be an advantage in facilitating the adoption of innovations, because they have greater agility to respond to changing environments and new market and competitive requirements.

Therefore, SMEs must be capable of adopting and adapting innovative technologies by continuously upgrading and staying ahead of change – not only at the senior management level but by people throughout the organization.

The adoption of cloud computing by SMEs depends greatly on the ability to be open to innovation. Research indicates that there are six key variables in determining an organization’s readiness for adopting an innovation:

  1. Perceived innovation
  2. Risks
  3. IT innovation
  4. Driven technologies
  5. Organizational innovativeness
  6. Innovative IT capabilities

The whitepaper Digital Innovation Dynamics on Organizational Adoption: The Case of Cloud Computing Services points out areas for SMEs to focus on when adopting new technologies like cloud computing.

The three main areas to pay attention to for a successful innovation path are Environmental, Organizational and Technological, and each has key evaluation and strategic planning factors.

For example, in the environmental area, perceived innovation barriers to consider include capital and talent restrictions, organizational perceived risks, organizational capacity for innovation, and IT innovation-driven competitiveness and capabilities. You need to consider the what, when, and how for each of these factors. What are the common beliefs that management has for each factor, and which beliefs are relevant to effective innovation management?

Research suggests the following ways to guide strategy formulation and decision making.

Theory Belief Findings
Organizational innovativeness positively influences the adoption of cloud computing as an innovative technology. The lack of financial resources and talent prevents SMEs from adapting faster to new technological requirements. SMEs are often at the forefront of technology adoption due to their behavioral advantages (agility and efficiency) over large competitors.
IT innovation competitiveness positively impacts the adoption of innovative technologies in SMEs. Adopting innovative technologies in organizations can help demonstrate competitiveness. IT innovation-driven competitiveness appears to be insignificant, as it does not have a direct impact on the adoption process.
Perceived risks in IT innovation negatively influence the adoption of cloud computing as an innovative technology in SMEs. Limited capabilities for SMEs often lead to potentially high levels of failure rates for innovation. Perceived risks of IT (in particular on innovative technologies) are correlated with concerns related to ensuring systems are secured against complications.
Perceived barriers in IT innovation negatively influence the adoption of cloud computing as an innovative technology in SMEs An organization’s readiness for cloud computing technologies is one of the main barriers affecting adoption. A positive unit change on organizational innovativeness and capabilities produces positive change in adoption.
Innovative IT capabilities positively influence the adoption of cloud computing in SMEs. Successful IT implementation could contribute positively towards building the required capacities in technical knowledge and associated skills. If SMEs don’t carefully evaluate before adopting innovative and disruptive technologies, their organizational dynamics could be affected severely.

Table 1.0 Comparing theory, common beliefs, and research findings

This study suggests things that SMEs should take into consideration when adopting innovative technologies such as cloud computing in order to gain and sustain a competitive advantage.

Also, SMEs must engage technology vendors that understand the organization’s requirements and work to ensure that they have the right environment for adopting cloud computing.

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Guillermo B. Vazquez

About Guillermo B. Vazquez

Guillermo B. Vazquez is a senior technology executive at SAP. He leads business and technical digital transformation initiatives that include multimillion-dollar SAP global programs with Fortune 500 companies. Guillermo has extensive experience in defining enterprise architecture strategy and solutions, advising more than 20 C-level executives on business intelligence requirements for the adoption of SAP HANA software as well as cloud, mobile and Big Data solutions. He participated in the SAP S/4 initial product release test team, working with the SAP Development Team in SAP Labs in Waldorf. Guillermo holds a master’s in science and engineering in technology management and business strategy from the University of Pennsylvania and the Wharton Business School. He is currently pursuing a doctorate in business administration with a specialization in management information systems at the Fox Business School at Temple University.