Chapter 2 of a Dissertation

Title:Roles of Cloud Operation Management Framework in improving the ability of IT managers to manage associated organizational resources for cloud services

2.1 Chapter Introduction

This chapter focuses on building a theoretical framework for the current study through a detailed review of the relevant literature on cloud operation management from a management perspective in the management of organizational resources for cloud services.  The development of the theoretical framework starts by defining and contextualizing cloud computing operations management computing framework by reviewing the factors behind its adoption in the management of the organizational resources. This is followed by the review of extant studies on the role of IT channel partners and managers in increasing adoption of the cloud services by the end uses for increased management of the associated organizational resources. The third section reviews on the different factors that are critical in ensuring that the IT managers and channel partners are clouds ready for successful management of the organisational resources for cloud services.

2.2 Factors Influencing the Adoption of Cloud Computing Services

2.2.1 Definition of Cloud Computing

From the reviewed studies, the cloud computing has been identified as an IT service model allowing for the computing services (both hardware and software) in being delivered to the customers on a demand basis.  The services can be distributed over a network or in a self-service model available despite the device and location (Marston et al., 2011).  It has also been defined as a model facilitating a ubiquitous, convenient and on-demand access to a set of a shared pool of configurable computing resources. The shared resources including the networks, servers and storage applications can be rapidly provisioned and release them without the desire of having excessive management or interactions with the service provider (Subashini & Kavitha, 2011). In regard to the characteristics of the cloud management framework include on-demand self-service, pooling of resources, prompt elasticity, service measurement and brand network access. Also, the management of cloud operation framework must appreciate that the cloud computing is typically deployed by four main models which are private cloud community cloud, public cloud and hybrid cloud (Hew & Kadir, 2016).

2.2.2 Factors behind increasing adoption levels of Cloud Operational Management Framework
The technology organisation and environment theory

Considerable empirical research has been carried out in the context of the factors that influence the adoption of cloud computing by cloud computing by the end-users in modern businesses. A significant number of available research has been carried out in the context of technology, organisation and environment (TOE) theory (Baker, 2011).  From a general perspective, the TOE suggests that the integration of technological innovations can be significantly associated with the three groups of factors. The concept of technology in this theory identifies the perceived characteristics related to technological innovation, organisations comprising of the firm’s positioning with the environment entailing the different characteristics of a company’s external environment (Hsu et al., 2014; Gutierrez et al., 2015).

From an economic point of view, research has demonstrated that economics comprise one of the fundamental factors that organizations take into account in reducing the costs linked with their use of information systems (Hsu et al., 2014). The cloud operation framework characteristics such as elasticity, scalability and pay-per-use are structured in a manner that the firms that adopt the innovation do not necessarily have to invest in their individual infrastructure such as servers and to employ staff supporting their operations. The only prerequisite for the involved stakeholders is paying for their firms on a demand basis (Armbust et al., 2010; Truong, 2010). In a similar note, Lin and Chen (2012) observed that the primary reason demonstrating the prompt adoption of the cloud computing framework is its capacity of enabling the involved firms in transforming their existing fixed costs linked with the acquisition of the technological infrastructure into the variable costs. The consequence of the occurrence is that the business firms are not only in a position of saving significant financial and time resources but are equally in a position of making their overall operations highly effective and agile. The presence of this characteristic ensures that IT managers can manage associated organisational resources for cloud services.

From a technology point of view, there are several benefits linked with the cloud operation management framework which have been cited as the primary reasons for an increase in their adoption. In this context, it has been argued that cloud computing in comparison with the traditional IT infrastructure is increasingly useful, easy to use and accurate (Brynjolfsson et al. 2010).  The adoption of cloud computing is a more manageable undertaking in that the end-user firm can browse through a catalogue of different IT services being offered, successfully add them to a shopping cart and initiate a framework of utilizing the functions as the cloud vendor or service provider approve the order to the operation management (Xun, 2012). From an empirical point of view, reviewed studies by Gutierrez et al. (2015) and Ackermann et al. (2012) observed that the technological readiness linked with the cloud computing is comprised of the leading reasons characterising its integration in the cloud operation management framework.  It is, however, essential to observe that unique technological issues linked with the cloud computing have equally been a significant obstacle to the high levels of adoption of high standards of enactment of this innovation particularly in emerging markets. In particular, some end users consider of the cloud computing architecture as one that is vulnerable to diverse issues revolving the aspects of reliability, security and trust (Wu et al., 2011). It is in this light that Subashini and Kavitha (2011) observed that some of the technological issues including the data security and privacy are being addressed through a successful cloud deployment model including the private cloud.

In the context of organizational perspective, the cloud Operation Management Framework adopting the aspects of strategy, the quality of human resources and overall managerial skills (Oliveira & Martins, 2010).  In light of this, Benlian and Hess (2009) observed that cloud computing could be conceptualized as a type of IT outsourcing process. The organizations utilising the organizational resources for cloud services as a form of the cloud computing business models are in a position of outsourcing their non-core IT activities to the cloud vendor and service provider and are in an active process of being in a position of focusing on their core activities. In support of this particular view, a reviewed study by Saya et al. (2010) identified that the cloud computing had facilitated different organizations in gaining seamless access to specialized IT services that would have been challenging to attain them internally successfully.

The reviewed literature by Hashem et al. (2015), however, demonstrates that despite the identified benefits adoption levels by the organizations continue to lag behind those of large corporations, particularly in the developing countries. This would be mainly due to lack a stable cloud operation management framework that can successfully aid the IT managers in managing the associated organizational resources for cloud services. This is evidenced by Troung (2010) study that observed that limited adoption could fundamentally be associated with the unavailability of sufficient top management support such as the IT managers. The author further pointed out that consistent management support is essential particularly in the context of the need to provide resources to facilitate a successful integration and re-engineering processes and supporting of communication between a firm’s IT department and managers and the cloud operational management framework service providers.

Big data analytics and micro-marketing analytics

From a management perspective, the presence of big data represents a significant element that has a high potential of boosting the overall consumption of the available cloud offerings. The reviewed prior research in this area underscores that increased adoption of information technologies have led to business enterprises and organizations generating and storing vast amounts of data (big data) (Hashem et al., 2015).  The level in which the involved organizations deploy their IT managers in managing and sourcing insights from the produced data represent a critical challenge that influences their capacity of leveraging from a competitive advantage. As a consequence, there has been an increasing desire of sophisticated analytic solutions with a potential of allowing businesses in mining both the structured and unstructured data for sourcing relevant management and marketing insights (Assunçao et al., 2015).  Hence, the big data sourced from the internal and external sources including the web, blogs, and other diverse social networking sites can, for example, be utilized to source relevant data pertaining to the preferences of the consumers.  After a successful identification of the customer preferences, it facilitates the entities in improved understanding of the overall needs of their clients and as such deploy more focused management of their organization resources of the cloud services.

Through the context of the above description, available research has noted that modern organizations have in the past encountered multiple challenges in a successful realization of big data value influenced by the existence of high costs of analytical software. From a traditional point of view, successful mining of big data has equally demanded the organization to adopt massive computing infrastructure in equal basis with enlisting of different services of expensive consultants specializing in analytical work (Zhang et al., 2014). The rationale of this is enabling the end-user firms to only paying for the involved services used in the analytical process without necessarily having to make purchases of expensive licenses or acquisition of computing infrastructure (Assunçao et al., 2015). The different customized cloud products equally generate a broad range of analytical solutions including the descriptive, predictive, and prescriptive modelling of the existing consumer data. Additionally, the presence of the low price equally influences the generation of an affordable for business organizations of all sizes making it easy for IT managers to successfully manage their organization resources of the cloud services (Kambatla et al., 2014).

A high level of big data mining by the IT managers through the adoption of cloud computing equally facilitates a successful increase in the number of firms engaging in micro-marketing strategies. By description, Christopher and Peck (2012) micro-marketing is a strategy inclusive of the capacity of allowing firms in customization or targeting their diverse offerings in small segments of local markets in equal measures with individual customers by the IT managers. Therefore, the impeccable focus on a small portion has a significant influence on increasing the opportunities of improving the market responsiveness. Hence, the success of the micro-marketing by IT managers as part of managing the associated organizational resources for cloud services is dependent on an accurate and refined analysis of significant data volumes. In this context, cloud computing is positioned in a better place in the provision of an affordable solution to the micromarketing needs of a variety of involved firms (Bonometti, 2012).

2.3 Roles of IT Managers Channels in Consumption of Organizational Resources for Cloud Services in different service management perspective

2.3.1 Transition from Traditional to Modern IT Cloud-based Business Models

The traditional IT infrastructure was being characterized by the presence of end-users or consumers tasked with the role of purchasing the computing tools in terms of hardware and software as their products. In simple terms, Yoo (2011) observed that the elements of the physical distribution of products from a vendor to the consumer must be implemented successfully. The computing tools have nevertheless altered this model as they are supposed to be purchased as services on-demand basis. In significant detail, Zhang et al. (2010) pointed out that the aspect of cloud computing, as opposed to traditional enterprise computing, is anchored on the need to implement a successful visualization of the hardware and software as an element successfully contributing to the reusability of clod and extensibility. To affirm these findings, Yoo (2011) further argued that cloud computing fundamentally differs from the other existing innovation computing processes including the distributed computing which is inclusive of connections of remote computers in a geographical orientation into a single network allowing for a successful combination of successful processing power. The significant distinction is founded on the view that as opposed to the existing distributed computing, the cloud computing ensures there is a possibility of the end consumers configuring the sourced product. Additionally, the end-users of the cloud computing services are supposed to successfully run the installed programs with the aim of using the web-based services available at their disposal and use.

In the organization resources cloud services, there are three distinct services provided which in turn imply redefining the overall roles of cloud managers and channel partners in improving the overall consumption of cloud services amongst the end users. According to Dhar (2012) and Bayramusta and Nasir (2016), the three distinct services include the infrastructure as a service (Iaas), Platform as a Service (PaaS) and the Software as a Service (SaaS) as shown in figure 1 below. In light of this, Fouquet et al. (2009) pointed out that the IaaS is inclusive of the provision of the hardware and IT infrastructure management in factors such as the storage and process of available information. The service equally facilitates the provision of potential virtual hard disks which are readily accessible by the consumer from diverse virtual machines. A suitable example of the IaaS is the Amazon Elastic Compute Cloud (EC2).

Figure 1: Comparison between different frameworks

Source: (Bayramusta & Nasir, 2016)

On the other hand, the PaaS include the middleware which is used in the provision of the cloud services organization users with sufficient control over the application design, control over physical infrastructure is limited. The examples of this cloud service include the Microsoft Azure and Google App Engine. The final concept which is SaaS describes a situation where the vendors and service providers offer software applications with a potential of providing relevant support in a broad range of business processes. The process is inclusive of the Consumer Relationship Management, Supply Chain Management and the Enterprise resource planning (Bayramusta & Nasir, 2016). It would be the role of the robust cloud operation management framework to be in a position of improving the ability of the IT managers in managing the associated organizational resources for the cloud services. 

The Position and Roles of IT Managers and Channel Partners

Based on the reviewed past studies, channel partners can successfully position themselves in the fresh IT model through a successful provision of brokerage solutions (Buyya et al., 2009). A significant challenge faced by the end users and IT managers pertains to a successful selection of an appropriate service choice for their organization. The prevailing challenges in this area have been connected to the inexistence of sufficient knowledge on the manner in which the cloud operation management framework operates and the level of available resources for the IT managers disposal. The IT managers and channel partner can hence engage in initiatives of reducing the prevailing challenge through the provision of assistance to the end user in comparing and ranking all the available cloud organization services which are essential and relevant to the end users (Tordsson et al., 2012). To affirm these findings, Velte et al. (2010) study pointed out that cloud computing services are a significant new technology advancement consistently enhanced by the existence of the vendors. The prompt alteration of the service quality and diverse conditions is often an indication that there would be new service legal agreements (SLA) which have consistently been negotiated with the IT managers and the IT vendors to successfully enhance manager’s ability to manage organizational resources for cloud services. The SLA has often been noted to be challenging for clients and as such cloud service brokers can successfully carry out a significant practice in the identified area of focus.

The reviewed studies further indicated that the cloud computing including the existence of multiple providers of the generated services such as storage, computing, applications among other services and diverse architecture designs are characterized by distinct end consumers risks (Toosi et al., 2014). A significant risk in such a phenomenon includes the vendor lock-in (Tordsson et al., 2012) which is a concept identifying the inability of the consumers in switching from a single provider to the other. The risk is as a consequence of high switching costs arising from the diverse aspects of incompatibility of the technologies with those linked with additional product or service providers (Kessaci et al., 2013). In the service management context, the vendor lock-in is evident when a client is not in a position of transferring their owned resources from a single cloud vendor to a different as a consequence of incompatibility in the organization cloud services architectures. In one of the studies by Subramanian et al. (2015) that used the China SMEs as the case study identified that their vendors in most instances are characterized by locked firms joining a contract in the trial period. In such a phenomenon, the cloud brokers and managers could provide the end-users with a practical solution to such an issue through leverage on a similar template definition ensuring an easy migration being coordinated providers of the cloud services. A suitable example of such a phenomenon is the cloud broker playing the role of a channel partner providing the involved end users with an appropriate web interface assisting the overall end-user organization and IT managers in managing their deployable, providers and the diverse accounts.

Another aspect that must be put into the account in the service management of cloud operations is the solutions pertaining to the acquisition of services from diverse providers. In light of this, Tordsson et al. (2012) observed that particular cloud providers could not possess a comprehensive set of computing solutions critical for use by a specific organisation. In such a phenomenon, the consumers end up being compelled in sourcing for cloud services from different vendors. The involved brokers and different IT managers can harness a more natural acquisition of such services by provision of the essential coordination. In a similar breadth, the IT service provider could play the role of an intermediary with a potential of assisting a successful rank of diverse providers in light of the existing attributes essential for a particular end-user organisation. To attain this role, the service provider would be required to offer significant energy and weight to all the attributes and later providing a holistic ranking for a specific provider. The intermediaries’ roles by the different channel partners have been evidenced to imply increasing the opportunities of end-user leveraging from the need of accessing to the highest quality and the most effective and available cloud services (Johansson & Ruivo, 2013).  Figure 2 below offers an illustration of the extent to which the cloud brokers or channel partners can be used in fitting the contemporary cloud-based business model and lead to successful service management in cloud operations.

Figure 2:Illustration of service management perspectives and cloud brokerage scenario

 (Tordsson et al., 2012)

Challenges encountered by IT Managers that channel partners can help overcome in the Service management in Cloud Operations

SMEs in the developing nations encounter immense challenges in their approach to ensuring their business models is integrating cloud computing in their operations. A significant challenge that has been noted to be encountered include lack of sufficient financial capabilities which are often limited to the vendor determined applications without any choices (Subashini & Kavitha, 2011). In evaluating this issue, Bayrak (2013) observed that for modern organisations whose size are medium, the majority of the cloud services vendors are in most instances not willing to offer extensively customised service-oriented architecture (SOA) and APIs that are essential for the need of attaining smooth operations. The unwillingness is linked to the existence of an increased customization overhead that is projected to be incurred by the involved firms.

Additionally, in the context of the small firms, the available research has evidenced that they tend to encounter technical challenges in areas of attaining successful compatibility and integration of cloud computing with the already available IT infrastructure.  In light of this, Misra and Mondal (2011) pointed out that the challenges emanate from the fact that a majority of the small enterprises located in the merging nations are found suffering from severe human costs and expertise issues that are essential in attaining a successful operational integration with their cloud computing systems. The IT managers have in this context been identified as being the most appropriate individuals in to guide their organizations in mitigating the incurred challenges while at the same time ensuring that they observe relevance in their industry operations (Bayrak, 2013). In particular, the channel partners are actively integrated into the cloud business model which can critically guide in enablement and successful integration of cloud solutions.

2.4 Measures for Increasing Organization Readiness for Cloud Business Framework

2.4.1 Adopting the Appropriate Service Strategy by the IT Managers

A strategy is identified as a critical segment of an effective business plan for an organization (Wu et al., 2015). Through an integration of the most effective strategy, it is potential for a firm to increase their competitive edge in their market of operation. A study by Porter (1998) had successfully identified the primary business strategies are inclusive of differentiation, cost leadership and overall focus. From this, Porter advocated the need for selecting only a single appropriate strategy and successful avoidance of a situation demanding a “stuck in the middle”. Further, Doole and Lowe (2008) observed that the integration of different strategies could be instrumental in offering a specific firm with the prerequisite resources essential for leveraging in the prevailing competitive advantage.

A differentiation strategy can be adopted that is inclusive of a strategy of an organization focusing their efforts to offer their target market products or services identified as being unique from the one provided by their different competitors (Ortega, 2010). Organizations that integrate this strategy have been evidenced to gain from charges of premium prices while capturing significant market share. The differentiation strategy can be implemented through a focus on aspects of high product quality, provision of additional features and the after-sale support (Benedettini et al., 2015). The differentiation strategy can be integrated into the cost leadership as a generic strategy revolving around the facets of competitive advantage through the selling of products at the lowest cost in a specific industry.  As noted by Porter (1998) this can be implemented through a focus on the aspects of mass distribution, economies of scale, using superior technologies and effective adoption of overall capacity. Through a critical review, Hallgren and Olhager (2009) observed that apart from the existence of cost leadership effectiveness in sourcing for capitalising in competing firms which can establish increased novel approaches for attaining cost leadership hence leading to downward pressure on price issues. Additionally, the cost leadership is primarily accomplished through different firms passing through a detailed learning curve and leveraging from diverse process innovations (Ortega, 2010).

2.4.2 Service Strategies in Cloud-based Business Model

In the context of Porter’s generic strategies by the IT managers and channel partners, there exist immense efforts albeit limited to evidencing the extent in which the stakeholders can be fitting in the context of existing cloud-based business models. This is affirmed by Wang and He (2014) study that focused on the cloud service providers in Taiwan observed that the IT managers could choose one or more of strategies evidenced in figure 3 below. These factors are identified as being inclusive of low costs and free operationalisation, high-quality management, custom-made products and successful value co-creation. This is informed by the level of expected degree of a client lock-in and attaining overall business demands of the stakeholders involved.

Figure 3: Service Strategies in Cloud-based Business Model

Source: (Wang & He, 2014)

In the context of strategy customization strategy by the IT managers and channel partners in an entity adopting an enterprise directed and differentiation-based competition model can be successful. In this context, a long-term relationship with their end users can be attained through successful customization of the cloud services by particular demands of a business. Ultimately, value co-creation strategy entails a focus on locking in clients through a provision of complementary core competitiveness extensively specific among the clients integrating the adoption of a strategic differentiation strategy (Wang & He, 2014). A relatively older study by Prahalad and Ramaswamy (2004) equally pointed out that value co-creation can significantly be an effective strategy to lock in their clients. In this case, CompTIA in 2015 suggested that majority of the IT managers and the end users of the organisation cloud services have preferences on the unique niche but within facets of a similar cloud platform.

2.4.3 Adopting an Appropriate Deployment Model

Prior a comprehensive decision making on investment in the cloud business models, IT managers involved in the management of organizational resources in cloud services can integrate relevant business models. The IT Managers must identify the most optimal deployment model critical in their operations.  As aforementioned, the deployment models in which the IT managers could select from including the private cloud, public cloud and the hybrid cloud. Nevertheless, Mouratidis et al. (2013) observed that the selection of the models is primarily dependent on the customer business demands and expectations. A private cloud deployment model is limited to a single customer leading to clients having significantly high levels of control as opposed to cloud applications, infrastructure and can equally demand expected customization extent.

Additionally, the public cloud deployment model is readily available to the general public and typically owned by the cloud vendor. Nevertheless, the third-party members such as the IT managers can be involved in the management of the cloud services and sharing their resources with potential clients (Mouratidis et al., 2013). The preference of public cloud among IT managers and providers is as a consequence of their easier resource management strategies, overall flexibility and successful scalability approaches.  Besides, this is directly impacted by aspects of security and privacy issues. The last hybrid cloud is identified as having a potential of integrating both the private and public cloud. This is identified as the most optimal deployment model from a management area of focus since it facilitates increased critical services from particular customers hosted in the private cloud to mitigate security demands with other services being hosted on the distinct public clouds (Bayramusta & Nasir, 2016).

 2.4.4. Digitization by the IT Managers and Channel Partners in Structure and Operations adopted in Management of Organisational resources in cloud services

As a consequence of the progressive IT revolution as a strategic change, a significant number of entities are integrating digital business platforms. This means that a significant number of operations in organisations are digitized (Shein et al., 2015). Cloud computing represents one of the significant technologies relying on digital platforms. Accordingly, there has been a suggestion that relevant channel partners lead to ensure their readiness for the cloud business model in channels digitisation.  The relevance of digitization has significantly been underscored by the International Data Corporation (IDC) which is a survey involving more than 500 channel partners and IT managers in the United States. From the survey, it is evident that there has been a significant decline in the business of reselling of IT products including the hardware and infrastructure software. For instance, it was evidenced from the study that in 2015, there was a 41% of overall revenues by the channel partners involved in the reselling process as opposed to 53% of a similar business that had been implemented in 2014 (IDC, 2015). This is a significant strategy benefitting the IT managers as they transition from the reselling of the products to eventually offering services in their digital platforms.

2.5 Cloud Management Framework for Implementation in IT Field

Currently, available research indicates that the best practice in cloud management framework implementation must consider the factors of portability and interoperability issues. These are issues in the IT field leading to the managers being forced to implement services standardization (Di Martino et al., 2011).  Standardization is an approach that is inclusive of the creation of strategic specifications in equal measures with interfaces that can be potentially used by all involved cloud services organizations. Despite the efforts being initiated, Petcu et al. (2011) pointed out that the IT managers can only succeed in this only if it is in IaaS. The organizational resources for cloud services including storage, database and notification services have not in any way contributed to the establishment of unified API. Kumbhare et al. (2012) observed that IT managers with the willingness of standardizing their services for the sake of increasing the overall marketing consumption among the IT partners and eventually the end users or the organizations facing immense challenges. A related challenge, in this case, includes possible tampering with available critical data. In the current research, this is perceived as being an instrumental aspect in the context of the view that privacy issues are still a significant barrier of increased use of cloud services in the IT field.

As part of the cloud management framework, the IT managers must be in a position of bundling the product provided from diverse vendors and as such increasing the overall management proposition to end users demanding adoption from different vendors. Additionally, different channel partners are best positioned in providing value-added services through a decoration of diverse cloud services with increased functionalities including the data ciphering and provision of pre-fetching strategies (Wu et al., 2013).  Other studies have demonstrated that IT managers have a potential of enhancing management of their cloud services to the channel partners through well-developed interoperability significantly limited.

Figure 4:Cloud Management Framework for Implementation in IT Field (adapted from Wu et al., 2013)

IT Managers for Managing Associated Organizational Resources for Cloud Services without a Cloud Strategy

An increased evaluation of the extant literature suggests that it is not all the IT managers are successfully transitioning to the cloud business model. Distinct reasons contribute to a successful transition. For instance, the IT managers lack an elaborate understanding of whether the cloud model is effective as a natural adjunct of their business.

Additionally, other IT managers adopt hyped models which is exposed directly to multiple risks and as such leading to failure (Sharma et al., 2016; Lin & Chen, 2012). Nevertheless, Gartner research indicated that the vendors lacking cloud services face a significant risk of long-term future practices. There has been a significance subsiding of the end-user businesses leading to statistics noting that the public cloud services market is exceeding more than $180 billion (Garrison et al., 2012). As business organizational resources are used for cloud services are leveraging in a paradigm shift from traditional IT products IT managers who are not ready to integrate the cloud strategy face a blatant risk of losing their market through a successful strategic drift.