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Global Journal of
Computer Sciences:
Theory and Research
Volume 9, Issue 1, (2019) 021-031
www.gjcs.eu
The economic benefits of cloud-based E-commerce in Indian service
small to medium businesses (SMBs)
Nitirajsingh Sandu, KENT Institute, 20 Barrack Street, Sydney, Australia
Ergun Gide*, Central Queensland University, 400 Kent Street, Sydney, Australia
Suggested Citation:
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to
medium businesses (SMBs). Global Journal of Computer Sciences: Theory and Research. 9(1), 021–031.
Received September 11, 2018; revised January 13, 2019; accepted March 15, 2019.
Selection and peer review under responsibility of Prof. Dr. Dogan Ibrahim, Near East University, Cyprus.
©2019. All rights reserved.
Abstract
This research paper investigated the economic benefits of Cloud-based E-commerce in Indian service small to medium
businesses (SMBs). The emergence of the new concept of Cloud computing has greatly changed the way in which
organisations are managing their services. Cloud computing primarily includes the process of providing computing resources
as a service rather than a product in an organisation. They provide different opportunities to the society which include
reduction of poverty, development of rural areas, and generation of job opportunities, entrepreneurship, and export of
nation and so on. Hence, it is necessary to adopt new technologies so as to enhance their business performance, improve
competitiveness and reduce cost. However, service SMBs are facing several issues in India which are ultimately due to lack of
sufficient resources. For this purpose, an online survey was conducted to evaluate the level of economic benefit is obtained
by Indian service SMBs.
Keywords: Cloud computing, cloud-based E-commerce, Indian service small to medium businesses (SMBs), economic
benefits.
* ADDRESS FOR CORRESPONDENCE: Ergun Gide, Central Queensland University, 400 Kent Street, Sydney, Australia
E-mail address: e.gide1@cqu.edu.au / Tel.: +61 7 3365 1111
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
22
1. Introduction
Cloud computing is seen as an emerging concept that has transitioned from being just an emerging
technology to a mainstream powerhouse that is used by both the big and small enterprises
throughout the world. With numerous business enterprises going digital, Cloud computing has proven
to be beneficial to not only the enterprise, but to the workforce, and thus has been seen to enhance
speed, increased access to information and reduced costs Marston, Li, Bandyopadhyay, Zhang &
Ghalsasi [20]. Besides, Cloud computing has been to be essential for businesses since instead of
organisations running their applications on the PC, they run it on a shared multi-tenant platform [6].
This has given the organisations an advantage in the way they provide their services to their
consumers. Through this platform, the small and medium businesses (SMBs) can customise the
platform according to the customer needs and demands. In India, the SMBs are considered to be vital
to the economy since they contribute to about 8% to the Indian GDP and 45% of the country’s
manufacturing output [26]. For this reason, this paper is going to focus on the economic benefits of
Cloud-based E-commerce in Indian service SMBs.
2. Literature review
The emergence of Cloud computing in the modern society has significantly changed the way
enterprises are operating the businesses. According to Kuada, Adanu and Olesen (2013), the adoption
of Cloud computing has been evidenced to enhance the aspirations of the SMBS to enter into
competition with the big business firms. This means that the adoption of emerging technologies is
paramount for any business firm since it can result in enhanced efficiency, innovation and productivity
[19]. However, despite the rapid advancements in technology, the SMBs are traditionally
disadvantaged given that they are limited in their resources and hence have challenges regarding
adopting the right kind of the systems. Cloud computing is seen to be quite expensive for the SMBs
given that they require the use and adoption of high-technology systems, costs and changing usage
models. Therefore, because of resources, size, IT expertise and other constraints, Cloud computing is
perceived to have the certain advantage to the Small and Medium Enterprises (SMEs) globally [9].
Besides, the adoption of the Cloud computing in E-commerce with the associated internal information
technology data migration is associated with numerous risks and challenges that can affect the
operations of the SMBs [21]. However, with the associated benefits of Cloud computing, various SMB
have adopted the use of Cloud-based E-commerce.
With the advantages of the use of Cloud computing services, about 74% of the companies that have
adopted the use of Cloud-based computing services indicate that the adoption of this platform would
have a measurable impact on their businesses [7]. In the UK, the adoption rates of the Cloud
computing services are seen to be high (88%) as compared to the U.S. This number was up from about
54% in 2015 and 62% in 2016 [14]. Besides, it was seen that most of the Cloud-based user
organisations had adopted the hybrid approach (58%) to IT and 54% remotely hosting their Cloud-
based services [7].
2.1. Type of Cloud computing in SMBs
According to Buyya, Broberg and Goscinski [3], the Cloud computing platform offers firms with
various types of Cloud computing which they can select from. This can be classified under various
Cloud-based service platforms, as mentioned in Table 1.
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
23
Table 1. Type of Cloud service
Infrastructure-as-a-Service (I
Platform-as-a-Service (P
Software-as-a-Service (SaaS
This kind of Cloud computing
service mainly involves the delivery
of virtualised resources
(computing/storage) based on the
demand and is primarily
considered as one of the most
fundamental types of Cloud
computing service models among
business firms.
This framework involves the
consideration of a Cloud user as
being primarily responsible for the
maintenance and patching of the
application software and operating
systems (Lin, Fu, Zhu &
Dasmalchi, 2009).
The Platform-as-a-Service (PaaS)
is another Cloud computing
platform for the SMBs which
delivers a computing platform
that mainly involves the software
development model and the
operating system (Lin et al.,
2009).
This type of framework is majorly
interesting for the developers
since it provides a higher level of
Cloud abstraction (Durkee, 2010;
Lin et al., 2009).
Through this type of Cloud
computing service, the
application software is first
installed by the Cloud providers,
and then the consumers are
provided with an opportunity to
access the application software
through the use of their Cloud
client software (Lin et al., 2009).
The use of the SaaS requires that
the maintenance and the support,
and upgrading of the software
applications are performed by the
end users.
2.2. Influence of Cloud computing applications and services on E-commerce businesses
E-commerce is primarily defined as the process through which products and services are exchanged
through the internet [25]. With the rapid pace of the emerging technologies, the SMBs have been
seen to adopt the use of Cloud-based computing services to enhance their operations in the market.
First of all, Cloud computing has enabled the E-commerce businesses to rent the hardware and the
software rather than purchasing them, and thus helping them reduce the cost of system building [25].
According to Grossman [11], average utilisation efficiency is less than 10% that results in the waste of
IT resources. However, with the Cloud computing platform, the enterprises can be able to integrate
their idle IT resources and even rent them to the consumers. This results in reduced costs of operation
of the e-commerce firm and prioritises the allocation of resources to certain business units.
Traditionally, the e-commerce firms had to purchase the required hardware and software, which
resulted in high operating expenses for these firms. However, through Cloud computing, these
organisations can virtually rent the IT services and products depending on its demand, and thus being
able to compete favourably in the market. Second, the Cloud computing platform has been seen to
solve the problems of utilisation efficiency [25]. For the e-commerce organisations, it is crucial to
invest in specific hardware and software utilities to maintain and increase operations. However, with
increased investment, the organisation can witness efficiency problems.
2.3. E-commerce and SMBs in India
According to Sharma and Sharma [22], E-commerce is emerging as a medium to help SMB to
compete in the market and contribute to the economic growth. Furthermore, it can increase business
opportunity, enhanced competitiveness and provide better access to markets. Recently, SMB adoption
to E-commerce is growing due to better access to the technical and communication infrastructure. The
emergence of robust payment gateway, new mobile technologies and Cloud-based application has
enhanced e-commerce business application. In India, Google pioneered the advertisement-based
revenue model and Amazon gave a whole new dimension to e-business based on Supply chain
logistics (Hegde, 2015). Social media with sites like Facebook, Twitter and YouTube use multiple
platforms to reach their audiences, building an opportunity for businesses. Cloud computing and
mobile application as digital technologies had also emerged as a catalyst for rapid economic growth
(Sindhu, 2017).
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
24
In India, it is approximated that there are about 48 million SMEs which is twice the number of
the small enterprises in the U.S (23 million) [1]. According to KPMG (2015), the
increase in technologies has resulted in most of the India firms adopting the use of e-commerce
and Cloud computing services to enhance their operations. This has resulted in the growth
of the e-commerce sector in the country over the years. As a result of this, the e -commerce sector
in the country is estimated to contribute up to about $80 billion by 2020 (KPMG, 2015). This
follows the fact that there has been an increase in the usage of the Internet and the penetration
of the smartphones, and thus increasing the market awareness of e-commerce. In around 2014,
there were an estimated 281 million internet users in the region which is estimated to rise up to
640 million by 2019. With the availability of smartphones, it is estimated that India is going to
outpace the United States, to become the second largest internet user-based country (KPMG,
2015).
With this growth in the number of users, the India e-commerce sector is estimated to grow
further. The increase in the internet usage has also resulted in the growth of SMEs/SMBs utilising
the e-commerce platforms. The SMBs in India are dependent on the internet technologies, and it
is estimated that approximately 43% of the SMBs participate in online sales (KPMG, 2015). This is
because the web-based SMBs are believed to make higher profits since they have enhanced
customer reach and increase employment opportunities. According to the survey conducted by
KPMG, it was seen that more than 56% of the SMBs believed that the use of the internet
technologies is paramount for business growth as compared to 22% who we not aware (KPMG,
2015).
2.4. The importance of SMBs to the Indian Economy
The Indian economy is considered as the fastest major economy throughout the world owing to
the increase in the number of SMEs/SMBs in the region (KPMG, 2017). The SMBs are considered
to be the backbone of the country’s economic growth. According to the 2015–2016 annual report,
the Micro, Small, and Medium Enterprises were estimated to be more than 51 million and
contributed to approximately 37.5% of India’s GDP, and 37% of the manufacturing output (KPMG,
2017). The digital transformation witnesses in the country have become the major landscape in
which the SMBs operate, and this has resulted in increased revenue growth in the country.
Besides, the government’s support of the digitisation of the SMBs has resulted in increased
e-commerce operations in the region by more than 50%–60% (KPMG, 2017). As a result, it is
estimated that the contribution of the SMBs to India’s GDP could increase from about 10% to
more than 46%–48% [4].
The SMBs are seen to play a critical role in driving regional development. Despite operating with
minimal capital and infrastructure, the increased digitisation is seen to enhance the operations of
these enterprises. Besides, the SMBs in India is seen to engage in diverse trades which has resulted in
the employment of more than 117 m people and 37% output in the manufacturing sector (KPMG,
2017).
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
25
Figure 1. Contribution of SMBs in the Indian Economy (Source: KPMG, 2017)
With increased consumption and employment opportunities in the region, SMBs has been able to
reduce the poverty levels in the country and driven increased economic growth. This can be seen in
Figure 1.
3. Research data
Despite research on the importance of SMBs to the economic growth of the country, little
research has been done on the economic importance of Cloud computing to the SMBs. Therefore,
this study sought to identify the economic importance of Cloud computing to the Indian SMBs. To
understand this, a survey was conducted among the Indian SMEs to identify the use of Cloud
computing in these enterprises, using Google Forms. The invitation was sent to random 500 SMBs
to complete the survey, to improve the response rate reminder to complete the survey was sent
after 2 weeks.
During the study, a total of 42 responses were obtained from various sector respondents. To
identify the industry in which the companies operated, the respondents were asked to indicate
where their companies were characterised as shown in Figure 2. From their responses, it was seen
that a high number of the SMBs (n = 8, 19%) were in the Advertising, Banking and Education
Institute sector. However, there were no SMBs in the telecommunication sector with the
construction, law/legal, logistics, manufacturing, media and the NGO sector making only about (n
= 1, 2.4% each).
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
26
Figure 2. Characterisation of the SMBs per industry
To understand if the SMBs had adopted Cloud computing in their organisation as shown in Figure 3,
about (n = 16, 38.1%) indicated that they were planning to adopt the platform while (n = 15, 35.7%)
indicated that they were currently testing the platform. In the other sense, only about (n = 7, 16.7%)
indicated that they were currently using this services as compared to (n = 5, 11.9%) who were not
using Cloud computing services.
Figure 3. Adoption of Cloud computing services by organization
In the quest to understand the type of Cloud computing services that the organisations were using
as shown in Figure 4, it was evident that two Cloud computing services were mainly adopted by these
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
27
organisations. From the study, it was seen that (n = 21, 52.5%) used the Platform-as-a-Service (PaaS),
while (n = 18, 45%) used the Software-as-a-Service (SaaS). This can be seen in Figure 4.
Figure 4. The type of Cloud computing services used by organisations
Regarding the current IT expenditure on Cloud computing in the organisation as shown in Figure 5,
most of the firms are evidenced to spend more than 5% of their budget (n = 8, 19%) on Cloud
computing. A few organisations (n = 1, 2.4%) are seen to spend between 1% and 2% and more than
10.5%.
Figure 5. The IT expenditure on Cloud computing in the organization
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
28
For the organisations that were using the Cloud computing services, they were asked to indicate the
reasons why they were using the platform. From the responses, as shown in Figure 6, it was evidenced
that a high percentage (n = 11, 26.2%) adopted the platform as a result of scalability and flexibility of
the platform. Besides, others (n = 10, 23.8%) indicated that they used the platform to reduce the IT
costs in their organisations. However, only a few (n = 2, 4.8%) indicated that they used the platform
since the core processes were executed in a standard way.
Figure 6. The purpose of use of Cloud computing platform
To understand if there was any impact on the use of Computing following increased IT expenditure
as shown in Figure 7, about (n = 18, 45%) indicated that there was indeed an impact as compared to (n
= 16, 40%) who said no.
Figure 7. Impact on the overall IT expenditure due to the adoption of Cloud computing services
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
29
Regarding if there were a reduction in costs due to investment in IT infrastructure due to the
adoption of Cloud-based services, a high number of the respondents as shown in Figure 8 indicated
that they strongly disagreed that the Cloud-based services had resulted in decreased capital
expenditure in the organisation as compared to those who agreed. In terms of if the Cloud-based
services decreased investment in the new infrastructure an equal number (n = 10) of those who
somewhat agreed and disagreed respondent. In the other sense, only one respondent agreed with this
as compared to three individuals who disagreed with this statement. When asked to indicate if there
were any additional barriers as a result of the adoption of Cloud computing in the organisation, a high
number (n = 17, 40.5%) indicated that there were no additional barriers as compared to (n = 14,
33.3%) of those who said yes.
Figure 8. Barriers to adoption of Cloud computing
To get an understanding of the impact of the barriers, the respondents were asked to indicate if
there were direct or indirect costs on the consumer of the Cloud-based services and the kind of costs
that were likely to occur. From the responses as shown in Figure 9, it was clear that there were costs
that were associated with the legal aspects of the platform (n = 21, 50%), direct costs related to the
tailored advice on Cloud services and costs associated with the time invested (n = 12, 28.6%).
Figure 9. The costs associated with the Cloud computing services on the consumer
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
30
The economic benefits of Cloud-based services to the SMBs in India is perceived through various
ways. SMBs get access to high-tech technologies which results in huge cost savings for the
organisations [12]. Cloud computing has offered the small firms with business intelligence and
analytics that has greatly lowered the costs of operations as compared to the traditional methods.
According to Devasena (2014), some of the companies have reduced their costs of operations by 70%
due to the adoption of Cloud-based services. For example, the adoption of the Amazon Web Services
resulted in insignificant reduced operational cost although there was lack of competitive forces in the
market. The other benefit that the SMBs have witnessed as a result of usage of Cloud-based services is
that there have been reduced asset costs as a result of IT expenditure and also the maintenance costs
of these IT platforms, and thus resulting in reduced entry barrier to the market. This is evidenced in
the study above where the companies that adopted the use of Cloud computing services achieved
increased production. The Cloud-based services allow the SMBs to access immediate software and
hardware resources at a faster rate resulting in upfront capital investment, and thus faster time to
market. Voith, Oberle and Stein [24] in their research indicated that adoption of IaaS in the SMBs
results in reduced IT costs and capital expenses.
Cloud computing is also considered to be economically beneficial to the SMBs since it is more
reliable than the traditional methods used by these firms. Cloud computing platforms provide data
redundancy which is in-built in the Cloud-storage solutions so that files can be obtained at any time
even when the networks are down [5]. The portability of the end-user data to another Cloud provider
in Cloud computing is seen to be extremely crucial since it enhances the reliability of the system, and
thus ensuring that the SMBs operate continuously even when there are inconsistencies in the system
[10]. Through leveraging the SaaS and the IaaS solutions, the SMBs can stop worrying about the
installation and running of their software packages given that they can contract the offerings as
services at any time [2]. Besides, the SMBs can obtain access to any service levels which would have
been higher than any typical on premise installation given that the Cloud-based services are most
reliable. This is evidenced in the above study where the SMEs that adopted the use of Cloud
computing indicated that the Cloud-based services were reliable, which led to increased production
and reduced IT costs.
4. Research limitation and future research
This research is based on Indian service SMBs only, similar research can be applied to other field
and other countries, facing a similar situation. Also, the research is based on online survey and
providing quantitative data with a limited number of responses. In future, a qualitative research would
also be carried out to find deep insights on the economic benefit perceived by Cloud-based E-
Commerce by Indian SMBs.
5. Conclusion
It is clear that the Cloud computing adoption has made a critical effect on the micro as well as SMBs
in India. This platform is seen to be currently sneaking to the business strategies of these organisations
due to its perceived benefits. Although the SMBs have few resources, the integration of the Cloud-
based computing services has resulted in increased convenience and improving the reliability of
operations in these organisations. Besides, Cloud computing is seen to reduced costs given that the
firms can only use the required hardware and software platforms for their operations. Finally, Cloud
computing providers can gear to provide relevant Cloud-based services to the Indian service-based
SMBs. It will enhance their efficiencies given that it allows the firms to provide services to the
consumers depending on their demands.
Sandu, N. & Gide, E. (2019). The economic benefits of cloud-based E-commerce in Indian service small to medium businesses (SMBs). Global
Journal of Computer Sciences: Theory and Research. 9(1), 021-031.
31
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