Cloud computing's role in reducing organizational costs and expenses

A Study of How Cloud Computing Relates to Cost-Effectiveness
Introduction
Background
Cloud computing has developed to be one of the most deliberated upon innovations in recent years owing to the prospects that it offers. Research indicates that the global market size for cloud computing has a valuation of $266 billion in 2019. This is a remarkable growth based on the fact that it was valued at only $16 billion one decade ago. Furthermore, it is anticipated that the market size will increase at a compounded rate of 14.9 percent between now and 2027. Based on the advancement of the digital market, increasing internet penetration across the globe and progressively greater use of mobile devices, on top of the use of big data, are aspects that will facilitate increased growth for cloud computing (Grand View Research, 2020).
Off Late, use of cloud computing has increased to become a significant information technology and business performance instrument. Cloud computing is delineated by the National Institute of Standards and Technology as a distinctive model for facilitating pervasive, expedient, on-demand network accessibility. This is done to a shared pool of configurable computing resources that can be quickly provided and distributed with little effort or service provider interrelation (Carcary, Doherty, and Conway, 2015). It grants firms the chance to gain accessibility to on-demand IT services by utilizing the internet either completely free or in terms of a pay-per-use agreement. As a result, this makes it possible for the companies to enhance their business strategic and technological agility, in addition to receptiveness in the global business setting. Cloud computing has substantially advanced to become a pivotal component for organizations across the globe.

Table of Contents
Introduction 3
Background 3
Topic to be studied 4
Significance of Topic 4
Research Problem 4
Research Questions 4
Purpose of the Study 4
Methodology 4
Good Title for Study 5
Literature Review 5
Definition of Cloud Computing 5
Cloud Computing Services 5
Infrastructure as a service (IaaS) 6
Software as a service (SaaS) 6
Platform as a Service (PaaS) 6
Fundamental Features of Cloud Computing 7
On-demand self-service 7
Broad network access 7
Resource Pooling 7
Flexibility and Scalability 8
Measured Service 8
Cost-Effectiveness of Cloud Computing 9
Reduced Hardware and Software Costs 9
Scalability 9
Storage Cost Savings 10
Diminished Personnel Expenses 10
Cost Transparency 11
Methodology 12
Data Collection 12
Sample Population 13
Ethical Considerations 14
Data Analysis 15
Contributions to Theory or Practice 15
Ethical Issues 16
Conclusion 17
References 17

Significance of Topic
This study seeks to examine the cost-effectiveness of cloud computing in organizations. Taking into consideration the capability of cloud computing to support greater capacity or protracted capacities of firms, devoid of incurring additional expenses, it can be concluded that this technology platform has numerous prospects for firms. Cloud computing has generated substantial buzz in the business setting, and with the increased advancement of technology such as big data, it continues to become even more pivotal. The significance of this topic lies in the aspect that some companies have not examined its value for cost-efficacy and the competitive advantage that it facilitates. This topic seeks to demonstrate the significance of adopting and enforcing cloud computing within a firm's IT environment to generate cost-effectiveness.
Research Problem
Information and communication technologies (ICT) usage can enhance the competitiveness of a company and offer actual advantages. The IT department plays a key function in any business operation. Nonetheless, the establishment and operation of a data center is a costly affair. A company is required to procure the precise equipment and employ specialists to undertake the installation and management of the center. Also, firms spend massive amounts of capital for the development and installation of software to enhance their operations. Nonetheless, this is not a sustainable solution in the long run, especially if a firm intends to be an intense competitor against its rivals.
In the contemporary business setting, the advancement of technology has completely revolutionized business undertakings. Business entities have been determined to diminish computing costs. Therefore, several entities have opted to consolidate their information technology operations and utilize virtual innovations and technologies. However, companies have not adopted or implemented cloud computing services due to hesitation in terms of cost expenses and benefits.
Research Questions
The research will be based on these research questions:
1. What are the disadvantages and advantages of cloud computing?
2. How does the adoption of cloud computing facilitate cost-effectiveness within an organization?
3. Is there a correlation between cloud computing and firm cost-effectiveness?
Purpose of the Study
This Study’s purpose is to find out the cost-effective benefits that an enterprise can attain by adopting and implementing cloud computing in its information system.
Methodology
The research approach that will be employed in the study is a quantitative one. This is for the reason that the deductive research method will be observed as it will start with the investigation of the existing theories and concepts, construction of hypotheses, and gathering primary data to test such hypotheses. Notably, the quantitative approach provides data that can be articulated and scrutinized in numbers. A strong key suit of the study is that it gives descriptive data and information, and it is also possible for the researcher to gain a picture of the data sample or population at large. Moreover, it is conceivable to determine the correlation between the dependent and independent variables in the study and analyze it comprehensively (Saunders, Lewis and Thornhill, 2015).
Good Title for Study
A good title for the study would be:
The Cost-Effectiveness of Cloud Computing in Organizations


Literature Review
Definition of Cloud Computing
Cloud computing alludes to the applications rendered as services over the internet in addition to the software and hardware systems within the data centers that provide such services. Cloud computing services encompass a massive number of functions within an enterprise, ranging from the storage of data and information, processing, and also networking using artificial intelligence (Mitra, O'Reagan, and Sarpong, 2018). Cloud computing is a computing setting that provides accessibility, scalability, and flexibility of computer supports at a virtual level of perception with minimal operating expenses. Cloud computing can be delineated as a computing approach that facilitates providing computing as the utility to sustain the daily requirements of the individual users and over-all businesses. Cloud computing takes into account the applications, the hardware and software conveyed as services over the Internet (Elmonem, Nasr, and Geith, 2016).
Cloud Computing Services
Cloud computing is categorized based on the different types of services delivered. There are three specific types, including:
Infrastructure as a service (IaaS)
These services are emphasized by offering computer infrastructure. That is, all of the software, servers, and resources are rendered by the providers. At the same time, the users perceive it as a whole infrastructure that is contained within a similar entity. Consumers utilize processing, storage, networking in addition to other computing resources from providers of cloud service in order to conduct their information systems. This is a platform service in which a corporation sells and also shares pertinent information to another individual or corporation to conduct their business. A fitting example of IaaS includes payment processing (Laudon and Laudon, 2016).
Software as a service (SaaS)
Software as a service (SaaS) is delineated as a software distribution model that takes into account a third party provider hosting applications and ensuring that they are accessible to consumers over the internet. Consumers utilize software that is hosted by the seller on the seller's cloud infrastructure and rendered as a service over a network. Fitting examples of SaaS comprise of Google Apps, which facilitate the provision of mutual business applications online. Another example includes Salesforce, which conducts the leasing of consumer relationship management and associated software services through the internet (Laudon and Laudon, 2016).
Platform as a Service (PaaS)
These services concentrate on the disposition of services and applications online, which thereby enable the developer to manage both software and hardware. The three key aspects of this service include scalability, collective tools, in addition to services for utilization, testing, and maintenance of applications. In this service, the consumers make use of infrastructure together with programming components that are backed by the cloud service provider to enable the development of their applications. A fitting example is the Java runtime (Laudon and Laudon, 2016).
Fundamental Features of Cloud Computing
There are key characteristics of cloud computing that act as the aspects distinguishing it from traditional computing. These include the following:
On-demand self-service
The provision of cloud computing services can be made devoid of human involvement from the service provider. This implies that a processing firm can provide extra computing resources as necessitated, devoid of bypassing through the cloud service provider. The firms can utilize the self-service portal over the internet as an interface to gain accessibility to their cloud accounts to perceive the services available and the extent of usage (Khalid, 2017).
Broad network access
Cloud computing resources are obtainable over the network, and users can gain access through a wide range of platforms. This implies that cloud services are accessible through networks like the internet or a local area network. The bandwidth and also the latency of the network are pivotal components in cloud computing as they are determining factors of the quality of service. This is especially pivotal in rendering services to time-sensitive applications (Khalid, 2017).
Resource Pooling
The design of cloud computing services is created in a model that holds numerous tenants. This permits several consumers to share similar applications or infrastructure while at the same time sustaining their privacy and also safeguarding their sensitive data and information. This is akin to several tenants sharing one apartment building. They share a similar building infrastructure, but every tenant lives in their apartment rooms. Ultimately, this implies that numerous consumers are serviced from pooled physical resources (Novkovic, 2017).
Flexibility and Scalability
One fundamental attribute of cloud computing takes into account the capability to hastily provision resources within the cloud environment as the firms require them. Also, it implies hastened removal of such resources when they are not necessitated. It is possible to have fast scaling up or scaling down of cloud computing resources and, in several instances, by design, in reaction to business demands. It is a fundamental aspect of cloud computing. This implies that it is possible to scale up or scale down the costs in terms of the level of usage or capacity, devoid of any extra repercussions (Novkovic, 2017).
Concerning scalability, there is minimal capital outlay on the side of the consumer. This is due to the reason that as the consumer requires extra computing resources, they can provide them as necessitated, and they become accessible immediately. Significantly, scalability is more scheduled and progressive. For example, scalability implies that the firms are planning progressively more for additional capacity, and undoubtedly the cloud environment can cope with such scaling up or scaling down (Novkovic, 2017).
Measured Service
The usage of cloud computing services is metered, and firms pay by the usage levels. It is possible to achieve optimal resource utility by capitalizing on pay per use capabilities. The inference of this is that the usage of the cloud resources is supervised, measured, and stated by the cloud service provider. Imperatively, this model is centered on making payment for what is consumed. Therefore, the pay varied in line with the actual consumption level by the firm (Rao, 2015).
Cost-Effectiveness of Cloud Computing
Reduced Hardware and Software Costs
One key advantage of cloud computing is substantially diminished cost as compared to the conventional computing cost. Through the adoption and implementation of cloud computing, organizations can decrease information technology infrastructure and also decreased IT operation expenses (Carcary, Doherty, and Conway, 2015). When contrasted against traditional computing costs, it is imperative to note that cloud computing is substantially reasonably priced based on the subscription and metered based models. Typically, companies are necessitated to invest in procurement of resources, undergo lengthy installation processes as well as placing maintenance encumbrance of costly resources. On the other hand, cloud computing does not necessitate high powered or costly computing, and the required resources can be productive and inexpensive. Furthermore, traditional computing required physical infrastructure that is expensive to purchase and does not provide scalability. In contrast, cloud computing is carried out virtually and over the internet, which reduces the cost of purchasing equipment (Lal and Bharadwaj, 2016).
Scalability
Cloud computing offers cost-effectiveness to an organization based on the fact that the services are highly elastic. This implies that the firm can scale up or scale down the expended resources based on its existing needs (Elmonem, Nasr, and Geith, 2016). According to Attaran (2017), cloud computing enables enterprises to scale up during times when there is an increase in computing requirements and, on the other hand, scale down during periods when demand levels deteriorate. Consequently, this reduces the need for massive and overpriced investments in local information technology infrastructure. Most cloud service providers will permit a firm to increase its prevailing resources to take up augmented business requirements or changes. This enables the firm to support the growth and development of its business operations without costly modifications to its existing IT systems (AlBar and Hoque, 2019).
Storage Cost Savings
Organizations can cut back on their yearly operating expenses by implementing cloud storage. Cost-effectiveness can be guaranteed if data storage is carried out in the cloud. Furthermore, the users can achieve extra cost savings owing to the reason that internal power and also resources are not necessitated in a separate way to facilitate data storage (Shankar, 2016). Physical equipment such as external hard disks, which are usually purchased in traditional computing, is not required, and this decreases the expenses incurred. Also, cloud computing guarantees data retrieval for the company. It is deemed to be the ideal back up plan for an organization. This is because it generates a backup of the data files and folders stores, whose retrieval and access can be done at any time. Through cloud storage, backups are carried out automatically (Attaran, 2017).
Diminished Personnel Expenses
Carcary, Doherty, and Conway (2015) demonstrated that cloud computing supports greater increased capacity levels within the firm and also expanded competencies of the organization, without experiencing any additional expenses, which would have otherwise necessitated investment in personnel training, infrastructure, and software. Elmonem et al. (2016) indicated that the organization could achieve cost savings from additional IT personnel. This is because the updating and upgrading process of cloud computing services is realized faster as compared to traditional systems. Also, the transition to cloud computing instigated substantial changes to the pricing model of the firm. Notably, cloud-based solutions were retailed under subscription-based licensing arrangements that facilitated consumers to pay what they used. These efficiencies might inform management decisions (El Mhouti, Erradi, & Nasseh, 2018). One of the key advantages takes into account flexibility. Cloud computing not only facilitates flexibility for personnel but also facilitates flexibility in executing changes and innovations devoid of high risk and cost (Lal and Bharadwaj, 2016). There is also the upside of cost reduction and increased efficiency. A cloud provider can offer an immeasurable amount of resources to several users. The advantage experienced by management is that owing to diminished cost and time, the organization can lay emphasis on endeavors elsewhere and be more efficacious (Mitra et al., 2018).
Cost Transparency
Cloud computing guarantees that the company's expenses are properly reported and perceptible and that there is no wastage or excessive use of resources. Subscription and pay per use models ensure that the cost incurred is based on the firm's plan or liking. That is, the firm only pays for the resources used, and therefore the company cuts back on paying for what is not expended or what does not encompass the needs of the business (Elmonem, Nasr, and Geith, 2016). Cloud computing makes it possible for a business to track expenses in real-time. This implies that managers or chief information officers of the firm guarantee that expenses incurred are based on the resources used and that there are no cloud services that exceedingly surpass the budgeted amount (Elmonem, Nasr, and Geith, 2016).
According to O'Reilly (2018), in cloud computing, it is conceivable for a firm to perceive the stack and control for numerous aspects such as the firm's power schedules and data usage, which guarantees that the enterprise is solely paying for computation capacity when it is being utilized. Xue and Xin (2016) indicate that firms only pay what they have consumed. This means that the ultimate payments made are purely based on the periods when the firm accesses the cloud services. Also, cloud computing enables firms to attain cost savings due to different subscription models substantially. Xue and Xin (2016) point out that that cloud computing resources can be set up and executed almost instantaneously. For example, in SaaS, all activities are undertaken by the providers. Generally, the running, upkeep, and advancement of these services are undertaken by the providers.


Methodology
Data Collection
The research instrument that will be applied in the study is questionnaires. Questionnaires are progressively acknowledged as a valuable approach of collecting data owing to benefits such as the greater speed of participant response, minimal errors from the study participants, and also eradication of interviewer bias. Significantly, a comprehensive review of existing literature based on studies conducted by other scholars will help in formulating the questionnaires. As earlier indicated, most of the studies focused on the different ways in which cloud computing facilitates cost-effectiveness for users. Also, a pilot testing of these constructs will be carried out with managers or owners of small and medium enterprises and also academic scholars to guarantee that they are pertinent and understandable.
The questionnaires will consist of both open-ended and closed-ended questions. Specifically, open-ended questions will be used to appeal to the participants to provide free answers, especially where it is not conceivable to forecast the range of responses. Also, the closed-ended questions will be important in creating and gathering information faster from the participants. The beginning segment of the questionnaire will seek to obtain demographic data and information on the study subjects, including the industry of business operation, the number of years of operation, and years of using cloud computing. The following segment will comprise of questions concerning the cost-effectiveness benefit of cloud computing in the organization. Specifically, the questions will be centered on a Likert Scale that will include measurements ranging from strongly disagree to agree strongly. These metrics will be employed in the study with the main of attaining the correct and precise data, in addition to ensuring the study subjects are not confused about how to answer the questions. The questionnaires will be conducted either in person, through the post, or e-mails.
Sample Population
The study will employ a purposive sampling technique. In this sampling approach, the author selects specific sampling strategy components because they have distinctive features that enable a key theme or aspect to be comprehended in greater detail. Importantly, purposive sampling guarantees that the important aspects of the study are taken into consideration. The stratification of the sampling frame was based on the following significant criteria:
1. The firm should have adopted and implemented cloud computing
2. The firm should be situated in the United States
3. The firm should have less than 300 personnel
In every firm, the manager or the owner of the business establishment was selected as the point of contact. This is based on the reasoning that the individual holding this organizational position was most suited to answer questions relevant to the research problem being investigated. The sample of the study will comprise of 2000 firms. The researcher aims to accomplish a response rate of 9 percent to accomplish 200 responsible that can be utilized. This sample figure is considered to be an ideal minimal level in a massive population.
Ethical Considerations
Ethics are a vital constituent in any research study. There are key ethical aspects that will be considered in the study. The first ethical aspect that will be addressed is participant informed consent. This process will include explaining to the study participants the main objective of the research, the potential role that each participant will play in the study, and also how the study outcomes would be used. This will also include notifying the study participants all of the data and information that will be required and collected (Saunders, Lewis and Thornhill, 2015). The second ethical consideration is anonymity and privacy. All of the subjects involved in the study will be guaranteed that data and information will remain private, and none of the identities would be divulged in the final report. Importantly, the subjects will have the liberty to either agree or decline to respond to the questions posed. Furthermore, the subjects will be guaranteed that any information provided will be exclusively used for educational reasons and will not be revealed to third parties (Saunders, Lewis and Thornhill, 2015). Subject involvement in the study will be entirely done at their own will and permission. The subjects will have the opportunity to cease participating in the study at any point without any sort of consequences or enforcement. Furthermore, no study subjects will be swayed into being involved in the study either through financial incentives or buying off (Saunders, Lewis and Thornhill, 2015).
Data Analysis
Data collected from the study subjects will be analyzed using SPSS software. The analysis of the data will comprise of frequency analysis, analysis of variance and T-test, descriptive analysis, and Cronbach Alpha. Frequency analysis will be pivotal in pointing out the number of cases in every level of a categorical variable. Secondly, descriptive analysis through descriptive statistics will demonstrate the fundamental features of the data through summaries about the sample and the measures. Cronbach's alpha measures will be important in this case as a reliability test in line with the correlation between scores on two randomly created halves of the test. The statistical technique of Cronbach's alpha divides the items in the survey in all conceivable ways and ascertains the correlation values for all. As a result, the computer produces one number for Cronbach's alpha, the closer the number is to one, the higher the reliability estimate. On the other hand, data collected from the administrative documents will be properly organized and arranged in tables and after that analyzed by the researcher.
Contributions to Theory or Practice
The findings of this study will have pivotal practical implications for different players. First, there are practical implications for companies, SMEs, and also businesses run by individuals. These are the major beneficiaries of the study. Significantly, different business entities endeavor to have a competitive advantage in the marketplace and also reduce the costs incurred to generate increased profits. This study will demonstrate that adopting and implementing cloud computing will enable the entities to reduce not only the cost incurred but also achieve increased flexibility and scalability. Also, the incorporation of cloud computing in the entity's IT environment implies that there will be a decreased cost incurred for training personnel, procuring servers, and also hard disks for data storage. Furthermore, the companies will be able to pay for the resources that have been used due to the pay as you go models.
Secondly, the study will make theoretical contributions to the existing literature. Furthermore, educational establishments are significant stakeholders in understanding the benefits of cloud computing. With the advancement of big data, cloud computing will be a progressively more pivotal competency for personnel in the workplace setting. Partnering with business entities would be especially pivotal in accomplishing this endeavor. The companies and SMEs have a better understanding of the practical application of cloud computing. Also, they have idyllic insight into the prevailing competency gaps they have and what can be done to close the gaps. As a result, educational establishments will be able to formulate and deliver more pertinent cloud computing courses.
Ethical Issues
There are ethical issues that are specific to this study. One of the issues is outdated publication and plagiarism. Redundant publications encompass those devoid of complete cross reference, have similar hypotheses, data, and information and conclusions. Plagiarism includes using published ideas without acknowledging the author. A key solution is to ensure that all sources of information are fully disclosed and referenced (Jenn, 2006). A second ethical issue is data analysis. The researcher has a pivotal responsibility for suitably analyzing data. A key solution is that to guarantee suitable data analysis, all methodologies and sources utilized in attaining and analyzing data ought to be completely revealed. This will ensure that the readers do not misconstrue the results devoid of considering the prospect of the research study becoming underpowered (Jenn, 2006).
Conclusion
Cloud computing, over the years, has advanced to become a pivotal component for companies. This study purposes of examining how cloud computing relates to cost-effectiveness. Based on research conducted, it is expected that the study will demonstrate that cloud computing facilitates cost reduction in terms of the diminished need for hardware and software systems. Through cloud computing, the organization does not necessitate computers that are either highly powered or priced to operate the web-based applications. Taking into consideration that the applications are run in the cloud, it implies that the firm reduces the costs incurred in investing in personal computers or desktop software. Secondly, costs are reduced due to scalability meaning cloud computing eliminates the need for massive and overpriced investments in local information technology infrastructure. There is also cost-efficacy through diminished storage expenses. Traditional computing necessitates hard disks and servers to store data. However, through cloud computing, these expenses are eradicated as data is stored within the cloud and done so immediately. Since cloud service providers facilitate all the resources required by the user, it implies that there are also reduced expenses that would have been incurred in training IT personnel.



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