Adoption of cloud computing by South African firms: an institutional theory and Diffusion Of Innovation theory perspective

Abstract

This study investigated the adoption of cloud computing as a form of innovative IT by South African organisations. The investigation into the factors that explain the current extent of adoption was focused through the lenses of Institutional Theory and Diffusion of Innovation Theory (DOI). Cloud computing is a form of innovative IT offering an organisation the means to effectively and efficiently rent on-demand IT resources as a service. There are three generally agreed cloud services delivery models: Software-as-a-service (SaaS), Platform-as-a-service (PaaS) and Infrastructure-as-a-service (IaaS). Each of these cloud services models meets different organisational requirements and targets different customers, but what they all have in common is that each model offers advantages to organisations willing to adopt any one of them. Even though cloud computing offers advantages, it is not without its challenges and short-comings which are responsible for tempering the rate of adoption and the types of service delivery models being adopted. The aim of this research study was to develop and subsequently test a model of the institutional pressures and IS innovation characteristics that influence organisational adoption of cloud computing. A systematic literature review was conducted to gauge the state of the field, and thereafter a research model was developed and tested using a survey methodology. This involved operationalizing the variables hypothesized in the research model and collecting data through a questionnaire instrument. The self-administered online questionnaire was administered to a sample of 980 medium-to-large South African organisations, resulting in a final number of 87 usable responses. The data provided by these 87 organisations passed through reliability and validity tests which confirmed that the construct measures provided consistent and reproducible results (reliability) and accurately represented the constructs they were intended to measure (validity). After reliability and validity was demonstrated, correlation, regression and partial least square (PLS) structured equation modelling was employed to test the hypothesized research model. The results of the study indicate that the mimetic pressures construct drawn from Institutional Theory is more important than normative and coercive pressures in explaining adoption of cloud computing, and that the DOI factors of compatibility and relative advantage were also significant. However, it is evident from results that top management championship as an internal organisational factor is very important and may mediate the effects of other factors on the adoption of cloud computing. Cloud computing is very topical and is garnering a great deal of attention both academically and practically. Through the application of Institutional Theory and Diffusion of Innovation Theory to an IT innovation context, that of cloud computing, this study’s research results provides an academic contribution. This research also offers practical implications for organisational IT decision-makers, technology service suppliers and trade bodies. For those organisations who are considering adoption of cloud computing this research will offer insights into the relative influence of institutional pressures and IS innovation characteristics and how these factors weighed on other organisations’ decision-making.