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Risk-Benefit-Mediated Impact of Determinants on the Adoption of Cloud Federation

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  • Netsanet Haile

    () (College of Engineering, Seoul National University)

  • Jorn Altmann

    () (College of Engineering, Seoul National University)

Abstract

As an emerging trend for maximizing IT resource utilization, cloud federation raises various technical, economic, and legal issues. In order to understand the future of its adoption among cloud providers, it is important to identify which factors can be driving or inhibiting the process. This study aims at closing this research gap and find out the strength of their inhibiting or facilitating factors. Factors suggested by relevant studies as determinants of cloud computing are compiled. Among those determinants, the most relevant factors are selected and, then, used to construct a model of hypothesized relationships of the determinants with the perception of risk and benefits of cloud federation, thus with the intention of joining a cloud federation. Data from a total of 300 cloud service providers, consultants, and IT experts were collected through a survey questionnaire. The model is evaluated using structural equation modeling. The findings show that, among the six determinants analyzed by the study, flexibility and competitive pressure showed strong positive impacts. Thus, they are considered the major drivers of cloud federation. Furthermore, interoperability, service quality decline, and legal issues could be linked to be strong inhibitors of cloud federation. However, all these determines are strongly mediated by the perceived risk and perceived benefit of cloud federation. The estimated results for cloud providers showed that large cloud providers are attracted to cloud federation due to the potential of offering flexible services, while small cloud providers are driven by competitive pressure to join a cloud federation.

Suggested Citation

  • Netsanet Haile & Jorn Altmann, 2015. "Risk-Benefit-Mediated Impact of Determinants on the Adoption of Cloud Federation," TEMEP Discussion Papers 2015122, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised May 2015.
  • Handle: RePEc:snv:dp2009:2015122
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    File URL: ftp://147.46.237.98/DP-122.pdf
    File Function: First version, 2015
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    References listed on IDEAS

    as
    1. Ivan Breskovic & Michael Maurer & Vincent C. Emeakaroha & Ivona Brandic & Jorn Altmann, 2011. "Towards Autonomic Market Management in Cloud Computing Infrastructures," TEMEP Discussion Papers 201174, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Apr 2011.
    2. Jorn Altmann & Matthias Hovestadt & Odej Kao, 2011. "Business Support Service Platform for Providers in Open Cloud Computing Markets," TEMEP Discussion Papers 201179, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Sep 2011.
    3. Jorn Altmann & Mohammad Mahdi Kashef, 2014. "Cost Model Based Service Placement in Federated Hybrid Clouds," TEMEP Discussion Papers 2014116, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Sep 2014.
    4. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989 Elsevier.
    5. Netsanet Haile & Jorn Altmann, 2013. "Estimating the Value Obtained from Using a Software Service Platform," TEMEP Discussion Papers 2013105, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Aug 2013.
    6. Juthasit Rohitratana & Jorn Altmann, 2012. "Impact of Pricing Schemes on a Market for Software-as-a-Service and Perpetual Software," TEMEP Discussion Papers 201288, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Mar 2012.
    7. Ivan Breskovic & Ivona Brandic & Jorn Altmann, 2013. "Maximizing Liquidity in Cloud Markets through Standardization of Computational Resources," TEMEP Discussion Papers 2013100, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Feb 2013.
    8. Doherty, Anne Marie, 2009. "Market and partner selection processes in international retail franchising," Journal of Business Research, Elsevier, vol. 62(5), pages 528-534, May.
    9. Sodam Baek & Kibae Kim & Jorn Altmann, 2014. "Role of Platform Providers in Service Networks: The Case of Salesforce.com AppExchange," TEMEP Discussion Papers 2014112, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised May 2014.
    10. Minkler, Alanson P., 1990. "An empirical analysis of a firm's decision to franchise," Economics Letters, Elsevier, vol. 34(1), pages 77-82, September.
    11. Jorn Altmann & Costas Courcoubetis & Marcel Risch, 2010. "A Marketplace and its Market Mechanism for Trading Commoditized Computing Resources," TEMEP Discussion Papers 201059, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Mar 2010.
    12. Kibae Kim & Songhee Kang & Jorn Altmann, 2014. "Cloud Goliath Versus a Federation of Cloud Davids: Survey of Economic Theories on Cloud Federation," TEMEP Discussion Papers 2014117, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jul 2014.
    13. Ashraf Bany Mohammed & Jorn Altmann & Junseok Hwang, 2010. "Cloud Computing Value Chains Understanding Businesses and Value Creation in the Cloud," TEMEP Discussion Papers 201061, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jun 2010.
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    Cited by:

    1. Netsanet Haile & Jörn Altmann, 2017. "Evaluating Investments in Portability and Interoperability between Software Service Platforms," TEMEP Discussion Papers 2017136, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised May 2017.

    More about this item

    Keywords

    Cloud Computing; Cloud Federation; Structural Equation Modelling; Strategic Alliance; Survey; Adoption; Cloud Provider.;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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