Institute for International Business (IIB)
International Business Research Competition Application
Forecast for International Business – More Cloudy?
February 15, 2010
Submitted by
Andrew Chen
Associate Professor
Accounting and Information Systems
School of Business
University of Kansas
Phone: (785) 864-7529
achen@ku.edu
Forecast for International Business – More Cloudy?
Part I: Summary of Research Objectives
As global economy becomes more information- and network-oriented, businesses
create and collect tremendous amount of electronic data and information which needs to be
processed, stored, and disseminated and requires ever-increasingly intensive and ubiquitous
information technology (IT) capabilities. In addition, in this internationally competitive
environment, large and small enterprises not only demand more IT resources but also strive
for lower investment on and ownership of IT, more agile IT applications, more flexible IT
functionalities, and highly reliable and available IT resources. A promising computing model
has emerged to meet this business and technology trend – cloud computing. Cloud computing
is a form of information processing and storage where massively scalable IT resources
(hardware and computational capacity, data storage, software and applications, platforms, and
infrastructures) are remotely delivered as on-demand services to customers through advanced
Internet technologies and connectivity.
Could computing is driven by new IT trends such as mobile interactive applications
(ubiquitous computing and global connections for any device, any location, and any
communication mode), parallel batch processing (grid computing and better collectively
utilize idled computational resources), the rise of analytics (business intelligence), extension
of compute-intensive desktop applications (off-premise global-class computing might
gradually replace on-site enterprise-class or individual-class computing), and green IT
(Armbrust, et al., 2009). Gartner predicted that industrialized utility and cloud-based services
will (1) account for at least 50% of the new demand for managed IT infrastructure services by
2012, and (2) grow to more than $140 billion by 2013 (Gartner, 2009). Almost all major IT
companies have promoted and participated with this “cloudy” movement by developing and
offering cloud computing solutions such as Google AppEngine, Microsoft Azure, IBM Smart
Business, and Amazon EC2.
The purpose of this project is twofold. First, at the country level, will and how can a
government build a suitable environment to lure international businesses and promote cloud
computing for benefiting its economy? A case study of Taiwan will be conducted (Lee, 1989).
Future data collections and analyses on China and India will also be pursued. The results
from this endeavor can provide significant implication for governments around the globe to
prepare for international business competition on cloud computing and related IT. Second, at
the organization level, will and how can a firm leverage implicit benefits (e.g., networking
and alliance) and explicit benefits (e.g., cost saving) from adopting international cloud
computing to compete in the global market? We propose a “dynamic capability theory”
perspective to study this problem. Empirical data from small and large companies that utilize
cloud computing will be collected. The findings from this endeavor can shed light on
theoretical validity and empirical benefit of organizations’ pursuing “dynamic capabilities”
through IT means (e.g., cloud computing).
Andrew Chen
Forecast for International Business – More Cloudy?
Part II: Significance to International Business
With the advancement in Internet networking and telecommunication transmission
capacity, international businesses has further boomed beyond geographical boundaries since
individuals and businesses are more easily connected, and data and information are more
conveniently exchanged. Cloud computing can further impact international business beyond
information communication with exchange and distribution of resources, applications,
services, and capabilities. In this project, we focus on two areas. First, we explore the impact
and consideration of the international location of cloud computing providers. Second, we
study the theoretical rationale of utilizing cloud services beyond obvious economic benefits.
According to TechNavio (2009), the global market for cloud computing was $17.3
billion in 2008, and is forecast to reach $43.2 billion by 2012. According to Sandra Ng of the
global market intelligence firm IDC, the market for cloud services in the Asia-Pacific region
in 2009 is valued at US$549 million (Chang, 2009). She expects the sector to grow by an
average compound rate of 44 percent per year between 2008 and 2013. Taiwan’s cloud
computing services market is estimated to reach NT$5.56 billion (US$172 million) for 2009,
and to hit NT$6.21 billion (US$201 million) in 2010.
For most, if not all, cloud computing practices, the user’s data and applications reside
(at least for some time) on the cloud cluster, which is owned and maintained by the cloud
provider. Therefore, “Where is the cloud located?” is a serious question for users and
providers. Issues of providers will include suitable physical space in which to construct the
warehouse-sized building or facility (physical geography, climate and weather, natural
disaster, natural resource, safety of crime and attack), proximity to high-capacity Internet
connection, the abundance of affordable electricity and other energy resources, and the laws,
policies, and regulations of the jurisdiction (legal jurisdiction, government intervention, and
costs of doing business (taxes, insurance, and regulations on safety, environmental, industrial,
etc.)). Important questions can include: Should we get cloud computing domestically or
internationally? Which country or region should we get cloud computing oversea? What can
a country or region do to attract cloud computing businesses? What can a country or region
gain by attracting cloud computing businesses? To answer these questions, we propose to
conduct a case study of Taiwan. As Taiwan is among the leading technological and economic
forces in Asia and the Pacific Rim, cloud computing experiences learned from Taiwan mirror
regional and global trends and certainly reflect the U.S. market as well. The results from this
endeavor can (1) provide significant implication for governments around the globe to prepare
for international business competition on cloud computing and related IT, and (2) provide
valuable guidelines for global businesses to consider and prepare for adopting domestic and
international cloud computing services.
Andrew Chen
Forecast for International Business – More Cloudy?
Part III: Research Plan, Support Data, and Proposed Time Schedule
III.1. Background of Cloud Computing
Basically, there can be three usage modes of cloud computing services (Jaeger, et al.,
2009). First, the “cloud” hosts a user’s application (software, data storage, computational
resources, etc.) with a “Web service” provided. Second, the “cloud cluster” executes the
application code and returns the results to the user (batch processing). Third, the “cloud” is
temporarily providing computing services in conjunction with user’s existing IT
infrastructures for temporary peaks or seasonal peaks in traffic (cloud bursting).
For business IT consideration, cloud computing holds the promises of providing
benefits including cost containment (shift from IT capital expenditure to IT operating
expenditure), immediacy (fast, if not instant, agile access to IT resources), availability
(diverse and plentiful IT resources around the globe), scalability (provisioning and
implementation of needed IT are done on demand and as needed), efficiency (reallocate
operational IT to cloud and focus on strategic IT and business core competence), resiliency
(cloud providers have mirrored solutions and backup connections that can be utilized in a
disaster scenario as well as for load-balancing traffic), flexibility (cost of switching providers
is low) (ISACA, 2009).
While proponents of cloud computing emphasize the potential opportunities of
develop cloud-based applications and benefits of exploiting cloud-based services, many
issues and caveats cannot be simply ignored. Usually, issues and expectations of users of
cloud services can include access, reliability, security, data confidentiality and privacy,
liability, intellectual property, ownership of data, fungibility, auditability, available
contractual remedies, and supplier stability (Jaeger, et al., 2009). In this project, we focus on
the location issue of cloud computing for both users and providers.
III.2. Cloud Computing at International Locations
According to TechNavio (2009), the global market for cloud computing was $17.3
billion in 2008, and is forecast to reach $43.2 billion by 2012. For cloud computing, location
consideration is naturally without geographical boundary constraint since technology
feasibility will not be an important issue. Other than fix locations for cloud computing
facilities, other portable and easily assembled facilities are also proposed and implemented.
For example, Sun’s “Project Blackbox” is a large shipping container (IBM, Google are
looking into it as well) which can be strategically and quickly deployed to ideal locations.
“Google Navy” – water-based data center on ships positioned in international waters (mobile
and easy to form a fleet) – is also an innovative way to setting up cloud computing services.
For US companies, utilizing Asian countries’ cloud services can even take advantage of time
zone difference (off-peak hours of using energy) to reduce costs and environmental impacts.
Traditionally, India's top IT companies make up approximately 45% of
the entire global market. Companies like Tata, Infosys, and Satyam enjoy worldwide
Andrew Chen
Forecast for International Business – More Cloudy?
reputations and attract and land multinational deals every year. In addition to English
language competency and IT expertise, trust in those companies, and in India as the go-tocountry for IT outsourcing, has grown because the nation successfully combines low labor
costs with Western management skills. However, the regulations and laws in India were not
as developed as expected. On the other hand, China is also catching up on global IT
outsourcing and service market. In China, the government has built entire cities and towns
(e.g., Shenzhen) dedicated to the IT industry, presenting almost perfect conditions for
companies. In addition, China has long been known for its low cost of labor and its fast
evolving infrastructure. However, issues such as level of IT expertise of Chinese workers and
concerns about intellectual property rights are often mentioned for China’s IT offerings. In
addition, China does not have many large IT companies. Many people argue that China’s IT
market needs to consolidate in order to become more competitive. Currently, standardized IT
services are outsourced to China and the more complex IT services are entrusted to India.
These factors fundamentally reflect to cloud computing considerations in the international
arena.
III.3. Cloud Computing in Taiwan
To compete in international cloud computing market, government and related IT
institutions are gearing up necessary efforts and strategies. On November 4, 2009, Microsoft
announced that Microsoft and Taiwan’s Ministry of Economic Affairs will jointly establish
the “Software and Services Excellence Center” at Taiwan in 2010 with US$9.5 billion in
research and development projects (with considerable portion going to cloud-computing
technologies) (Ho, 2009). Microsoft said this venture is aimed at helping local contract
makers of electronic products develop devices and services related to cloud computing. Both
hardware and software firms in Taiwan will participate in the development of related
technologies at the proposed center, which will operate in parallel with the “cloud-computing
mobile application technology center” set up recently by the government-backed Industrial
Technology Research Institute (ITRI). On December 21, 2009, IBM announced a new
Research collaboratory will be established in Taipei, Taiwan (IBM, 2009). This collaboratory
which focus on using technologies – including cloud computing, analytics, and mobile
devices – to advance wellness-centric healthcare that manages diseases more efficiently and
effectively to keep people healthier. Cloud computing will serve as the foundation for much
of the collaboratory’s work in areas such as sensor data collection, record sharing, analysis,
and diagnostics. The cloud computing model is suited to healthcare applications due to the
volume of dynamic and diverse source of information. Further, IBM is also teaming up with
Tsing Hua University in Taiwan to set up a cloud computing center based on the global PC
heavyweight’s software research project, code-named “Pangoo”. Other players who have
expressed an interest in the race include notebook maker Quanta Computer Inc. and system
manufacturer Foxconn Technology Group, among others.
Andrew Chen
Forecast for International Business – More Cloudy?
Even with all these developments in Taiwan, it is still of great interest how and can
countries like Taiwan to compete with China or India in cloud computing. Research findings
of implementation cases in Taiwan can reflect global aspects of cloud computing movement.
That is, since Taiwan is technologically advanced and there are substantial trading and
cooperation relationships between Taiwan and the U.S., research findings can be used as a
comparison with or references for those of the United States. These findings can also provide
further awareness of cloud computing implementation issues and guidelines for setting
adoption strategies.
III.4. Dynamic Capability Theory
Teece et al. (1997) define dynamic capabilities as “the ability to integrate, build, and
reconfigure internal and external competencies to address rapidly-changing environment”.
Dynamic capabilities theory proposes that dynamic resources help a firm adjust its resource
mix and thereby maintain the sustainability or the firm’s competitive advantage. While the
resource-based view (RBV) (Barney, 1991) emphasizes resource choice, or the selecting of
appropriate resources, dynamic capabilities emphasize resource development and renewal.
Wade and Hulland (2004) argued that IS resources may take on many of the attributes of
dynamic capabilities, and thus may be particularly useful to firms operating in rapidlychanging environments. That is, IS resource helps firms to develop, add, integrate, and
release other key resources over time.
We argue that capability is about the ability to do things that otherwise couldn't be
done. We conjecture that businesses can benefit greatly from the cloud computing services to
fulfill their desire to create new solutions that were not technically or economically feasible
without the use of cloud services. That is, cloud computing model can help firms to foster and
utilize necessary dynamic capabilities to compete and innovate. From current IS literature,
the popular theory to explain the relationships between IT and performance is RBV. In
today’s business environment, however, the competitions between coalitions of firms require
not only capabilities and resources owned by single firms but also “dynamic capabilities” that
integrate, deploy, and reconfigure organizational skills, resources, and functional
competences in the range of a network (Teece, Pisano et al. 1997). We conjecture that such
dynamic capabilities perspective is especially important to explain the roles of cloud
computing model to facilitate coordination, collaboration, and assembly of global IT
resources.
III.5. Research Methodology
At the first stage, semi-structured interviews and documentation collections will be
conducted in Taiwan. Through governmental and academic connections (e.g., Dr. San Gee,
Deputy Minister, Council for Economic Planning and Development, Executive Yuan,
Taiwan; Dr. Houn-Gee Chen, Professor, College of Management, National Taiwan
University, Taiwan; Dr. Chih-Ping Wei, Professor, College of Technology
Andrew Chen
Forecast for International Business – More Cloudy?
Management, National Tsing Hua University, Taiwan) which have close relationships with
large Taiwan-based companies in the global e-business market and strong ties with
governmental units, the proposed project can be better and successfully facilitated. We will
contact and meet with top-level people of institutions such as Ministry of Economic Affairs,
Industrial Technology Research Institute, and Tsing Hua University to collect data. The
results from this endeavor can provide significant implication for governments around the
globe to prepare for international business competition on cloud computing and related IT.
At the second stage, we will conduct semi-structured interviews and surveys with
organizations which utilize international cloud computing services. These companies will be
mainly US- and Asian-based companies which have connections with Taiwan’s cloud
computing providers. The findings from this endeavor can shed light on theoretical validity
and empirical benefit of organizations’ pursuing “dynamic capabilities” through IT means
(e.g., cloud computing).
III.6. Activity Planned for the Grant Period (April 2010 – May 2011)
Time
Activity
Connect with contacts in Taiwan to set up visits and
April – May 2010
interviews.
Visit connected institutions to collect documentations and
May – July 2010
conduct interviews with top-level people of those institutions
August – December 2010
Analyze data
January – May 2011
Complete and submit research manuscripts
Andrew Chen
Forecast for International Business – More Cloudy?
Part IV: Curriculum Vitae
Andrew Chen, Associate Professor, Accounting and Information Systems
EDUCATION
Ph.D. Operations and Information Management, University of Connecticut, 1999
M.S. Accountancy, George Washington University, 1992
B.B.A. Accounting, Soochow University, Taiwan, 1986
ACADEMIC EXPERIENCE
2009 –
Associate Professor, AIS, University of Kansas (KU)
2006 – 2009 Assistant Professor, AIS, University of Kansas (KU)
1999 – 2006 Assistant Professor, Department of IS, Arizona State University (ASU)
1997 – 1998 Visiting Lecturer, OPIM, University of Connecticut (UConn)
RESEARCH INTERESTS
Knowledge Management, IT Business Value, Human Computer Interface Design, Electronic
Commerce, Robust Databases, Healthcare Information Systems
TEACHING INTERESTS
Strategic IT Planning, Contemporary and Emerging IT, Web Technology and Applications,
Computer Networking, Business Intelligence, Accounting Information Systems
RECENT REFEREED JOURNAL PUBLICATIONS
1. Chen, A., Y. Hwang, and R. Santanam, “Knowledge Lifecycle, Knowledge Inventory,
and Knowledge Acquisition Strategies,” Decision Sciences, 41(1), 2010, (forthcoming).
2. Chen, A., and J. Nichols, “A Model of Service-Oriented Architecture and Firm/Network
Performance,” International Journal of Information Technology Management, 9(1), 2010,
54–74.
3. Vroblefski, M., A. Chen, B. Shao, and M. Swinarski, “Managing User Relationships in
Hierarchies for Information System Security,” Decision Support Systems, 43(2), 2007,
408–419.
4. Chen, A., S. Sen, and B. Shao, “Strategies for Effective Web Services Adoption for
Dynamic E-Business,” Decision Support Systems, 42(2), 2006, 789–809.
5. Chen, A., “Robust Optimization for Performance Tuning of Modern Database Systems,”
European Journal of Operational Research, 171(2), 2006, 412–429.
6. Chen, A., P. Goes, A. Gupta, and J. Marsden, “Heuristics for Selecting Robust Database
Structures with Dynamic Query Patterns,” European Journal of Operational Research,
168(1), 2006, 200–220.
7. Chen, A., and T. Edgington, “Assessing Value in Organizational Knowledge Creation:
Considerations for Knowledge Workers,” MIS Quarterly, 29(2), 2005, p. 279–309.
Andrew Chen
Forecast for International Business – More Cloudy?
8. Chen, A., Y. Hwang, and B. Shao, “Measurement and Sources of Overall and Input
Inefficiencies: Evidences and Implications in Hospital Services,” European Journal of
Operational Research, 161(2), 2005, 447–468.
RECENT CONFERENCE PROCEEDINGS
1. “Designing Preferable Virtual Worlds: An Analogy of Space,” with Y. Lee and M. Ellis,
Americas Conference on Information Systems (AMCIS) 2009.
2. “Healthcare Information Technology Adoption and Protection Motivation: A Study of
Computerized Physician Order Entry Systems,” with Y. Lee, Americas Conference on
Information Systems (AMCIS) 2008.
3. “The Effect of Individual Differences, Tasks, and Decision Models on User Acceptance
of Decision Support Systems,” with Y. Liu, Americas Conference on Information Systems
(AMCIS) 2008.
PAPERS UNDER REVIEW
1. Lee, Y., A. Chen, and V. Ilie, “Can Online Wait be Managed? The Effect of Filler
Interface Design on Perceived Waiting Time and Web Site Appraisal,” MIS Quarterly.
2. Lee, Y., and A. Chen, “An Exploratory Investigation of Constructs and Nomological
Networks of Usable Virtual Worlds,” ISR.
RECENT THESIS COMMITTEE
Doctoral Dissertation
Chair, “The Role of IS and Network Performance,” Yucong Liu, KU (in progress)
Member, “The True Cost of Pair Programming,” Nan Sun, KU (in progress)
Member, “A Comparison study on preferences of Student and Instructors in relation to the
current online course design at the KU Continuing Education,” Charlene Hu, KU, 2009
Member, “An Empirical Investigation into the Moderating Relationship of Computer SelfEfficacy on Performance in a Computer-Supported Task,” Miguel Aguirre-Urreta, KU,
2008.
RECENT INSTITUTIONAL SERVICE
Affiliated Faculty, Council of Investigators, eLearning Design Lab, KU, 2009–
Chair, Online Education ad hoc Committee, School of Business, KU, 2009–
Member, Ph.D. Team, School of Business, KU, 2008–
Member, AIS Director Search Committee, KU, 2009–2010
Research Workshop Coordinator, AIS, KU, 2006–2009
RECENT HONORS AND AWARDS
Institute for International Business Research Grant, KU, 2009
Best Paper, IT in Health Care Track, Americas Conference on Information Systems, 2008
New Faculty General Research Grant, KU, 2007
AFFILIATIONS
The Association for Information Systems (AIS)
Andrew Chen
Forecast for International Business – More Cloudy?
Part V: Other Sources of Funding:
None. Potential governmental assistance and funding from targeted countries can be
pursued.
Part VI: Budget
Category
Details
Airfare
Kansas – Taiwan – Kansas
Hotels
$ 100 × 7 nights = $ 700
Meals
Transportation
Gift
Faculty Summer Support
(including fringe benefits)
Total Budget
$ 50 × 14 days = $ 700
Taxi, Train, and Bus
For interviewees
Budget
$ 1,500
$ 700
$ 700
$ 300
$ 1,000
Andrew Chen
Forecast for International Business – More Cloudy?
References:
Armbrust, M., Fox, A., Griffith, R., Joseph. A. D., and Katz, R., 2009. “Above the Clouds: A
Berkeley View of Cloud Computing,” UC Berkeley Reliable Adaptive Distributed
Systems Laboratory, http://www.eecs.berkeley.edu/Pubs/TechRpts/2009/EECS-200928.pdf.
Barney, J. 1991. "Firm Resources and Sustained Competitive Advantage." Journal of
Management, 17(1), 99-120.
Chang, M., 2009. “Taiwan’s ICT firms embrace cloud computing,” Taiwan Today,
November 27, 2009, http://www.taiwantoday.tw/ct.asp?xItem=81617&CtNode=429.
Ho, J., 2009. “Update: Microsoft, Taiwan to Develop Cloud Computing Technology,” The
Wall Street Journal, November 4, 2009.
IBM, 2009. “IBM Research Collaborates with Leading Taiwanese Institutions to Deliver
Wellness-Centric Healthcare Via Cloud Computing,” IBM Press Release, December 21,
2009, http://www-03.ibm.com/press/us/en/pressrelease/29086.wss.
ISACA, 2009. “Cloud Computing: Business Benefits with Security, Governance, and
Assurance Perspectives,” ISACA Emerging Technology White Paper, Rolling Meadows,
IL.
Jaeger, P. T., Lin, J., Grimes, J. M., Simmons, S. N., 2009. “Where is the Cloud? Geography,
Economics, Environment, and Jurisdiction in Cloud Computing,” First Monday, 14(5), 112.
Lee, A. S. 1989. “A Scientific Methodology for MIS Case Studies.” MIS Quarterly, 13 (1),
33-50.
TechNavio, 2009. “Global Cloud Computing Services Market 2008-201,” TechNavio
Reports, May 21, 2009.
Teece, D. J., G. Pisano, and Shuen, A., 1997. "Dynamic Capabilities and Strategic
Management." Strategic Management Journal, 18(7), 509-533.
Wade, M., and Hulland, J., 2004. “The Resource-Based View and Information Systems
Research: Review, Extension and Suggestions for Future Research,” MIS Quarterly,
28(1), 107-142.
Andrew Chen