the variance in cloud-deployment success among our survey participants,
senior IT managers. This is another
indication of their importance in the
cloud-computing model, where maximizing the benefits of the cloud is essential for operational performance
and business success.
Sources of advantage
While cloud computing should deliver
benefits to any client organization, the
challenge of differentiating an organization and gaining advantage depends
on development and use of internal
IT-related capabilities. Organizations
may differentiate themselves despite
applying similar IT solutions when organization-specific capabilities are employed to leverage IT resources. IT cost
reductions, IT economies of scale, and
performance (deployment success) are
expected outcomes when technical,
managerial, and relational capabilities
optimize cloud implementation.
Despite implementing uniform
information technologies, organizations can create competitive advantage
through superior interorganizational
relationships with their cloud providers. The related trust would lower the
cost of negotiations, as well as the
possibility of related conflict. It would
also enhance cooperation between the
organization and the vendor by creating favorable conditions for constructive exchange and shared governance.
Genuine cooperation and the coordination of activities should encourage
the organization and its cloud provider
to explore new ideas, increasing the
likelihood of achieving shared goals.
In contrast, a lack of trust indicates
a heightened sense of suspicion that
would impede effective exchange of
information. Such conditions would
cause the client organization to rethink its vendor relationship and second-guess its own cloud-deployment
Organizations with rigid IT infra-
structure generally lack the ability to
fully implement a cloud strategy. IT
managers who lack business knowl-
edge and IT understanding of how to
exploit cloud technologies or integrate
a cloud solution across business units
would likewise hinder successful de-
ployment. However, an organization
without effective technical and mana-
gerial capability might achieve perfor-
mance gains and IT cost reduction but
not competitive advantage.
Cloud computing services can provide IT functionality to small and
large organizations alike. Organizations throughout the industrialized
world, challenged by competition and
government regulation, show strong
interest in cloud computing to help
reduce operating costs and increase
business agility while addressing their
computing and data-storage needs. 18
While many benefits are associated
with cloud computing, one key to success is for the client organization to
use its IT-related capability to leverage
cloud-provided resources. Organization-specific IT capabilities, coupled
with homogeneous information technologies, promise a differentiated IT
environment that can be a source of
competitive advantage. Management
and market factors being equal, organizations that develop and strengthen
their IT-related capabilities are likely
to realize greater value from their
investment compared to organizations that implement only a cloud resource.
1. alvarez, s.a. and Barney, J.B. resource-based theory
and the entrepreneurial firm. In Creating A New
Mindset: Integrating Strategy and Entrepreneurship
Perspectives, M. hitt, r. Ireland, s. Camp, and D.
sexton, eds. John Wiley & sons, Inc., new york, 2002.
2. Barney, J.B. firm resources and sustained competitive
advantage. Journal of Management 17, 1 (1991), 99–120.
3. Bhatt, g. and grover, V. types of information
technology capabilities and their role in competitive
advantage: an empirical study. Journal of Management
Information Systems 22, 2 (2005), 253–277.
4. Cearley, D. and reeves, D. Cloud Computing
Innovation Key Initiative Overview, technical report.
gartner, Inc., stamford, Ct, July 22, 2011; http://
5. Costigan, r.D., Ilter, s.s., and Berman, J.J. a
multidimensional study of trust in organizations.
Journal of Managerial Issues 10, 3 (1998), 303–317.
6. feeny, D.f. and Willcocks, l.p. Core Is capabilities for
exploiting information technology. Sloan Management
Review 39, 3 (1998), 9–21.
7. grover, V., Chen, M. J., and teng, J.t.C. the effect of
service quality and partnership on the outsourcing of
information systems functions. Journal of Management
Information Systems 12, 4 (1996), 89–116.
8. hewlett-packard Development Company, l.p., S TART
Small, Grow Tall: Why Cloud Now, Business White
paper, 2011; http://www.hp.com/hpinfo/newsroom/
9. Ibrahim, M. and ribbers, p.M. the impacts
of competence-trust and openness-trust on
interorganizational systems. European Journal of
Information Systems 18 (2009), 223–234.
10. Johnston, D.a. McCutcheon, D.M., stuart, f.I., and
Kenwood, h. effects of supplier trust on performance
of cooperative supplier relationships. Journal of
Operations Management 22, 1 (2004), 23–38.
11. Marinescu, D.C. Cloud Computing: Theory and
Practice, Working paper. Computer science Division,
Department of electrical engineering & Computer
science, university of Central florida, orlando, fl,
12. Mata, f.J., fuerst, W.l., and Barney, J.B. Information
technology and sustained competitive advantages: a
resource-based analysis. MIS Quarterly 19, 4 (1995),
13. Mcallister, D.J. affect- and cognition-based trust
as a foundation for interpersonal cooperation in
organizations. Academy of Management Journal 38, 1
14. Mell, p. and grance, t. the nIst definition of cloud
computing. Special Publication 800-145, 2011; http://
15. ravichandran, t. and lertwongsatien, C. effect of
information systems resources and capabilities on
firm performance: a resource-based perspective.
Journal of Management Information Systems 21, 4
16. sambamurthy, V. and Zmud, r. W. Managing IT for
Success: The Empowering Business Partnership.
financial executives research foundation,
Morristown, nJ, 1992.
17. symantec Corp. Choosing a Cloud Hosting Provider
with Confidence. symantec Corp., Mountain View, Ca,
18. symantec.cloud. Weathering the Storm:
Considerations for Organizations Wanting to Move
Services to the Cloud, White paper. symantec Corp.,
new york, 2011; http://www.techdata.com/%28s%281
19. Zaheer, a. and Venkatraman, n. relational governance
as an interorganizational strategy: an empirical test
of the role of trust in economic exchange. Strategic
Management Journal 19, 5 (1995), 373–392.
Gary Garrison ( email@example.com) is an
associate professor of information systems management
in the Jack C. Massey graduate school of Business of
Belmont university, nashville, tn.
Sanghyun Kim ( firstname.lastname@example.org) is an associate professor
of management information systems in the school of
Business administration of Kyungpook national university,
Robin L. Wakefield (robin_ Wakefield@baylor.edu) is an
associate professor of management information systems
in the hankamer school of Business of Baylor university,
© 2012 aCM 0001-0782/12/09 $15.00