The impact of security and scalability of cloud service on supply chain performance

ABSTRACT Cloud computing introduces flexibility in the way an organization conducts its business. On the other hand, it is advisable for organizations to select cloud service partners based on how prepared they are owing to the uncertainties present in the cloud. This study is a conceptual research which investigates the impact of some of these uncertainties and flexibilities embellished in the cloud. First, we look at the assessment of security and how it can impact the supply chain operations using entropy as an assessment tool. Based on queuing theory, we look at how scalability can moderate the relationship between cloud service and the purported benefits. We aim to show that cloud service can only prove beneficial to supply partners under a highly secured, highly scalable computing environment and hope to lend credence to the need for system thinking as well as strategic thinking when making cloud service adoption decisions. Keywords: cloud service, security concerns, scalability, supply chain management (ProQuest: ... denotes formulae omitted.) 1. Introduction The internet has been employed in multidimensional and multifaceted ways in various supply chains. Lancioni et al [2003] found there to be an increase in the use of the internet by organizations to leverage supply chain management applications. The significance of the internet owes to its ubiquity and provisioning of real time communication. Irrespective of the type of supply chain, the internet has proven to be limitless in the purpose it can serve provided its use had been carefully or strategically planned [Wang et al., 2004]. Its use has ranged from communication information exchange to more operational related functions such as order filling, purchasing, production scheduling, customer service, human resource management etc. [Chen and Meixell, 2003]. Leveraging Information Technology (IT) can be costly and has deterred small to medium scale organizations from using it. This in part has led to the emergence and justification for the somewhat new IT concept called 'cloud computing'. Cloud services bring flexibility, configurability, cost effectiveness, low implementation cost to IT and by extension, Supply Chain Management (SCM). Many IT experts and academics have reported a plethora of benefits an organization stands to gain if and when they avail themselves to this opportunity. In the same vein there has been a series of counter argument about the purported benefits of joining the cloud. However, as is common to most IT initiatives, a careful analysis of how it will affect one's internal and external business environment must be undertaken before adopting the strategy, otherwise it can be the bane of a business existence. Top amongst these counter arguments are the issues of security [Subashini and Kavitha, 2011] and ability to scale up or down computing resources as needed without making service unavailable [Armbrust, 2010]. Most of these reports, although anecdotal, have been viewed from the cloud provider's perspective. There has been paucity of report on how these issues affect cloud users (in this case supply chain members), which have been mostly studied at an organization level. There is yet to be an academic research on how these issues affect the operations of an entire supply network. This study proposes an approach, which incorporates a system thinking perspective, to investigate how some of these issues, especially security and scalability, affect businesses at an organizational level and supply chain level. By looking at the impact of these variables on supply chain performance, the research posits that this will inform an appropriate cloud computing adoption strategy to suit the overall organization and supply chain management goal. Security is conceptualized as one of the uncertainties present in the cloud. It is defined here as the level of defence against IT threats as evidenced by the probability of breach occurrence. …