An Empirical Study on Factors Affecting Switching Intention to Cloud Enterprise Resource Planning: A Comparison Between Public and Private Clouds

An Empirical Study on Factors Affecting Switching Intention to Cloud Enterprise Resource Planning: A Comparison Between Public and Private Clouds

Yu-Wei Chang (National Taichung University of Science and Technology, Taichung City, Taiwan), Ping-Yu Hsu (Department of Business Administration, National Central University, Taoyuan City, Taiwan), Wen-Lung Shiau (Zhejiang University of Technology, Hangzhou Shi, China) and Ming-Chia Hsu (National Central University, Taoyuan City, Taiwan)
Copyright: © 2019 |Pages: 24
DOI: 10.4018/JGIM.2019100103

Abstract

With the diffusion of cloud computing, public and private enterprise resource planning (ERP) have received increasing attention. However, several prior studies have investigated the factors that affect cloud system adoption for either public or private cloud systems. This article attempts to compare public and private cloud ERP. A research model is developed based on Two-Factor Theory and empirically test our hypotheses by collecting 253 public cloud samples and 227 private cloud samples. The results show that system quality and perceived ease of use positively affect switching benefits, which in turn positively affect switching intention. Security risk, satisfaction, and breadth of use positively affect switching costs. The moderating effects of public and private clouds affect the relationships between perceived ease of use and switching benefits, between breadth of use and switching costs, and between switching costs and switching intention. The findings offer suggestions for promoting organizations to switch to cloud public and private ERP.
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1. Introduction

In recent years, cloud computing has become an emerging development in information technology (IT). Cloud computing provides business products, services, and solutions that are delivered and consumed in real time by organizations (Gen, 2008). According to the International Data Corporation (IDC) enterprise cloud computing survey, 28% of organizations’ total IT budgets will be dedicated to cloud computing in 2017. The organizations will move 60% of their total IT environments into clouds by 2018. Total spending on IT infrastructures for cloud environments will grow from $37.1 billion in 2016 to $59.5 billion in 2020. In 2020, spending on public and private cloud IT infrastructure will reach $38.4 billion and $21.1 billion, respectively (IDC, 2016). Thus, organizations are moving to clouds faster than expected.

Public clouds allow organizations to access online services and resources provided by cloud service providers over the internet. Organizations do not own their core IT and thus save the costs of IT personnel and infrastructure. Private clouds allow organizations to access services and resources that they already own via an intranet. Thus, organizations must own their core IT infrastructure and invest considerable resources in managing and maintaining their utilized data and services (Géczy et al., 2012; Kenyon, 2012; Welsh & Gregory, 2012).

Public and private clouds have common business benefits that attract organizations to cloud enterprise resource planning (ERP), such as system functionalities and useful interfaces (Welsh & Gregory, 2012). However, there are different challenges and barriers in adopting public and private cloud ERP. Since organizations’ access to data and services is controlled by cloud service providers over the internet, public clouds pose a greater security risk than private clouds. On the other hand, since private clouds require IT infrastructure, hardware and in-house services, they are more expensive than public clouds (Géczy et al., 2012). Thus, it is difficult to choose between public and private cloud ERP for organizations.

Prior studies have investigated the factors that affect either public or private cloud system adoption (Lian et al., 2014; Low et al., 2011). However, the two options should be considered at the same time when deciding to adopt cloud solutions, since only one of them can be chosen. The reality is that most organizations have already implemented enterprise systems prior to planning a shift toward cloud services. Since switching to public or private cloud ERP means relinquishing incumbent ERP, an investigation of adoption alone may not precisely consider the dilemma faced by organizations. Therefore, the purpose of this study is to construct a model to investigate and compare the different factors that affect organizations’ switching intention to public and private cloud ERP. In particular, this research will answer the following questions:

  • What are the factors that motivate and demotivate organizations to switch to cloud ERP?

  • What factors particularly affect switching intention between public and private clouds?

To answer these research questions, this study examined cloud-related benefits and costs based on Two-Factor Theory. Two-Factor Theory proposes enablers and inhibitors that affect user job satisfaction (Herzberg, 1995). Several information systems (IS) studies employed this theory to investigate two categories of factors that affect system adoption (Islam, 2014; Lee et al., 2009; Liu et al., 2011). In this study, we characterize the enablers and inhibitors as switching benefits and switching costs. Switching benefits and costs can be influenced by various factors (Kim & Kankanhalli, 2009; Park & Ryoo, 2013). The factors that can enhance perceived benefits are system quality, information quality, and perceived ease of use based on Information Systems Success Model (DeLone & McLean, 1992) and Technology Acceptance Model (TAM) (Davis, 1989; Davis et al., 1989). According to previous studies, the factors that increase potential costs are the security risk of new systems (Lee et al., 2013; Paquette et al., 2010; Ratten, 2016), and satisfaction with and breadth of use of incumbent systems (Park & Ryoo, 2013; Ye et al., 2008).

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