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According to the National Institute of Standards and Technology (NIST), cloud computing is an information systems model that is developed for enabling conveniently, providing access to an integrated pool of tools and resources such as integrated networks, data centers, and data stores, systems applications, etc that are a self-functioning mechanism where minimum management and human interference is involved other than backend and end-user involvement (See Figure 1).
The increasing popularity of cloud computing has resulted from the many advantages and benefits it offers to companies with e-business models and for companies trying to strengthen their internal competencies in their infrastructure. Cloud computing is not expensive wherein it allows setting up inexpensive data Centers within the IT architecture of the business infrastructure which results in operational cost efficiency. It aids in the strategy of cost leadership. With a limited number of staff to connect with and engage in inter-connectivity with the clients at the same time, replicating the existing networking framework towards cloud computing should not be difficult for Amazing Gadgets. This is the dominant advantage of cloud computing wherein it allows companies to integrate even the complex of the infrastructures via intra and extranets. Cloud computing has become an essential tool to implement knowledge-based e-business operations for companies. In the dotcom bubble of late 1990s and early 2000s, Amazon took the first mover advantage in the online retail business, in the form of using cloud computing and modernizing its data centers, information systems and computer networks, which made use minimum capacity, but maximum internal operational efficiency.
However, when a company is geographically limited, its information systems within cloud computing will not support international information storage which may pose a challenge for the company trying to expand overseas, i.e. in China.
Implementing cloud computing using infrastructure developed through benchmarking, the company will benefit from improving its information systems and communication with clients and internal employees but not necessarily gain competitive advantage as the tool is already commonly practiced by companies worldwide. Amazing Gadgets, like many other companies advancing their IT infrastructure can benchmark on Amazon’s business model that is embedded heavily with cloud computing.
The potential implications for Amazing Gadgets in the globalization of manufacturing by entering into China are: (1) the infrastructure will become more complex, as more employees will be employed and will need to be kept track of and be connected with the senior management to monitor performance and lead towards goal accomplishments. This will pose a challenge for the current IT function which is accustomed to managing information of a limited number of people; (2) the costs of connectivity with employees overseas will increase and this will reduce cost efficiency which is the ultimate goal of the company under any circumstance. The company cannot compromise of fast, easy and quick connectivity with overseas staff, especially in the beginning when the management is on its way to get settled in the new environment in the plant in China. IT systems play a crucial role in the initial phase of corporate transitions of growth, expansion or mergers and if the system is weak as it is, it will pose further challenges of coping with the change in the organisation; (3) the IT staff will face the challenge of incorporating the expanded business operations, additional employees, suppliers, and other information into the system and updating it back to back; (4) when new software will be developed, there is a chance it will add to the overall costs of the company; and (5) the company will need to hire more staff in the IT department to manage and improve the existing IT infrastructure in the company.