Exploring the Swedish Manufacturing Markets

During spring 2016 I was in a tough decision. I had completed almost all my master’s courses but I didn’t have a subject for my upcoming master’s thesis. I wanted to make my thesis as a contract to a company, and I wanted that the subject was new and interesting. Luckily, I had participated in 2015 course Success factors for Startups where Jarl Matti from Jakamo was presenting how to manage and lead successfully startup. During winter 2016 Timo from Jakamo was presenting in usability course how to design and lead software development through user experience. I was impressed by both presentations and I decided to contact them. After going through some conversations with Jakamo staff, Jakamo finally gave me master’s thesis subject in summer 2016.

Jakamo, as you might know, provides highly efficient and user-friendly supply chain collaboration platform where large and small firms can create and contribute value to their supply chains. Jakamo had gained already quite good saturation in Finnish manufacturing markets, but as any company, they were lacking clients. Jakamo was looking to the west and gave me master’s thesis subject to conduct a market analysis on how Swedish manufacturing markets perceive cloud computing.

Research questions and cloud markets

During summer 2016 I went through more than 150 pages of scientific articles which discussed the success factors in cloud computing and supply chain collaboration. After gaining the knowledge from these papers, I formulated the research questions as follow:

  1. What factors affect to cloud computing adoption in Swedish manufacturing companies, and what plans these companies have for the future related to cloud computing services?
  2. Which are the success factors when deploying cloud computing in Swedish manufacturing companies?


Figure 1:
Traditional computing capacity provisioning (Armbrust et al 2009)

The master’s thesis’s literature review covered mostly the cloud computing. Here’s one insight which I found to be the reason why in many cases cloud computing outperforms traditional computing usage. Traditional computing usually involves clients or their IT provider to operate their software and hardware with fixed costs and fixed capacity, while cloud computing is flexible for both. Based on Amstrong et al. (2009) findings, traditional computing is either under-provisioned or over-provisioned (Figure 1). When compared to on demand cloud computing (Figure 2), the computing capacity is allocated based on demand, thus reducing computing waste.


Figure 2:
Cloud computing capacity provisioning (Armbrust et al. 2009)

According to Statistics Sweden, manufacturing industry is lacking behind the industry average on cloud computing adoption. The statistics didn’t give deeper insight into this but one could argue that manufacturing industry uses more legacy systems and have bigger and slower processes than the industry average. Biggest gaps between manufacturing and industry average were in cloud database and cloud CRM adoption (Figure 3).

 

Figure 3: Comparison between manufacturing and all industries in cloud adoption

 

Results & Implications

The mixed approach was chosen as the research method. The mixed research combines quantitative and qualitative research approaches. Data was gathered using our university’s own online semi-structured form. Interview questions and hypotheses for quantitative and qualitative research parts were based on prior literature. Total 186 SCM-related managers working in large Swedish manufacturing companies were contacted. Out of these 6 managers answered.

 

Table 1: Details on respondents

Manager Company size in employees Gender Position / Role (if applicable)
A Over 10000 Male Business Development Director
B Over 10000 Male
C Over 10000 Male Supply Chain Director
D Between 1000 and 5000 Female
E Over 10000 Female Supply Chain Development
F Between 1000 and 5000 Female Procurement Manager

Most of the results from this thesis support existing literature and studies in cloud adoption and deployment. The only exception was a question about complexity. In previous studies, cloud computing was perceived to be complex. This study showed with mean 3.833, on 5 Likert scale 5 being the most convenient, that cloud services are easy to use. This can be because the cloud services have taken a well-established role in IT services. Previous studies, which the hypotheses were based on, were conducted between 2011 and 2014, so there has been 3-6 years’ time to develop.

Table 2: Comparing hypotheses to the results

Hypothesis Expected effect on cloud adoption or deployment Mean Confirmation
H3: Relative advantage

 

Positive 4,167 Confirmed
H4: Technology readiness

 

Positive 4,333 Confirmed
H6: Complexity Negative 3,833 Not confirmed

 

H12: Relational IT Capability (Trust) Positive 4,833 Confirmed
H13: Communicating cloud benefits to client employees Positive 4,167 Confirmed

What’s completely new in this study is that communicating cloud benefits to employees has a positive effect on cloud deployment (Hypothesis 13). This idea was derived from Garrison, G et al 2012 and 2015 work that if the cloud trust is an important factor between cloud supplier and client organization, it might also work to the other way, trust between client employer and their employees. The CI 0.86 with probability α = 1 % and mean 4.16 show that this hypothesis is positive and true. The result is also supported by open questions. Manager E said that staff has in many cases negative attitude to new technologies in the beginning but it normally improves over time. Because of this, manager E argued that it’s important to put time into change management. Manager F said that changes in a company take time to adopt but normally receive a positive response if you see the benefit.

When recalling the research question one which was the following:

“What factors affect to cloud computing adoption in Swedish manufacturing companies, and what plans these companies have for the future related to cloud computing services?”

It can be concluded based on this semi-structured survey that relative advantage, technical readiness, and convenience are positive factors that motivate companies to acquire cloud services. Answering to the second sentence in research question, 5 out of 6 interviewed managers said that their company has a digitization strategy. In summary, companies were investigating how cloud computing could be used to gain business benefits and they were looking ways of automating processes through cloud services. Companies were acquiring cloud services because they had useful characteristics such as scalability, transparency and convenient implementation. Reduced costs, automation and improved processes, SaaS superiority over traditional setup and communication with partners were useful from the business perspective. Lastly, managers mentioned that cloud enables a convenient way of analysing big data and creating data visualization. Research question two was as follow:

“Which are the success factors when deploying cloud computing in Swedish manufacturing companies?”

The aim with the question was to find the success factors in cloud deployment and if the companies have done required actions to meet those. Managers perceived that they have concentrated their resources to have cloud-related technical readiness (mean 3,5) and enough resources to educate personnel to harness cloud benefits (3,25), they perceive trust as an important factor with cloud supplier (mean 4.883) and communicating cloud benefits to personnel (mean 4.166)

What’s next?

When looking into the bigger picture, it’s clear that also manufacturing companies are starting to acquire and harness cloud related technology. This is because the market has become so saturated that in many applications, the cloud based technology surpasses traditional computing. Generally speaking, successful future companies will be those who can harness available IT technology for their own business operations combined with supportive IT systems such as cloud computing. This demand pushes all global companies to change their processes agiler and more customer responsive.

Read the master’s thesis in here:

https://www.tritonia.fi/en/e-theses/abstract/7506/SaaS+adoption+in+Swedish+manufacturing+markets

 

 

About the author. Victor Slätis wrote this master’s thesis during summer 2016 to spring 2017. Currently, he oversees and develops HUS billing system servers and databases at CGI. At free time, he hunts Pokemons in Pokemon GO with his girlfriend, plays guitar in a metal band and loves jogging in brisk Finnish forests.

Sources:

Armbrust, M., Fox, A., Griffith, R., Joseph, A.D., Katz, R.H., Konwinski, A., Lee, G., Patterson, D.A., Rabkin, A., Stoica, I., Zaharia, M. (2009) Above the Clouds: A Berkeley View of Cloud Computing. EECS at UC Berkeley. Retrieved August 11, 2016, from https://www2.eecs.berkeley.edu/Pubs/TechRpts/2009/EECS-2009-28.html

Företagens användning av IT 2016. (2016). Stockholm, Sweden: Statistiska centralbyrån.

Garrison, G., Kim, S., & Wakefield, R. L. (2012). Success factors for deploying cloud computing. Communications of the ACM Commun. ACM 55:9, p. 62.

Garrison, G., Wakefield, R. L., & Kim, S. (2015). The effects of IT capabilities and delivery model on cloud computing success and firm performance for cloud supported processes and operations. International Journal of Information Management 35:4, p. 377-393.

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