Impact of Cloud Computing on Sme’s in Automobile Sector Essay Example

have introduced a concept called "Cloud Computing," recognizing this trend. This model involves sharing web infrastructure for tasks such as internet data storage, scalability, and computation.

According to NIST - "Cloud computing is a model for on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction."

The automotive SME's of India are among the country's largest and fastest-growing industry. High growth rates in the automobile sector have been observed in previous years, and it is expected to grow at a CAGR of 15% over the next 5 years. These facts indicate that the automobile industry will significantly grow in the next 5 years.

As with any advancing industry or sector, numerous challenges are sure to follow. In order for automobile companies to survive global competition, it has become crucial for them to constantly innovate, upgrade, and evolve according to changing market dynamics. Collaboration is believed to be the key to innovation.

The Internet has facilitated collaboration in the automobile sector among various stakeholders such as suppliers, original equipment manufacturers (OEMs), and other suppliers. Cloud computing is expected to have a significant impact on all industries, including the automotive supply chain. Therefore, it is essential to understand the effects of cloud computing in the automobile industry and its potential advantages for manufacturers.

Objective of the Study

This study aims to analyze the future evolution and challenges that the automobile industry will face in the next 5 years while identifying areas within the industry that can benefit from cloud computing. The findings from this analysis will help prepare the industry for future advancements by providing suitable solutions.

Literature

Review

Existing literature on cloud computing presents diverse opinions and conflicting definitions.

According to McKinsey ; Co., Cloud Computing has multiple definitions, but for this exercise, we will follow the Gartner definition: "a style of computing where massively scalable IT-enabled capabilities are delivered 'as a service' to external customers using Internet technologies." McKinsey also presents a classification of software-as-a-service that includes delivery platforms like managed hosting and cloud computing, as well as development platforms like cloud computing and application-led platforms such as SaaS platforms.

In today's business landscape, companies globally are striving for dynamic supply chains that can adapt to volatile market conditions and customer demands. The projected market size for cloud-based services is approximately $150 billion by 2014. Cloud computing can play a significant role in enhancing the supply chain by enabling flexible and innovative transaction-based models that are crucial in the current times.

Cloud computing offers opportunities for companies to enhance their performance by expanding into new markets, developing innovative services, and adapting quickly to changing market demands. The specific approach taken by each business in transitioning their processes to the cloud may vary. The automotive industry is predicted to experience substantial growth over the next five years, requiring small and medium-sized enterprises (SMEs) to establish robust local supply chains in order to compete internationally. Technology plays a critical role in eliminating barriers related to time and distance between companies and countries, such as expensive hardware infrastructure, limited software connectivity, and costly service structures. Automobile-component suppliers are classified into different levels including OEMs (Original Equipment Manufacturers), tier-1 suppliers, tier-2 suppliers, and so forth.

The industry orders flow from consumers at the bottom of the supply chain, pass through

automakers, and then rise to the third tier suppliers. In the Automobile Industry, both domestic and multinational OEMs have worked closely with their Tier I suppliers to encourage high levels of ICT adoption among them. This has had a cascading effect, as Tier I suppliers have also motivated Tier II suppliers and beyond.

The significance of Information Technology has grown steadily, serving not only as a means for operational delivery but also as a strategic asset that differentiates companies. To achieve this, enhanced collaboration among trading partners is essential. This collaboration can yield multiple benefits, including the sharing of industry best practices and optimizing the use of information and technology. Additionally, it can contribute to establishing benchmark standards.

Small and medium-sized enterprises (SMEs) often lack awareness about high-quality solutions offered in the market and encounter difficulties accessing reputable ICT vendors. Even within the same manufacturing sector, successful solutions may be confined to specific clusters without widespread adoption in other clusters. Consequently, SMEs frequently depend on local options for both products and suppliers. By facilitating easier access to ICT solutions and improving availability, SMEs will have greater opportunities to find suitable solutions that meet their business requirements.

The local IT vendor ecosystem must be built and developed to meet the specific needs of SMEs. Additionally, eliminating market information asymmetries will allow local IT vendors and other technology providers to expand their customer base. The key challenge for automakers is effectively managing global supply chains, which directly impacts stakeholders such as suppliers, dealers, OEMs, and distributors. This requires end-to-end integration of IT systems. Terms and Definitions: Cloud Computing is the delivery of computing services over a network as a utility,

while SMEs refer to companies with a headcount or turnover below certain limits defined by the Ministry of Small Scale.

The amount for a small enterprise is Rs. 5 crore and for a medium enterprise is more than Rs. crore but does not exceed Rs. 10 crore. OEM’s, which stands for Original Equipment Manufacturer, are manufacturers of products or components that are bought by a company and sold under that company's brand name. OEM refers to a replacement part made by the original part's manufacturer.

Automobile-component suppliers can be categorized into different levels, including: OEMs (Original Equipment Manufacturers), tier-1 suppliers, tier-2 suppliers, and so on. The industry orders start from the consumers at the bottom of the supply chain, pass through automakers, and then progressively reach third tier suppliers.

ICT - Information and communications technology encompasses the integration of telecommunications, intelligent building management systems, and audiovisual systems within modern information technology. The surveys and data collection efforts aim to gather primary data specifically for a research project that investigates the impact of cloud computing on India's automobile sector.

SAMPLING AND DATA COLLECTION METHODOLOGY

This study examines the potential of cloud computing for small and medium enterprises (SMEs) operating in India's automobile sector. Its primary objective is to analyze the extent to which SMEs in India can benefit from implementing cloud computing.

The main aim of this study is to create a research model that justifies the preference for using cloud computing in Indian SMEs within the Automobile sector. A significant challenge will be acquiring financial data from select SMEs and determining which data is relevant for analysis.

DATA COLLECTION METHODS

To gather primary data for this study, telephonic interviews will be conducted with

IT personnel from approximately 30 Indian SMEs. These interviews will follow a structured format with specific questions. Additionally, an email-based questionnaire will be sent out to users of various traditional ERP software in these 30 Indian SMEs to collect general user opinions for hypothesis testing.

Secondary data for this study was collected through various sources. The internet was used to visit the websites of ERP software providers using SaaS technology and gather data on the cost per user. Cloud vendors' websites were also consulted for data gathering. Journals such as IEEE, ACM, and The Computing Journal were used to collect relevant data. Additionally, the Economics Times daily business newspaper and magazines like The CTO Forum, Business Week, Digit, and Chip were utilized.

The research framework of the study includes the following variables: supply chain management, centralization of resources, cloud computing, saving in time, greater environmental sustainability, business process optimization, total quality management, moderating variable, intervening variable, dependent variable, and independent variable.

In this study, the dependent variable is business process optimization. The research primarily focuses on optimizing the business process by improving supply chain management, centralizing resources, and implementing total quality management.

Therefore, Business Process Optimization is dependent on various factors. It aims to optimize process flows regardless of their size or the boundaries of any application or company. It connects process design and process maintenance. The variables that influence Business Process Optimization include Supply Chain Management. Small and medium-sized enterprises can enhance their global supply chains by utilizing pay-as-you-go logistics services offered through the Internet "cloud." These services enable faster and more efficient sharing of shipment information with suppliers, transportation providers, and end users. Additionally, they utilize advanced

software tools to process this information effectively, thereby reducing supply-chain costs.

By leveraging on-demand services available over the Internet, companies gain access to a logistics platform that they could not afford to build or maintain on their own. This also gives them a strategic advantage over competitors who still rely on outdated tools like Microsoft Excel spreadsheets, email, and Electronic Data Interchange (EDI) formats for managing trade compliance, transportation, and logistics processes. Additionally, resources can be centralized in the cloud and allocated to users based on their specific needs. This means that if one user requires more infrastructure for peak load capacity, it can easily be allocated to them without the need for additional installations. By sharing resources among multiple users, the cloud enables improved utilization and efficiency.

The text discusses the use of Total Quality Management (TQM) in organizations to improve internal processes and customer satisfaction. Implementing TQM can result in reduced maintenance costs, improved performance, and increased customer loyalty. Our study also suggests that optimizing business processes involves better supply chain management, applying TQM principles, and centralizing resources.

HYPOTHESIS DEVELOPMENT

Cloud Computing is a subscription model accessed through the web that allows users to pay based on their usage needs. This model provides IT services and capabilities online while storing data on a third-party server.

Cloud computing is a viable option for users who pay either hourly or monthly due to its cost savings and benefits. Our hypothesis, labeled as H1, suggests that cloud computing services can lead to lower annual costs per user

compared to traditional ERP systems, although there is also the potential for higher expenses. Furthermore, cloud computing offers greater flexibility than conventional ERP systems but may be less adaptable. We have designated these hypotheses as H2, H3, and H4.

FINDINGS AND CONCLUSIONS It is imperative for the Indian Automotive Industry to maintain its global competitiveness in order to sustain previous levels of growth. In a highly competitive market, successful automobile companies require an effective and efficient supply chain. The management of global supply chains poses a significant challenge that affects all stakeholders involved (suppliers, dealers, OEMs, distributors) and necessitates complete integration of IT systems. Current trends in the automobile industry and supply chain emphasize the need for refining strategies through increased flexibility and real-time data sharing. Business innovation has accelerated, making Information Technology crucial for operational delivery and as a strategic asset for differentiation.

Greater collaboration is needed between trading partners to facilitate the sharing of industry best practices, effective utilization of information technology, and the establishment of benchmark standards. Increased IT spending on Supply Chain Management aims to reduce time to market and product life cycles, as well as enable rapid customization of products to meet evolving market demands. Additionally, determining which data should be transferred and its significance, as well as identifying the necessary internal infrastructure between partners, are essential considerations. Proper training is essential for employees to maximize the benefits of their SCM systems. Furthermore, Cloud Computing is expected to play a significant role in the IT sector, with many business processes transitioning to the cloud due to its unique advantages. However, it is important to note that not all supply chain processes can

be immediately migrated to the cloud.

In order for a business process to transition to the cloud, certain filters or specific criteria must be established. As cloud computing gains acceptance in the automotive industry, more business processes will be moved to the cloud. This integration of different cloud-based applications and processes will improve cross-enterprise and extended supply chain analysis and reporting, resulting in faster and more effective decision-making through timely, accurate, and comprehensive information management.