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SaaS Adoption in Software Development

Company in Thailand

Siva Trichaisri

Abstract

Software as a Service (SaaS) has been a focus of attention in recent years. A growing

number of countries, as well as Thailand, have promoted the SaaS market accordingly.

The study in this research is interested in the adoption of SaaS in the software

development company in Thailand. The study will apply the framework of technology-

organization-environment (TOE), which provides the factors that affect organizations to

adopt new information technology in three perspectives, which are technology,

organization, and environment. The directions for future research if this research result in

a successful outcome is also discussed in this paper.

1 Background

A cloud based application, in form of SaaS, is a model where an application is provided to

customers using the internet technologies. Application downloading or installation is not

necessary. The clients basically access the system via a web browser and paying a

usage fee.

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IT departments are interested to use cloud solutions because they lack of resources to

support the software. One of the advantages of SaaS is the ease of implementation.

Implementation takes time and resources of the client company. With SaaS solutions,

hardware, software, and security setup are all managed by the vendors. The

implementations are very light and very fast. Another advantage of SaaS is the ease of

upgrade. The clients do not have to struggling with to keep their software up to date as

this is also managed by the vendors (Kelly 2017). The fact that SaaS is provided through

the internet channel provides the ease of access to the users. For multinational

companies, it is much easier to roll out and support the systems globally. SaaS can also

provide high power of computing therefore it is not necessary to leverage the users’

devices or machines to perform heavy computing tasks (P.K. Senyo et al 2017).

The characteristics of SaaS are very beneficial to global software development (GSD).

GSD is the exercise of having software developers distributed to multiple geographical

locations. The purposes are to reduce labor costs, and increase development capacity

(Al-qadhi and Keung, 2014). Virtualizations, scalability, zero investment on infrastructure,

high performance, low cost, and multi-tenancy are the important cloud features that

support Agile development (Younas et al. 2016).

There are numerous software development tools in a cloud environment to support

development team. For instance, Jira are used to support sizable systems, manage

software problems and improve reliability. Assembla, and AgileFant are used as project

management tools that help in planning and decision making. Projects are built in the

effective way by adopting these tools (Younas et al. 2016).

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Table 1 – Agile and Cloud tools (Younas et al. 2016)

Haig-Smith and Tanner (2016) stated that cloud computing (CC) supports software

development in regard to simplicity. The development team can directly focus on the

tasks that create value, without having to maintain and support the development

environments.

In order to get a deeper understanding how the software development organizations in

Thailand make a decision whether to use SaaS to support their business, the following

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research question is addressed in this paper: What factors are significant for software

development organizations in Thailand to adopt cloud based solutions in form of SaaS?

2 Literature Review

In the studies of technology adoption at the organization level, Wu (2011) used

technology acceptance model (TAM; Davis 1986) to study the SaaS adoption. However,

Wu also has pointed out that TAM cannot be appropriate for application in all kinds of

situations because they fail to highlight the significance of marketing effort, security, and

trust.

Yeh et al. (2014) utilized the technology-organization-environment framework (TOE;

Tornatzky and Fleischer 1990) to study the factors influencing IT capabilities for new

technology adoption. Awa et al. (2017) and Premkumar (2003) used modified version of

TOE. The framework was modified by adding two additional domains, which are Task

and Individual domains, to study technology adoption in organizations.

TOE is well suited for the study at the enterprise-context adoption. Other technology

adoption theories, such as technology acceptance model (TAM), are mostly techno-

centric and therefore address the adoption at individual level. Whereas TOE focus more

on the organizational elements (Awa et al. 2017).

TOE framework has been widely used in the studies of IT/IS, especially for cloud

computing researches (P.K. Senyo et al 2017).

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Table 2 – Research frameworks used in cloud computing researches (P.K. Senyo et al 2017).

3 Theoretical Background

The framework of technology-organization-environment (TOE) was presented by

Tornatzky and Fleischer in 1990. TOE provides the features that affect organizations to

embrace new information technology in three perspectives, which are technology,

organization, and environment (DePietro, Wiarda, & Fleischer, 1990).

The three factors influence how an organization sees the need to adopt new technology.

 The technology domain includes internal/external technologies that are related to

the organization, which may comprise of processes and equipment.

 The organization domain refers to the characteristics and resources of the

organization. The organizational factors that have been widely studied are degree

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of support from high level management, the size of the organization,

communication channels, formalization, and centralization (Premkumar 2003).

 The environment domain includes the structure and the industry size, the

company’s competitors, the regulatory environment and the macroeconomic

situation.

Figure 1 - Technology-Organization-Environment framework

Technological Innovation

Decision Making

Technology

OrganizationEnvironment

4 Theoretical Model and Hypotheses

4.1 Theoretical Model

The proposed theoretical model is based on TOE theory discussed in the theoretical

background. The model has been constructed to identify the 7 research hypotheses and

the expected causal relationships among the variables.

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Figure 2 - Conceptual Model

Perceived Simplicity Perceived

Compatibility Perceived Benefits

Technology

SaaS Adoption

H2H1 H3

H6

H7

Partnership Quality

Mimetic Pressure

Environment

Management Support

IT Human Resource

Organization

H4

H5

4.2 Research Hypotheses

The hypotheses are associated with the casual effect relationship between variables as

illustrated in the theoretical model.

4.2.1 Technology Domain

H1: Perceived simplicity in manipulating SaaS application significantly supports adoption

Ease of use of the technologies has been widely studied in IT implementation, especial in

technology acceptance model (TAM). It has been found to be strongly influencing

adoption (Premkumar 2003). Awa et al. (2017) found that perceived simplicity in handling

innovative technology significantly encourages adoption. The simplified operation of a

system speeds up the adoption process.

H2: Perceived compatibility between SaaS application and organization environment

significantly supports adoption

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Compatibility of a new technology is how it is perceived to fit with the existing

technologies, work procedure, and corporate culture (Awa et al. 2017, Premkumar 2003).

Awa et al. (2017) confirmed that when new technologies offer compatibility and

integration the adoption is faster.

H3: Perceived benefits has a significant positive direct effect on SaaS adoption

Perceived benefits, which can also be referred to perceived usefulness in TAM, is how a

new technology is perceived as better than the existing one (Premkumar 2003). Awa et

al. (2017) found that new technologies have higher possibility to be implemented when

they are perceived to offer relative advantage over the existing ones.

4.2.2 Organization Domain

H4: Management support helps SaaS adoption to be faster

Top management support gives well-founded directions within the organizatio