This file was presented to the IT practitioners of the Australian Computer Society, particularly the cloud computing SIG (Special Interest Group). The research project determined five components of service value in a B2B context of cloud computing: service quality, service equity, confidence benefits, perceived sacrifices & cloud service governance. Finally, the perceptions of cloud customers based on these components were then measured and established its significance through PLS-SEM (Partial least squares structural equation modelling).

1. 1
October
2013
Cloud
Compu)ng
SIG:
Components
and
Percep)ons
of
Service
Value
in
B2B
Cloud
Compu)ng
Presented
by:
Roland
Padilla

2. VIEU
Conference
Room
–
restrooms
Bathroom
facili)es
are
located
on
the
ground
floor
through
the
glass
doors,
on
the
right
as
you
walk
in.

3. First
aid
There
is
a
first
aid
kit
located
in
the
kitchen
on
the
ground
floor.
Dial
000
in
an
emergency.

4. Emergency
evacua)on
Evacuate
the
building
by
following
the
green
emergency
exit
signs
located
at
the
top
of
the
doorways.
Do
not
use
the
liOs.
The
assembly
area
for
evacua)ons
is
in
Ballantyne
St,
next
to
McDonalds.

5. Cloud computing SIG:
Components and perceptions of
service value in B2B
cloud computing
Roland Padilla
01 October 2013

6. Hallatt, A. 2013, Arctic Circle, accessed 03 September, 2013, from <http://
www.thecomicstrips.com/store/add.php?iid=32573>.

7. Presentation Outline
1. Context
2. Gap
3. Purpose
4. Research questions
5. Research design
6. Components of SV in B2B cloud computing
7. Structural and measurement model
8. Discussion
9. Managerial implications

8. Context
• KPMG shows increased adoption of cloud services across the
Australian economy would grow GDP by $3.3B by 2020.
• EU predicts a 1% GDP growth and create 2.5M jobs by 2020.
• IDC estimates 14M jobs and US$1.1trillion a year in new
business ventures by 2015.
• Forrester projected cloud services of $14.7B in 2010 will
grow to $94.1B by 2015.
• Australia’s National Cloud Computing strategy
1)European Commission (2012) Unleashing the Potential of Cloud Computing in Europe, http://ec.europa.eu/
information_society/activities/cloudcomputing/docs/com/com_cloud.pdf.
2)KPMG (2012) Modelling the Economic Impact of Cloud Computing, www.kpmg.com/au/en/issuesandinsights/
articlespublications/pages/modelling-economic-impact-cloud-computing.aspx,
3)IDC (2012) Quantitative Estimates of the Demand for Cloud Computing in Europe and the Likely Barriers to Up-
take, http://ec.europa.eu/information_society/activities/cloudcomputing/docs/quantitative_estimates.pdf
4)Journal of International Commerce and Economics (2012) Policy challenges of cross border cloud computing
www.usitc.gov/journals/policy_challenges_of_cross-border_cloud_computing.pdf.
5)DBCDE (2013) The National Cloud Computing Strategy, accessed from http://www.communications.gov.au/
digital_economy/cloud_computing.

9. Definition
Cloud computing - a model for enabling convenient, 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.
Business-to-Business - 'B2B' is defined as a commercial transaction
between businesses, such as between a cloud computing service provider
and another organization. In contrast, business-to-consumer or 'B2C'
relates to transactions existing between a provider and a single person,
purchasing goods and services for personal consumption
Service Value -“The term service value describes the focus on the role
of various service components in shaping customers’ perceptions of
value, which is an overall assessment of the utility of a product based on
perceptions of what is given and what is received.
1) Mell, P., & Grance, T. (2011). The NIST definition of cloud computing (draft).NIST special publication, 800(145), 7.
2)Lucking-Reiley, D., & Spulber, D. F. (2001). Business-to-business electronic commerce. The Journal of Economic
Perspectives, 15(1), 55-68.
3)Ruiz, D. M., Gremler, D. D., Washburn, J. H., & Carrión, G. C. (2008). Service value revisited: specifying a higher-
order, formative measure. Journal of Business Research, 61(12), 1278-1291.

10. Little is known about the
measurement of service value in
B2B cloud computing services
from a customer perspective.
Gap

11. Purpose
The aim of the research project is to measure
service value for customers of B2B cloud
computing services, and then to test a model
explaining how service value relates to both
customer satisfaction and the intention of the
customer to repurchase the service.

12. Research Questions
RQ1: What are the components of service value
in B2B cloud computing?
RQ2: How do we measure the components of
service value?

13. 1) Service quality measures customer perceptions of the quality of service
delivered by the company providing the service.
2) Service equity concerns the image or brand equity as perceived by the
customer. Brand image can engender a strong feeling of “proximity, affection
and trust” (Ruiz et al., 2008, p. 1281) in the brand purchased. Brand equity, built
up through customers sharing experiences of services delivered, is also
important in the overall equity of the service
3) Confidence benefits concerns customers “having belief, trust, or faith in an
organization, its staff and services” (Flanagan et al., 2005, p. 374) and is often
built by a company going beyond the core service delivered.
4) Perceived sacrifice measures customer perceptions of the costs, monetary and
non-monetary (e.g., time, effort), they face by purchasing a service.
Components of the established service value model
Ruiz, DM, Gremler, Dwayne D., Washburn, JH & Carrión, GC 2008, ‘Service value
revisited: specifying a higher-order, formative measure’, Journal of Business Research,
vol. 61, no. 12, pp. 1278–1291.

14. Established Model Augmented Model
Note: The established model based on Ruiz, DM, Gremler, Dwayne D., Washburn, JH &
Carrión, GC 2008, ‘Service value revisited: specifying a higher-order, formative measure’,
Journal of Business Research, vol. 61, no. 12, pp. 1278–1291.
Service Value Model

15. Qualitative à
-21 managers
-30mins average
-156-page transcript
-tested components
-additional theme
-Australia only
Quantitative
-328 participants
-nearly 10% of total
-PLS-SEM
-SmartPLS software
Instrument à
-30-item measure
-7-pt Likert scale
-Strongly disagree to
strongly agree
-Australia, US,
Europe and Asia
-Survey Monkey
Research Design
Creswell, J. W., & Clark, V. L. P. (2007). Designing and conducting mixed methods
research. Sage publications. Thousand Oaks, CA.

16. Participants
Position Industry Cloud Service
1) CIO Research IaaS
2) IT Director Legal IaaS
3) Director IT IaaS
4) Executive
Director
Education IaaS
5) Director Logistics IaaS
6) GM Hospitality SaaS & PaaS
7) GM Transportation SaaS
8) IT
Manager
Not-for-profit IaaS
9) Managing
Director
Recruitment IaaS & SaaS
10) Director Accounting SaaS
Position Industry Cloud Service
11)Investor Startup IaaS
12) Director Education IaaS
13) CTO IT IaaS
14) Solutions
Architect
Financial IaaS
15) Founder Startup IaaS & PaaS
16) IT Director Transport IaaS & PaaS
17) Manager IT IaaS, SaaS &
PaaS
18) Partner Accounting IaaS & PaaS
19) IT Manager IT IaaS & PaaS
20) Solution
Adviser
IT IaaS & SaaS
21) Executive
Director
IT IaaS & PaaS
IaaS – Infrastructure-as-a-Service
PaaS – Platform-as-a-Service
SaaS – Software-as-a-Service

17. Components of Service Value in B2B Cloud Computing
1) Service Quality (i.e., reliability, consistency,
accessibility and monitoring)
2) Service Equity (i.e., reputation and preferences)
3) Confidence Benefits (i.e., trustworthinesss, less
anxiety and increased confidence)
4) Perceived Sacrifices (i.e., cost and time)
5) Cloud Service Governance (i.e., data migration,
security, sovereignty and service levels)

18. Indicators of the Measurement Models (1/2)
Service Quality (SQ)
SQ1 This cloud provider’s service is reliable.
SQ2 This cloud provider’s service is consistent.
SQ3 When I need the cloud service, I can always access it.
SQ4 My experiences of having a cloud service monitoring tool are always excellent.
SQ5 Overall, I can rely on my cloud provider to deliver the expected services.
Service Equity (SE)
SE1 Even if another cloud provider offers the same type of cloud service, I would still prefer this cloud provider.
SE2 If another provider offers cloud computing services as good as my provider, I would still prefer my current
provider.
SE3 If another provider is not different from my current cloud provider in any way, it is still smarter to purchase
my existing provider’s services.
Confidence Benefits (CB)
CB1 I have less anxiety when I receive alert notifications whenever there is a service outage.
CB2 I have less anxiety when I use the services of this cloud provider.
CB3 Even if something goes wrong, I still have confidence in dealing with the current cloud provider.
Perceived Sacrifices (PS)
PS1 The total cost of securing this cloud service is high.
PS2 The time required to use my cloud provider’s services is high.
Cloud Service Governance (SG)
SG1 Even if my existing cloud provider’s service levels drop, I would still prefer my current provider.
SG2 I can trust my data with this cloud provider.
SG3 It is easy to migrate my data to another cloud provider.

19. Indicators of the Measurement Models (2/2)
Service Value (SV)
SV1The value I receive from this cloud provider’s service is worth my time.
SV2The value I receive from this cloud provider’s service is worth my effort.
SV3The value I receive from this cloud provider’s service is worth my money.
SV4My cloud provider’s services are competitively priced.
SV5My cloud provider offers good value for the price I pay.
SV6My cloud provider understands my business needs.
Customer Satisfaction (CS)
CS1I am satisfied with my cloud provider’s services.
CS2Overall, I am pleased when I purchase this cloud provider’s services.
CS3Using this cloud provider’s services has been a satisfying experience.
CS4I am satisfied with my cloud provider.
CS5I chose well in determining this cloud provider to deliver my business needs.
CS6Having this cloud service has made my job easier.
Repurchase Intentions (RP)
RP1 I intend to continue doing business with this cloud provider in the future.
RP2 As long as the present service continues, I doubt that I would switch cloud providers.

20. Reflective à
•Bootstrapping diagram
•Composite Reliability
•Outer Loadings
•Average variance
extracted (AVE)
•Cross Loadings
•Fornell-Larcker Criterion
•Results Summary for
Reflective Measurement
Model
Structural
PLS-SEM Procedure
Formative à
1) Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2013). A Primer on Partial Least
Squares Structural Equation Modeling (PLS-SEM). Sage. Thousand Oaks, CA.
2) Ringle, C., Sarstedt, M., & Straub, D. (2012). Editor’s Comments: A Critical Look at the Use of
PLS-SEM in MIS Quarterly. MIS Quarterly (MISQ), vol. 36, no. 1, pp. iii-xiv.
• Outer Weights
• t Value
• p Value
• Significance level
• R2
• f2
• Stone-Geisser’s Q2 and
q2 using blindfolding
• Path coefficients using
bootstrapping method
• Significance testing of
the structural path

21. Partial Least Squares Structural Equation Model
Ringle, C.M., & Alexander, S.W. (2005). SmartPLS
(2.0 beta) [software]. Hamburg, Germany:
SmartPLS retrieved from http://www.smartpls.de.

22. Discussion
1) We found broad support for the extended service value model in a B2B
cloud computing context.
2) We found empirical support for the extra component called “cloud service
governance (SG)”. Further research will explore whether SG applies to
general B2B services.
3) We did not find support for the component called “service equity (SE)” .
This may be because of the lack of maturity in the cloud computing service
market. As the market matures, re-testing may find this component also
applies. However, it may also be that SE is not as important in B2B services
compared with B2C services. Both require future research.
4) Advances the literature by extending the established B2C service value
model to the B2B context of cloud computing. Knowing this will enable
customers to better understand the components of service value. Vendors
will be able to measure how well their services are leading to value and
satisfaction for their customers.

23. Managerial implications
1) Why should managers care? There may be over-emphasis on the relative
contribution of a certain component (e.g., service equity) to service value
and ignoring other aspects (e.g., service quality). In the end, the use of weak
service value measurement results in poor decision-making.
2) Also, the formative model enables a cloud customer to ascertain which
components are the most significant in forming service value perceptions.
Customers are sacrifice conscious. For standardised cloud services,
providers should consider customer perceptions of the price and time needed
to use the cloud service, because sacrifices are weighed against the benefits
received.
3) Cloud providers can achieve competitive advantage by focusing on the
measures of service value. By improving on one or more of the significant
components, managers can positively affect service value, and, ultimately,
increase customer satisfaction and their intention to repurchase additional
cloud services.

24. Questions and Suggestions
Hallatt, A. 2013, Arctic Circle, accessed 03 September, 2013, from <http://
www.thecomicstrips.com/store/add.php?iid=85534>.