Investigating the Impacts of Cloud Computing on Firm Profitability

Abstract

The advent of cloud computing has been a technical revolution that transformed how organizations access, store, and process information. This research proposes that cloud deployment can have a significant impact on profitability in multiple ways. We argued that one of the most significant ways is by reducing costs by eliminating the need for businesses to invest in and maintain their own IT infrastructure, making it easier for businesses to scale their resources up or down as needed, improving agility, and providing advanced security features and tools. Additionally, cloud deployment can increase profitability through increased scalability, improved collaboration, access to new technologies such as machine learning and big data, and improved customer experience by providing faster and more reliable service. By implementing cloud deployment, businesses can also increase revenue and improve overall operational efficiency and productivity. Using the datasets of 115 firms, this research investigated the impact of various cloud-use matrices on firm profitability. The results indicate that the gross profit margins of firms are increased when services delivered via the cloud, cloud spending, best cloud governance, and the number of cloud-based applications are increased in a more concentrated market with less competition. To increase the positive impact of cloud computing on a business organization, it is important to develop a clear and comprehensive cloud strategy, establish robust security and compliance policies, invest in the necessary resources and expertise for successful cloud migration, and continuously monitor and measure the performance and effectiveness of the cloud solutions. This will help organizations make informed decisions, align their cloud investments with their overall business goals and objectives, mitigate security and compliance risks, ensure a successful cloud migration, and continuously optimize their cloud solutions for maximum value. By taking this holistic approach, businesses can ensure that they get the most value out of their cloud investments and achieve optimal results.