1

Chapter 1
THE PROBLEM AND ITS BACKGROUND Introduction

Cloud computing or cloud technology refers to the use of computing hardware and software to deliver service whenever and wherever you need it. It may also be called hosting services. The cloud basically is defined as a set of hardware, services, networks, and interfaces that combine to deliver various aspects of computing as a service.(Gartner). Cloud computing offers its benefits through three types of service or delivery models namely infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and software-as-a-Service (SaaS). It also delivers its service through four deployment models namely, public cloud, private cloud, community cloud and hybrid cloud (NIST). In a 2011 study of the information technology (IT) research and advisory firm Gartner, cloud computing tops the Asian and global technology priority list. Despite the global economic crunch, cloud technology spending is forecast to reach $207 billion by 2016. Gartner also said in their

statement, current global spending on cloud is expected to increase from last years $91 billion to $109 billion this year. What makes Cloud Computing particularly interesting from a research perspective is mainly due to its promises of Growth and opportunities to the enterprises particularly in the software Industry. As Crosby(1988) defined Growth is something for which most companies, large or small, strive. Small firms want to get big and big firms want to get bigger. Most of the organizations want to grow for prosperity, and not just only to survive. There are many components to measure said

growth; thus: profit, net profit, revenue, sales figures, number of employees, physical expansions, among others. most common indicators of growth. It is not always true that such growth depends on an organizations size; nevertheless, superior performance of small firms can lead to a proportionate growth that can be high. There are many alternative ways to achieve growth such as joint ventures or alliances, licensing of own new technology, and approaching a new market or new product development, to mention a few (Dan et al., 1985 and Crosby, 1988). The same are the

To achieve the aforementioned growth, one needs a strategy as maintained by Joel Ross and Michael Kami: Without a strategy, an organization is like a ship without a rudder, going around in circles. Its like a tramp; it has no place to go (David, 2011, p. 35). Strategic management can be defined in various ways. According to David

(2011), Strategic management is the art and science of formulating, implementing, and evaluating cross functional decisions that enable an organization to achieve its objectives. As this definition implies,

strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success (David 2011). The present study deals primarily with the operations of Commerce One Business Solution, Inc. To be sure, this undertaking conforms to the standards prescribed by the University of Perpetual Help System Dalta (UPHSD) and is anchored on the components of the Strategy Formulation Stage of the Comprehensive Strategic-

Management Model of Fred David. Several evaluation tools will be used to ascertain the most recommended strategy that will be presented in the later part of this thesis; thus: External Factors Evaluation (EFE) Matrix, Internal Factors

Evaluation (IFE) Matrix, Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Internal-External (IE) Matrix, Grand Strategy Matrix (GSM) and the Quantitative Strategic Planning Matrix (QSPM).

Background Information Commerce One Business Solution, Inc. was established to support and further expand the presence of Exacts ERP and eBusiness Software, as well as Orisofts Human Capital Management System, which Exact Philippines started in 1998. Exacts global

restructuring opened an opportunity that led to the companys formation, with the majority and key members of Exacts local core team making a unified commitment and founding Commerce One Business Solution, Inc. (Commerce One, 2012). As a provider of business solutions, Commerce One offers a wide array of products and services to suit the clients needs. Th ese are: EXACT Globe Enterprise, EXACT Synergy Enterprise, EXACT Event Manager, EXACT Macola ES, Orisoft Technology; HRMWIN, PAYWIN, TMSWIN and Payroll Outsourcing Services. The Company in study has no existing Vision and Mission. Hence, the researcher formulated the companys Vision and Mission

with the assistance of its General Manager and employees since these are integral part of creating a business strategy. In fact, David (2011), asserts that Mission and Vision are viewed as two different concepts. Mission describes what the organization is now. It emphasizes the

current situation and goals. A business Mission is the foundation for priorities, strategies, plans, and work assignments. It is the starting point for the design of managerial jobs and, above all, such affords design of managerial structures (David, 2011). Vision is used to

describe what the company would like to become in the future. Wheelen and Hunger (2006) believes that Vision puts into words not only what the company is for the moment, but what it wants to become. In the other words, it has been referred to as managements strategic vision of the firms future. Cognizant of the foregoing; the following was adopted: Vision To become the leader in the software industry in the Philippines and around the world. Mission To deliver value-added business solutions and services tailor-fit to client's requirements in the Philippines. Focusing on Small and

Medium enterprises to give them a competitive edge by offering

innovative and practical solutions available in the market and will continue to maintain expertise in this field by having highly-competent Consultants. The stakeholders are composed of: top Management, staffs, customers, and suppliers. The business is stationed in the Central

Business District of Makati City which is known the financial capital of the country. The organizational structure of Commerce One is very simple. It consists of the top management, finance and administrative,

consultancy and support, and marketing. All the directives come from the General Manager who is the designated Sales Consultant and handles recruitment for new employees. Meanwhile, the Support and Consultancy Department takes charge of Pre-Sales Activities, Product Implementation, and Post Sales Support. They likewise handle IT,

Research, and Development concerns that are responsible for other products' customization. The researcher is under the Support and Consultancy Department as A Senior Support/Consultant. Finance and Admin handles Accounting and Administrative works, including billing and collections. On the other hand, the Marketing Department is

responsible in lead generation and other marketing activities.

Commerce One was incorporated in the Philippines on March 28, 2011 as an exclusive partner of Exact Software of the Netherlands, a foreign software solution provider thereat in Delft. Exact has been

listed in the New York Stock Exchange (NYSE), Euronext Amsterdam, since June 1999. It offers business software to entrepreneurial

businesses in a wide variety of industries such as Exact Synergy which brings people, information, and business processes together; Exact Globe Next which streamlines and automates business processes; Exact Online, an online business software; and other products. Other services offered are: Support, Consultancy, Training and Education, Custom Made software, and Business Process Assessment. After a quarter of a century of providing global solutions, it has already 100,000 customers with 48 branches worldwide as of December 2012. In 2011, due to Global organizational restructuring, some of its branches including the Philippines, were constrained to cease operations. To continue rendering services to existing local customers, Exact Head Office offered Partnership to the affected Management and employees; thus, Commerce One was born. To date, Commerce One has more than 30 active clients nationwide in different industries like Construction, Pharmaceutical, Trading, Logistics, and Manufacturing. Most of the same was handed over by the aforesaid Partner. In 2011-

2012, the Return of Investment was 2.09, with a Liquidity ratio of 1.14, considered as Very Promising for the first year of its operations. Though ones business is doing good, the growth and stability of a company is very essential. In a world with compressed business cycles, new technology, international competition, and very fast information availability, running a business is ever more difficult and challenging. To remain competitive, companies, without the luxury of time to think, must react quickly to outside influences or else be left behind. Here, a good strategic plan is very vital.

Statement of the Problem

This study aimed to formulate strategies for

Commerce One

Business Solution, Inc that will help them achieve their vision in the area of Applications or Product Development. Specifically it has: 1. Identified and eliminated the major weaknesses of organization 2. Identified and defended the status against major threats to the organization the

3. Identified the major opportunities that the organization is currently facing 4. Identified and preserved increase the major strengths of the organization

Hypothesis

There is no strategy that will provide software solutions vendors strategies that will help them achieve their vision according to: 1.1 Product Development 1.2 Market Penetration

Scope and Delimitations of the study

This study involved the formulation of the best strategy for the Case company using strategic management matrices of Fred David which started in the companys environmental scanning were it focuses on its Internal and External environment. Internal analysis covers the current situation of the company, Vision, Mission and objectives while External Analysis covers the technological and competitive environment in the software industry. However the result cannot be applied to all

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kinds of organization it only offers a theoretical knowledge for any company who wants to adapt strategic management well. The organization should formulate the best strategy based on its current situation.

Definition of Terms

The following terms are given their operational definitions according to the content of the study.

EXACT Globe Enterprise is a traditional back office ERP solution focusing on automating administrative processes. Financial accounting, as well as logistics systems and processes, are directly linked to account management, human resources, manufacturing, among others. EXACT Globe is available in more than 40 languages and supports more than 40 legislations wherein the same is seamlessly integrated with EXACT Synergy.

EXACT Synergy Enterprise is a fully-integrated, browser-based front office solution that works in conjunction with traditional ERP applications. It offers a platform for online communication and

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collaboration through which it facilitates sharing information among all resources in and around an organization. It focuses on automating value creation and delivery processes and covers solution areas such as HRM and CRM as well as document, workflow, and project management.

EXACT Event Manager: with EXACT Event Manager, one can define events and actions that one would like to take in response. EXACT Event Manager becomes an early warning system and a first line of defense against a rapidly-changing business environment inherent in todays global economy. By being pro-active, one can improve

efficiency and response time, minimize errors, and provide key decision-makers with immediate real-time information.

EXACT Macola ES: next to EXACT Globe, Commerce One offers various additional local ERP back office solutions. This includes

manufacturing-oriented products such as EXACTMacola. This product works in conjunction with EXACT Synergy.

Orisoft Technology: in 2008, EXACT acquired all shares of Orisoft Technology, a key Asian HRM software company based in Kuala Lumpur, Malaysia.

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The addition of EXACTOrisoft HCM Suite further expanded Commerce Ones product offerings that are centered on three main modules:

HRMWIN: is a human resource management system which assists users in managing human resources optimally and with greater effectiveness and efficiency. It contains various functions and features which meet the essential requirements of Human Resource

Management.

HRMWIN

available

functionalities

are:

Manpower

Planning, Recruitment, Employee Profile, Leave, Training, Claims, Performance Appraisal, Career Succession Planning, Industrial Relations, Report Writer, Transportation Route, Hostel, Locker, Exit Procedures, Benefits, Business Alerts, Organization Chart, Medical Record, Security, Correspondence, and

Employee Self-Service Workflow

PAYWIN is a payroll system that allows multiple databases of information to be accessed by more than one user simultaneously. It assists users in handling the entire payroll function, ranging from capturing employees information to calculation of salaries. It is

embedded with standard reports such as government reports, pay slips,

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bank listings, and many more that meet payroll static requirements. In addition, it provides flexibility to print reports for other management purposes.

TMSWIN manages employee attendance records through a system which covers employee clock-in and clock-out times using a timerecording terminal. It integrates Orisofts Payroll System with electronic Time Clocking Devices. The software generates standard reports

pertaining to daily attendance, monthly attendance, daily exception, overtime, irregularities in clocking, late attendance, absenteeism, working less than a particular number of hours in a day, summary for overtime, total work hours, and location (department) analysis.

Payroll Outsourcing Services: one of the products or applications that Case Company is offering.

Cloud Computing. internet model .

This refers to the pay per use model using the

Mission statement. The Case Company Mission Statement To deliver value-added business solutions and services tailor-fit to client's requirements in the Philippines. Focusing on Small and Medium

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enterprises to give them a competitive edge by offering innovative and practical solutions available in the market and will continue to maintain expertise in this field by having highly-competent Consultants.

Strength. This refers to the factors that are internal to the organization, particularly referring to something valuable or useful assets or qualities that must be enhanced by people managing the organization.

Strategist. This refers to the individuals who are most responsible for the success or failure of an organization.

Strategy Formulation. This refers to the development of a vision and mission, identifying an organizations external opportunities and threats, determining internal strengths and weaknesses, establishing long term objectives, generating alternative strategies and choosing particular strategies.

Strategic Management.

This refers to

the art and science of

formulating, implementing, and evaluating cross-functional decisions that enable organization to achieve its objectives

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Strategy. This refers to a carefully devised plan of action to achieve a certain goal or objective of the company.

Threats. This refers to the factors that are external to the organization, particularly referring to something bad or unpleasant, or dangerous to the organization that must be minimized or eliminated by people managing the organization.

Weaknesses. This refers to the factors that are internal to the organization, particularly referring to the weak points or frustrations, experienced by the members of the organization disguised in the form of technical problems that must be improved or changed by people managing the organization. of the organization.

Vision Statement. This refers to the aspirational description of what an organization would like to achieve or accomplish in the short-term or long-term future. It is intended to serve as a clear guide for choosing current and future courses of action.

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Chapter 2 REVIEW OF RELATED LITERATURE AND STUDIES

This chapter deals with the summary of the readings on related literatures and abstract of related studies which have significant bearing in the present study.

Related Literature (Foreign) Cloud Computing According to the United States National Institute of Standards and Technology (NIST), Cloud Computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (for example, networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model is composed of five

essential characteristics, three service models,

Essential Characteristics: On-demand self-service - A consumer can unilaterally provision computing capabilities, such as server time and network storage, as

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needed automatically without requiring human interaction with each services provider. Broad network access Capabilities are available over the

network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (for example, mobile phones, laptops, and PDAs). The providers computing resources are

Resource pooling -

pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (for example, country, state, or datacenter). Examples of resources include storage, processing, memory, network bandwidth, and virtual machines.

Rapid elasticity -

Capabilities can be rapidly and elastically

provisioned, in some cases automatically, to quickly scale out and rapidly released to quickly scale in. To the consumer, the capabilities

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available for provisioning often appear to be unlimited and can be purchased in any quantity at any time. Measured Service. - Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (for example, storage, processing, bandwidth, and active user accounts). Resource usage

can be monitored, controlled, and reported providing transparency for both the provider and consumer of the utilized service.

Service Models: Cloud Software as a Service (SaaS). - the capability provided to the consumer is to use the providers applications running on a cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (for example, web-based email). The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings. Cloud Platform as a Service (PaaS). - the capability provided to the consumer is to deploy onto the cloud infrastructure consumer-

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created or acquired applications created using programming languages and tools supported by the provider. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has control over the deployed applications and possibly application hosting environment

configurations. Cloud Infrastructure as a Service (IaaS). the capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over operating systems, storage, deployed applications, and possibly limited control of select networking components (for example, host firewalls).

Deployment Models: Private cloud. - the cloud infrastructure is operated solely for an organization. It may be managed by the organization or a third party and may exist on premise or off premise. Community cloud. - the cloud infrastructure is shared by several organizations and supports a specific community that has shared concerns (e.g., mission, security requirements, policy, and compliance

20

considerations). It may be managed by the organizations or a third party and may exist on premise or off premise. Public cloud. - The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services. Hybrid cloud. - The cloud infrastructure is a composition of two or more clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (for example, cloud bursting for load-balancing between clouds).

Cloud Computing Challenges

Furth (2010), cited Leavitt (2011) the new paradigm of cloud computing provides a number of benefits and advantages over the previous computing paradigms and many organizations are adopting it. However there are still a number of challenges, which are currently addressed by the researchers and practitioners in the field. They are briefly presented below. Performance - The major issue in performance can be for some intensive transaction-oriented and other data-intensive applications, in

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which cloud computing may lack adequate performance. Also, users who are at a long distance from cloud providers may experience high latency and delays. Security and Privacy - Companies are still concerned about security when using cloud computing. Customers are worried about the vulnerability to attacks, when information and critical IT resources are outside the firewall. The solution for security assumes that that cloud computing providers follow standard security practices. Control - Some IT departments are concerned because cloud computing providers have a full control of the platforms. Cloud

computing providers typically do not design platforms for specific companies and their business practices. Bandwidth Costs - With cloud computing companies can save money on hardware and software; however they could incur higher network bandwidth charges. Bandwidth cost may be low for smaller Internet-based applications, which are not data intensive, but could significantly grow for data-intensive applications. Reliability - Cloud computing still does not always offer roundthe-clock reliability. There were cases where cloud computing services suffered a few-hours outages.

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In the future, we can expect more cloud computing providers, richer services, established standards and best practices. In the

research arena, HP labs, Intel, and Yahoo have launched the distributed Cloud Research Test Bad, with facilities in Asia, Europe, and North America, with the objective to develop innovations including cloud computing specific chips.

Six principles for successful Cloud adoption Global non-profit IT association ISACA has issued Guiding Principles for Cloud Computing Adoption and Use, a useful guide featuring six key Cloud Computing principles to ensure, or at least improve the chances of, successful adoption. The Enablement Principle - Plan for Cloud Computing as a strategic enabler, rather than as an outsourcing arrangement or technical platform. To plan strategically for Cloud adoption and use, enterprises need to: (1) Treat Cloud Computing adoption and use as a strategic business decision. (2) Make informed decisions, considering both business and operational needs and the benefits that can be provided by Cloud Computing. (3) Communicate Cloud Computing arrangements and agreements to internal parties to ensure proper alignment and consistent oversight. (4) Periodically review

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organizational strategies and the contribution of IT to ensure that Cloud initiatives maximize value delivery, risk management and resource utilization. The Cost/Benefit Principle- Evaluate the benefits of Cloud acquisition based on a full understanding of the costs of Cloud compared with the costs of other technology platform business solutions. To properly evaluate the costs and benefits of Cloud Computing, enterprises need to: (1) Clearly document expected benefits in terms of rapid resource provisioning, scalability, capacity, continuity and the cost reductions that the Cloud services offer. (2) Define the true life-cycle cost of IT services provided internally or through a provider to have a basis for comparing expected and received value. (3) Balance cost with functionality, resilience, resource utilization and business value. (4) Look beyond cost savings by considering the full benefits of what Cloud services and support can provide. (5) Periodically evaluate performance against expectations The Enterprise Risk Principle - Take an enterprise risk management (ERM) perspective to manage the adoption and use of cloud. To understand the risk implications of Cloud Computing,

enterprises need to: (1) Consider the privacy implications of co-mingling data within the virtualized computing environment. (2) Evaluate privacy

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requirements and legal restrictions, considering client needs as well as provider restrictions and capabilities. (3) Determine the accountability addressed in SLAs, the ability to monitor performance and available remedies. The Capability Principle - Integrate the full extent of capabilities that Cloud providers offer with internal resources to provide a comprehensive technical support and delivery solution. To leverage both internal and Cloud provider resources effectively, enterprises need to: (1) Understand the human and technical resource capabilities that exist in the current infrastructure and how a Cloud strategy will impact the need for these or other resources. (2) Define the capabilities that a Cloud provider will make available as well as constraints on these resources, including periods of unavailability or priority of use. (3) Consider emergency situations and resource requirements necessary to determine causes, stabilize the environment, protect sensitive and private information, and restore service levels. (4) Determine how policies, practices and processes currently support the use of technology; how transitioning to a Cloud solution will require policy, practice and process changes; and the impact these changes will have on capabilities. (5) Ensure that service providers can demonstrate that personnel understand information security requirements and

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are capable of discharging their protection responsibilities. (6) Ensure that internal staff members have the skill and expertise to coordinate activities with Cloud providers and that they are engaged in Cloud service acquisition and ongoing management. (7) Ensure that effective channels of communication are provided with provider management and key specialists, particularly for problem identification and resolution. The Accountability Principle - Manage accountabilities by clearly defining internal and provider responsibilities. To ensure that

responsibilities are clearly understood and individuals and groups can be held accountable, enterprises need to: (1) Understand how traditional responsibilities are assigned and implemented within the existing organizational structure and as a part of policies and practices to determine how these are addressed within Cloud solutions. (2) Determine how for responsibilities Cloud between are tenant and provider how

organizations

solutions

assigned

and

communications between accountable individuals and groups will be facilitated. (3) Ensure that processes and procedures provide a mechanism to ensure that responsibilities are accepted and

accountabilities are clearly assigned. (4) Maintain within the governance structure a means of reviewing performance and enforcing

accountabilities. (5) Consider the risk to the enterprise as part of the

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enterprise risk management program, the impact of potential lapses in assigned responsibilities, or the impact of not being able to assign accountabilities. The Trust Principle - Make trust an essential part of Cloud solutions, building trust into all business processes that depend on Cloud Computing. To ensure that business processes that depend on Cloud Computing can be trusted, enterprises need to: (1) Clearly define confidentiality, integrity and availability requirements for information and business processes. (2) Understand how reliance on Cloud Computing solutions may impact trust requirements. (3) Structure the efforts of security, risk management and assurance professionals within both tenant and provider organizations to ensure that trust requirements are known and satisfied. (4) Monitor changes in business use of Cloud Computing, vulnerabilities associated with Cloud solutions, and implementations across tenant and supplier environments to ensure that threats to trust can be identified and resolved. (5) Ensure that Cloud infrastructure, platform and software service providers

understand the importance of trust and create solutions that can be trusted. (6) Provide ongoing assurance that information and information systems can be trusted.

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Related Literature (Local) Cloud Computing Benefits

According to Microsoft Philippines, Microsoft Cloud Computing for SMBs Philippines, the benefits of Cloud Computing are apparent. Here, it has been said that subscribing to software delivered over the web enables ones business to take advantage of enterprise-class software without the burden or cost of managing the technology yourself. There are many benefits to cloud computing, including the following: (1) cost savings: renting software in the cloud on a pay-

as-you-go basis eases cash flow; (2) lower IT support costs: one always has to have the latest versions of software without the need for IT support; (3) mass storage: renting storage is cheaper than buying extra disk space for PCs; (4) reduced risk: data security is hosting a companys problem instead of personal ones; (5) access anywhere: get ones documents over the web from home or just about anywhere else.

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Strategic Management

Related Literature (Foreign)

Definition and Concepts Strategic management is a set of managerial decisions and actions that determines the long-term performance of a corporation. It involves environmental scanning (both external and internal), strategy formulation (strategic or long range planning), strategy implementation, and evaluation and control. They emphasize analyzing and evaluating external opportunities and threats in terms of an organizations strengths and weaknesses (Wheelen & Hunger 2006). From the perspective of David (2011), Strategic Management can be defined in various ways; thus, it is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives. As this definition implies, strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success.

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Kaplan and Norton (2004) saw company strategy as an added value that is planned to be produced to customers and shareholders. Here, continuous, specific capability improvements and alignments with customer needs are crucial.

Coulter

(2005)

defined

strategic

management

as

those

organizational decisions and actions, in which organizational members analyze the current situation, decide on strategies, put those strategies into action, and evaluate, and modify or change strategies. Strategy implementation means putting the organizations various strategies into action. It is putting theory into practice. Strategy evaluation is the

process of examining how the strategy has been implemented as well as the outcomes of the strategy. The same takes stock of the actual implementation of the strategy and its effectiveness. Employees should monitor both the actual implementation of the strategy and the performance outcomes of strategies that have been implemented. If these do not measure up to the expectations or strategic goals, then the strategy itself or the implementation process may have to be modified or totally changed. The discrepancies identified will inform the Definitely, an in strategic

organization what action to take next if need be. organizations employees play an important role

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management. important

Although an organizations top managers have several leadership responsibilities in the strategic

strategic

management process, managers and employees at other levels throughout the organization are also important to the process (Coulter, 2005).

Benefits

As per David (2011), the benefits of strategic management is dispensable for a company to be more pro-active than reactive in shaping its own future; it makes an organization to initiate and affect activities so that it can exert control over its own destiny. At present,

the benefits of strategic management begin to be recognized and realized by more and more people, no matter small business owners, chief executive officers, or presidents and managers of many for-profit and non-profit organizations. The basic benefit of strategic management has helped organizations formulate sound strategies by using the more systematic, logical, and rational approach to strategic choice (David 2011).

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Figure 1. Benefits of Strategic Management

Figure 1 above illustrates the benefits of a firm that does strategic planning. An efficient strategy requires all employees to help

accomplish a mission; thus, the whole process of strategic management is a good way to motivate all managers and employees to develop dedication to the company. First of all, it helps them enhance

communication, the employees began to know what the company is doing, how to achieve the goal so that they involve themselves with the firm and maintain a greater commitment for it. Here, the managers and employees become more creative and hard-working when they gradually understand each other. Finally, the company will succeed with the effort of the employees (David, 2011). To be specific, benefits consist of financial benefits and nonfinancial benefits. Financial benefits include improvement in sales, profitability, and productivity. A good strategic management can

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achieve the mission and objectives of the company; hence, the profits will come naturally (David, 2011). Meanwhile, there are many non-

Financial Benefits; these are: (1) it can improve understanding of competitors strategies. A good SWOT can help us to understand the

difference with competitors, including awareness of threats; and (2) it allows reducing resistance to change. Here, more and more

opportunities can be exploited in the process; (3) It defines management problems objectively; (4) it provides a framework for a company to coordinate and control the activities; (5) it promotes the communication among employees and managers; and (6) it encourages strategic thinking, inspiring people think more on the future of a company (David, 2011).

Figure 2 The Strategy-Formulation Analytical Framework

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The Input Stage The input tools require strategists to quantify subjectivity during early stages of the strategy-formulation process. Making small decisions in the input matrices regarding the relative importance of external and internal factors allows strategists to more effectively generate and evaluate alternative strategies. Good intuitive judgment is always needed in determining appropriate weights and ratings (David, 2011).

The Matching Stage The matching stage of the strategy-formulation framework consists of five techniques that can be used in any sequence: the SWOT Matrix, the SPACE Matrix, the BCG Matrix, the IE Matrix, and the Grand Strategy Matrix. These tools rely upon information derived from the input stage to match external opportunities and threats with internal strengths and weaknesses. Matching external and internal critical success factors is the key to effectively generating feasible alternative strategies (David, 2011).

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The Decision Stage Analysis and intuition provide a basis for making strategyformulation decisions. The matching techniques just discussed reveal feasible alternative strategies. Many of these strategies will likely have been proposed by managers and employees participating in the strategy analysis and choice activity. Any additional strategies resulting from the matching analyses could be discussed and added to the list of feasible alternative options. Participants could rate these strategies on a 1 to 4 scale so that a prioritized list of the best strategies could be achieved. Quantitative Strategic Planning Matrix is being used.(David, 2011)

Related Literature (Local)

Strategic Management Process According to Camatog (2012), citing Cruz (2007), there are five Inter-related tasks: (1) forming a strategic vision of what the companys future business make up will be where the organization is headed so as to provide long-term direction, delineate what kind of enterprise the company is trying to become, and infuse the organization with a sense of purposeful action. The vision of a company must ideally be a

35

balance between its big, hairy, and audacious long-term goals and its core values and core purpose which is a companys reason for being; (2) setting corporate objectives which means converting a companys vision into performance outcomes for the company to achieve. These must be specific, measurable, attainable, and time-bound results of activities; (3) crafting corporate strategies to achieve desired objectives. These strategies must be based on an analysis of the

different external environments as well as the internal environment of the corporation, the personal values of the decision-makers of the corporation, and societal expectations; (4) implementing and executing the chosen strategies efficiently and effectively. This means that any change in strategies will also require changes in the companys structure, systems, staff, skills, styles, and shared values or culture; and (5) evaluation performance and initiating corrective adjustments in vision; long term direction; objectives; strategies or implementation in the light of actual performance, experience, changing conditions, new ideas, and new opportunities. monitoring and control system. This requires the installation of a

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Chapter 3
METHOD AND PROCEDURE

This chapter presents the research frameworks, methods used, sources of data, respondents of the study, research instruments and techniques. Research Design To gain better understanding of the dimensions of the problems, an Exploratory Research is employed. According to Ghauri (2005),

Exploratory Research exists when the problem is not specific or not clear at the start of the research. Although the need for a research or search for knowledge is evident, the actual problem is still to be discovered in the course of the research. Applying it to this

undertaking, the researcher made observations on the current situation of the organization and conducted informal interviews with the General Manager and employees. The Descriptive Method shall likewise be had to achieve research objectives. In descriptive researches, the problem is clear and understood at the start of the research (Ghauri 2005). Data is

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systematically gathered to address this problem indicating a very focused and very directed research methodology. methodologies were Three main

used for data collection: first, the researcher

undertake a management audit; this covers the companys Internal and External Environment. Afterwards, the list was classified as: Strengths, Weaknesses, Opportunities, and Threats based on the Key Result Areas identified in the Mission of the company. Second, a Management Survey was distributed to get quantified results to answer the research questions. Third, Interviews with the General Manager and employees was done to understand and analyze the results.

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Research Framework
1. Theoretical Framework

Figure 3 A Comprehensive Strategic-Management Model

The study focus on the Commerce One Business Solution, Inc. current situation Utilizing Strategic Management Model of Fred David(2011) as presented in the Figure 3 above.

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There are 3 stages of strategic Management: (1) strategy formulation includes developing a vision and mission, identifying an organizations external opportunities and threats, determining internal strengths and weaknesses, establishing long term objectives,

generating alternative strategies and choosing particular strategies to pursue; thus: A Vision is a road map of companys future. A Mission

statement is the purpose of, or reason for, the organizations existenc e. A strategies is a comprehensive plan stating how the organization will achieve its Vision-Mission and goals objectives. They maximize

competitive advantage and minimize competitive disadvantages; External opportunities and external threats refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization in the future. Internal strengths and internal weaknesses are an organizations controllable activities that are performed especially well or poorly. They arise in the management, marketing, finance/accounting, production/operations, research and development, and management information systems activities of a business. (2) strategy implementation requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed. Strategy

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implementation includes developing a strategy-supportive culture, creating an effective organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing information systems, and linking employee compensation to organizational performance; (3) strategy evaluation is the final stage in strategic management. Managers desperately need to know when particular strategies are not working well. Indeed, strategy evaluation is the primary means for

obtaining this information. All strategies are subject to future modifications for external and internal factors are constantly changing. The three fundamental strategy-evaluation activities are: (1) reviewing external and internal factors that are the bases for current strategies; (2) measuring performance: and (3) taking corrective actions. undertaking will focus on Strategy Formulation. This

41

2.

Conceptual Framework
INPUT PROCESS OUTPUT

From Review of Related Literature Cloud Computing : definitions, essential characteristics, model, services, advantages, disadvantages, adaptation Basic Strategic Management Model of Fred David: Environmental Scanning (SWOT analysis) Develop VISION and MISSION

Analysis of the capability of the company Using the following Matrices; IFE, EFE, IE, SWOT, GRAND and QSPM

Proposed Cloud Computing Strategy for Commerce One Business Solution, Inc.

FEEDBACK :Strategy Monitoring and Evaluation

Figure 4 Research Paradigm. In the Input stage, it contains the Review of the Related Literature pertaining to Cloud Computing definitions, essential characteristics,

42

model, services, advantages, disadvantages, adaptation. it also includes the Develop VISION and MISSION and the Basic Strategic Management Model of Fred David, Environmental Scanning (SWOT analysis). In the Process stage is the analysis of the capability of the company through observation this is then used as a management survey. The survey was then tabulated and used several matrices to come up with the best strategy. These matrices are ; External Factors Evaluation (EFE) Matrix, Internal Factors Evaluation (IFE) Matrix, Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, InternalExternal (IE) Matrix, Grand Strategy Matrix (GSM) and the Quantitative Strategic Planning Matrix (QSPM). In the Output stage is the Proposed Cloud computing Strategy for Commerce One Business Solution, Inc.

Research Instrument
Management Survey Form shown in Appendix A was used in conducting Management survey to Case Companys Stakeholders . The responses will identify what are the Strengths, Weaknesses,

Opportunities and Threats affecting the organization. (Direction : Please check answer in the appropriate column beside each statements.)

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Data Management
Data Population In this study the researcher used purposive or judgement

sampling technique. Under this scheme, the participants are chosen based on the judgement of the researcher to be representative of the population. The researcher selected almost all the members of the

companys stakeholder except for the customers where in the researcher selected only those customers that contribute 70% to the total revenue of the company.

Sample Size

Table 3.1 Statistical Population.

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The population used in the survey is composed of the companys stakeholders; they are: the Board of Directors, which is also the Top management, Finance and Admin, and personnel. Only one supplier was included in the survey, which is the Exact partner; here, 100% output was attained.

Data Collection

The researcher observed the following procedures in collecting the data: a. The researcher talked to the Companys Managing Director concerning the researchers intention; b. Once approved, the questionnaires were distributed to Top management and the employees. c. An e-mail was sent to the supplier and customers with a request to answer the survey attached to the document. d. The respondents were given one week in answering the questionnaires; e. After one week, data was collected from the respondents; and

45

f.

After collection, the questionnaires were checked; data was then collated, tabulated, and computed.

Statistical Treatment of Data

As per the Research Instrument used and shown in Research Instrument, the following were used to treat the data described in Data Management. Note that the survey used was directed to predetermined participants, and not thru random sampling population. The same

implies that the validity of the data is based on specific and identified people for the whole strategic model revolves around business applications controlled by a few and directed individuals (as in the matter on who would be the top management of organizations). Furthermore, since this research is exploratory in nature, data gathered followed a strict flow of logic which must not be confused with simpler descriptive type of researches. Regarding Statistical Measurements, for data to be meaningful, measurements have to be applied in the data. These measurements create the necessary parameters on how to analyze the data to provide the needed conclusions and recommendation addressing the problem of this research.

46

There are different levels of measurements used in this research. The first is the nominal level where numbers are used to classify objects or observations (Ghauri, 2005). Such are seen in the observation tables where various items in the surveyed were needed to be classified between two outcomes. The first is to determine if an

observation is positive or negative anchored on its effect on the organization. The second is to determine if the observation is internal

or external based on the stakeholders being affected or are responsible for the effects of the observation. A correlation is then

made between the two sets of observations where something that is (i) positively internal is a strength; (ii) negatively internal is a weakness; (iii) positively external is an opportunity; (iv) and negatively external is a threat. By classifying the observations, the organizations SWOT is

thus determined. The second level is the ordinal level wherein some numbers used have specific relationships indicating rank or priorities (Ghauri, 2005). The same are manifest when the classified SWOTs are measured based on its importance or effect to the organization. Nevertheless, due to the nature of synthesizing SWOTs into one strategy, careful consideration must be made when determining ordinals. A scale from 1 to 4, where 4 indicates the strong side of the

47

scale and 1 represents the weak side of the scale was had. Getting the midpoint indicates that a score of 2.5 indicated the neutral ground of the scale. Applying it to the thesis, each SWOT is consequently measured as to whether it promotes something positive (4) or denotes something negative (1) with respect to its effect on the organization. A strong strength garnering a score of 4 or above 2.5 indicated that the strength has a big effect on the organization; that a need to preserve or improve its capabilities can be a reason for any strategies to be formulated. Taking into account that weaknesses have a negative effect on the organization, a rating of 1 or lower than 2.5 indicates the weakness has a big effect on the organization; that a need to eliminate the weakness must be a top priority in strategy formulation. The same will hold true for opportunities and threats. Opportunities with ratings of 4 or above 2.5 means opportunities that must be realized, while threats with scores of 1 or below 2.5 deals with threats that the organization must be conscious of and defend against its disastrous effects. In the survey, however, considering that the participants may not have the proper training to analyze the scales characteristics, the survey must be carefully analyzed. The survey provides 5 choices per observation; namely, highly agree, agree, neutral, disagree, and highly disagree with options for being not applicable or refuse to answer. For

48

the positive observations, such as strengths and opportunities, any totally agree answer can merit the score of 4 and follows the decreasing rule of 1 as a totally disagree answer; on the other hand, for the negative observations, such as weaknesses and threats, any totally agree answer merits the score of 1 (reverse of strengths and weaknesses) for the rule of strategic management requires that all SWOTs must be synthesized and positive observations have a reverse effect as compared to negative observations. The third level is the interval level where the number of constant intervals between numbers are significant (Ghauri 2005). These are obvious in two aspects of the survey depicted in the IFE and EFE tables. The first is when each observation is weighted according to its importance to the general condition of the organization. Ascertaining

the weights can be subjective; thus, an equal weight distribution is often suggested to the researcher. Still, if there is time and enough data in the industry, a more sophisticated assignment of weights for each observation can be made. The second application is when quantifying the importance of each participant in the survey. Since this is a

strategic management research, it is important to value the source of information and the status of each survey participant. Using a total sum of 1.00 or 100%, the participants are weighted where the most

49

influential participant should garner the highest weight.

The actual

percentages are only significant when the participants are compared to each other based on the assumed weights. Participant A may be twice as important as participant B; hence, the weight assigned to participant A is doubled as compared to participant B. Although the assignment of weights must be verified as well using other variables, the error in the measures can be compensated by the reason why the participants are being weighted. Stated otherwise, the weights can be debatable, but the aspect of ranking the participants according to their importance is taken cared of, making the final ratings of each observation valid (logically speaking). Another application of the interval level method is when each of the observations is rated based on the weighted average of each participant and their individual ratings. Each rating given by each

participant us subjected to the weight assigned to each participant and a weighted average is computed to get a very objective rating for each observation. For instance, the rating that will be given to a particular strength was computed by averaging the ratings given by the participants of the survey; however, such rating did not use straight averaging but was even subjected to the weight of each participant.

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The fourth level is the ratio scale level where the measurement starts from an absolute value (for example, zero) and the distance from the absolute value indicates significant information regarding the item being measured (Ghauri, 2005). These are noticeable when adding all the weights computed for each observation to craft a statistical conclusion. In the IFE and EFE tables, since the scale used in the rating is between 1 and 4 (and the measurement does not start with an absolute value of zero), the midpoint indicates the neutral ground when assessing an organization. Having a score greater than 2.5 tells one

that the organization is internally stable (or it can manage its strengths and weaknesses) or externally stable (or it can manage its opportunities and threats). The same logic appears in the QSPM, another table used to determine the final strategy of the organization. Validity and Reliability of Data must also be valid and reliable before any analysis is done. As a matter of fact, a significant step in data management is to (i) determine if a particular data is usable; (ii) disregard or remove useless data; and (iii) determine if the remaining valid data can still produce an objective and reliable analysis. Various techniques were employed to determine the validity of the data; moreover, since the sampling is directed or the participants are identified, there is a significant probability that the data gathered is valid

51

and reliable.

Another aspect that needs to be validated is on the

observations made by the researcher; the same truly depicts the true SWOTs needed to formulate a strategy for the organization. This is covered when each of the observations are ranked not by the researcher but by the participants of the research. Such removes

subjectivity/bias and pre-conclusions on the part of the proponent.

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Chapter 4 PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents the findings and interpretation of data collected via the management surveys. The data were presented and analyzed using Fred David Strategic Management Matrices. The

interpreted data formed the basis of discussions upon which recommendations and conclusions were drawn and presented in Chapter 5.

Respondents Assessment of the Instrument using the following Matrices.

Modified IFE Matrix Table 4.1 Modified IFE Matrix

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The Internal Factor Evaluation (IFE) Matrix is a strategyformulation tool that summarizes and evaluates the major strengths and weaknesses in the functional areas of a business; in the table 4.1

54

above the first column contains the Key Internal Factors identified in the management audit. This was group to Strength and Weaknesses of the Case Company. The second column is the weight assigned to each internal factors. The assigned weight is based on the effect of each

internal factors on organizational performance. The greatest effect was assigned with the highest weight. It is important that sum of all weights must equal 1.0. The column for Top Management, Admin and Finance, Supplier and customers are the major stakeholder of the Case Company. They are also weight according to their importance to the Case Company. Scores under each stakeholders columns are

composed of the weight assigned to each stakeholder multiplied to the scale assigned to each internal factors. For internal factors denoting to strength the scales are 3, 3.25, 3.5, 3.75, and 4, where 4 indicates the strong side of the scale and 3 represents the weak side of the scale. On the other hand, internal factors denoting for Weaknesses the corresponding scales are 1, 1.25, 1.50, 1.75, and 2 where 2 indicates the strong side of the scale and 1 represents the weak side of the scale. This was then tallied and totaled per group. The average weighted column is the sum total of all stakeholders scores while the weighted score column is the product of the Average weighted score and the weight of each variables. Under IFE matrix, regardless of how many

55

factors are included, the total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Total weighted scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position. Based on the result of the study, total weighted score is 2.73. This means that through the use of IFE Matrix and the given factors identified, the company was interpreted to have a strong

internal position. Though the result represents a strong side is not very strong because it is near to the average factors this indicates that the case company company. needs to strengthen more its internal aspect of the

EFE Matrix Table 4.2 : Modified EFE

56

57

The External Factor Evaluation (EFE) Matrix allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and

competitive information. In the table above the first column contains the Key External Factors identified in the management audit. This was group to Opportunities and Threats of the Case Company. The The

second column is the weight assigned to each external factors.

assigned weight is based on the effect of each external factors on organizational performance. The greatest effect was assigned with the highest weight. It is important that sum of all weights must equal 1.0. The column for Top Management, Admin and Finance, Supplier and customers are the major stakeholder of the Case Company. They are also weight according to their importance to the Case Company. Scores under each stake holders columns are composed of the weight assigned to each stakeholder multiplied to the scale assigned to each internal factors. For external factors denoting to Opportunities the scales are 3, 3.25, 3.5, 3.75, and 4, where 4 indicates the strong side of the scale and 3 represents the weak side of the scale. On the other hand, External factors denoting for Threats, the corresponding scales are 1, 1.25, 1.50, 1.75, and 2 where 2 indicates the strong side of the scale and 1 represents the weak side of the scale. This was then tallied

58

and totaled per group. The average weighted column is the sum total of all stakeholders scores while the weighted score column is the

product of the Average weighted score and the weight of each variables. Under EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. The average total weighted score is 2.5. A weighted score of 4.0 indicates that an organization is responding in an outstanding way to existing opportunities and threats in its industry. In other words, the firms strategies effectively take advantage of existing opportunities and minimize the potential adverse effects of external threats. A score of 1.0 indicates that the firms strategies are not capitalizing on opportunities or avoiding external threats. Based on the result of the study, total weighted score is 2.74. This means that through the use of EFE Matrix and the given factors identified, the company was interpreted to have a strong external position. Though the result represents a strong side, the Case Company is not very strong because it is near to the average factors. This only indicates that the case company needs to strengthen more its external aspect of the company specially in its competitiveness to other vendors.

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IE Matrix

Figure 5 IE Matrix The IE Matrix is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis. The result scores is based discussed above discussions. from IFE Matrix and EFE Matrix

On the x-axis of the IE Matrix, an IFE

total weighted score of 1.0 to 1.99 which represents a weak internal position; a score of 2.0 to 2.99 is considered average; and a score of 3.0 to 4.0 is strong. Similarly, on the y-axis, an EFE total weighted score of 1.0 to 1.99 is considered low; a score of 2.0 to 2.99 is medium; and a score of 3.0 to 4.0 is high. The IE Matrix is divided into three

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major regions that have different strategy implications.

First, the

recommendation for divisions that fall into cells I, II, or IV can be described as grow and build. Intensive (market penetration, market development, and product development) or integrative (backward integration, forward integration, and horizontal integration) strategies can be most appropriate for these divisions. Second, divisions that fall into cells III, V, or VII can be managed best with hold and maintain strategies; market penetration and product development are two commonly employed strategies for these types of divisions. Third, a common recommendations for divisions that fall into cells VI, VIII, or IX is harvest or divest. Successful organizations are able to achieve a portfolio of businesses positioned in or around cell I in the IE Matrix (David, 2011). The result of the study based on IFE weighted score is 2.73 while the EFE weighted score is 2.74. Plotting both scores in the IE Matrix, Case Company falls under Quadrant V, which manage best

with hold and maintain strategies. The recommended strategies are the following: (1) Market Penetration and (2) Product Development.

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Table 4.3 SWOT Matrix

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63

64

The

Strengths-Weaknesses-Opportunities-Threats

(SWOT)

Matrix is an important matching tool that helps managers develop four types of strategies: SO (strengths-opportunities) Strategies, WO

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(weaknesses-opportunities)

Strategies,

ST

(strengths-threats)

Strategies, and WT (weaknesses-threats) Strategies. SO Strategies use a firms internal strengths to take advantage of external opportunities. All managers would like their organization to be in a position in which internal strengths can be used to take advantage of external trends and events. Organizations generally will pursue WO, ST, or WT strategies to get into a situation in which they can apply SO strategies. When a firm has major weaknesses, it will strive to overcome them and make them strengths. When an

organization faces major threats, it will seek to avoid them to concentrate on opportunities.(David, 2011) In this study the following are suggested for SO strategies (1) Introduce Internet based product that can cater to Small and medium enterprises with lower cost (O13, O14, O15, O16, O 17, S11, S17, S2) (2) Intensify Market Penetration Strategy (S5, S6,S7,S8,S9, S10, S11, O10, O11,O121) (3) Create "add-on" to existing product like Purchase Requisition (S6, O9) WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. Sometimes key external

opportunities exist, but a firm has internal weaknesses that prevent it from exploiting those opportunities. In this study WO suggested strategies are (1) Increase Marketing efforts to penetrate other market

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specially the Small and Medium enterprises by strengthening web advertisement (W6, W7, O10, O11, O12) (2) Provide continuous training in both software and hardware to staff that will contribute in providing O13,O15). ST Strategies use a firms strengths to avoid or reduce the impact of external threats. This does not mean that a strong customer satisfaction (W1,W8,W9,W10,W3, W4, O9,

organization should always meet threats in the external environment head-on. Ins this study ST strategies are (1) Invest in new technologies such as SaaS that promise lower cost (T10, T8, T6, T10, S2, S11) , (2) Partner with other big players in the industry (T7,T8,T5, S3, S17) WT Strategies are defensive tactics directed at reducing internal weakness and avoiding external threats. An organization faced with numerous external threats and internal weaknesses may indeed be in a precarious position. In fact, a firm may have to fight for its survival, merge, retrench, declare bankruptcy, or choose liquidation (David, 2011). Recommended Strategies are (1) Acquire/develop local product that has lower cost (W5, T10 T4, T3), (2) Strengthen relationship (T1, T7,T8,T9,T5, W7). The overall strategies recommended by the SWOT matrix are; (1) Product Development, (2) Market Penetration and (3) Joint Venture. Customer

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A. Grand Strategy Matrix

Figure 6 Grand Strategy Matrix (David, 2011) The Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry) growth. According to (David, 2011) Any industry whose annual growth in sales exceeds 5 percent could be considered to have rapid growth. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix. Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent strategic position. For these firms, continued concentration on current

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markets (market penetration and market development) and products (product development) is an appropriate strategy. It is unwise for a Quadrant I firm to shift notably from its established competitive advantages. When a Quadrant I organization has excessive resources, then backward, forward, or horizontal integration may be effective strategies. When a Quadrant I firm is too heavily committed to a single product, then related diversification may reduce the risks associated with a narrow product line. Quadrant I firms can afford to take advantage of external opportunities in several areas. They can take risks aggressively when necessary. Firms positioned in Quadrant II need to evaluate their present approach to the marketplace seriously. Although their industry is growing, they are unable to compete effectively, and they need to determine why the firms current approach is ineffective and how the company can best change to improve its competitiveness. Because Quadrant II firms are in a rapid-market-growth industry, an intensive strategy (as opposed to integrative or diversification) is usually the first option that should be considered. However, if the firm is lacking a distinctive competence or competitive advantage, then horizontal integration is often a desirable alternative. As a last resort, divestiture or liquidation should be considered. Divestiture can provide funds needed

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to acquire other businesses or buy back shares of stock. Quadrant III organizations compete in slow-growth industries and have weak competitive positions. These firms must make some drastic changes quickly to avoid further decline and possible liquidation. Extensive cost and asset reduction (retrenchment) should be pursued first. An alternative strategy is to shift resources away from the current business into different areas (diversify). If all else fails, the final options for Quadrant III businesses are divestiture or liquidation.(David, 2011). Finally, Quadrant IV businesses have a strong competitive position but are in a slow growth industry. These firms have the strength to launch diversified programs into more promising growth areas: Quadrant IV firms have characteristically high cash-flow levels and limited internal growth needs and often can pursue related or unrelated diversification successfully. Quadrant IV firms also may pursue joint ventures. .(David, 2011) Case Company has an annual growth in revenues of 13 percent increase in Financial Year 2012 compared to Financial Year 2011, but has weak competitive position to compete effectively because of more big players in the software industry on the other hand local competitors has better leverage because it offers more flexible software cost compared to the case company where in the cost is dictates by the

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principal.

Case Company is positioned itself in Quadrant II wherein

recommended strategies are product development, market penetration, market development, horizontal integration, divestiture, and liquidation are the possible strategies. Recommended Business Strategies Table 4.4: Recommended Business Strategies from SWOT, IE and GSM

The table 4.4 above is a summary of the derived recommended strategies utilizing the three matrices which are SWOT, IE and GSM.

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Result shows that the top two among all strategies identified are Market Penetration and Product Development. Product development is creating new product to the current and prospective markets while Market Penetration is an extensive strategy to acquire more clients and /or customers in the market, selling COBSI products and services in the current market.

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Quantitative Strategic Planning Matrix Table 4.5 :

73

74

75

76

The Quantitative Strategic Planning Matrix (QSPM) is objectively indicates which alternative strategies are best. It is a tool used that allows strategists to evaluate alternative strategies objectively, based on previously identified external and internal critical success factors. Like other strategy-formulation analytical tools, the QSPM requires good intuitive judgment.(David, 2011). At the left side of the table is the list of Case Companys key external opportunities/threats and internal strengths/weaknesses which was directly taken from the EFE and IFE Matrix. The second column is the weight where in each key factors are assigned particular weight according to their importance to the case company. Strategies columns is derived from the recommended

strategies table 4.5. For the Case Company Strategy Column 1 is Product Development while strategy column 2 is Market Penetration. Attractiveness Scores (AS) was assigned to each key external or

internal factor, one at a time, considering the question Does this fa ctor affect the choice of strategies being made? for the factors answering YES to the question the researcher assigned the following

Attractiveness Scores ; 1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive. For the factors that answering NO to the questions means there has no effect to choice being made then it was leave blank. The Total Attractiveness Score is

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the product of Weight assigned to each factors by the Attractiveness scores in each rows. The Total Attractiveness Scores indicate the relative attractiveness of each alternative strategy, considering only the impact of the adjacent external or internal critical success factor. The higher the Total Attractiveness Score, the more attractive the strategic alternative (David, 2011). Higher scores indicate more attractive

strategies, considering all the relevant external and internal factors that could affect the strategic decisions. For the group under Strengths the total score was 1.7362 for Product development while 1.6969 for

Market Penetration. For group under Weaknesses the total score was 0.5655 for Product Development while 0.6897 for Market Penetration. The total scores for Internal Environment factors are 2.3017 for Product Development while 2.3866 for Market Penetration. Meanwhile for the Group under Opportunities the total score was 1.8813 while 1.7642. for the group under Threats the total scores was 1.1222 and 1.0444. Total External Environment Scores 3.0036 and 2.8087. Finally the QSPM is the sum of the scores of Internal and External Environment with

3.0036 for Product Development and 2.8087 for Market Penetration

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Chapter 5
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

This chapter discusses the summary of findings, conclusions and recommendations of the study. The main object of this study was to provide the best management strategies for the Case Company that can be utilized to stay competitive and become preferred partner in the software industry. To accomplish the objective of study, the data gathered were treated, analyzed and finally interpreted. The particular issues that the study attempted to work into the following: Identify and eliminate Major weaknesses of the

organization Identify and defend against major threats to the organization Identify the Major opportunities the organization is currently facing Identify and preserve or increase the major strengths of the organization

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Conclusions

For the basis of the finding, the researcher presents the following conclusions;

1. IFE : the matrix total average result is 2.74 indicating that the organization is internally strong 2. EFE : the matrix total average result is 2.73 indicating that the organization is externally strong 3. SWOT under this matrix upon consolidating all the suggested strategy, the three strategies are Joint

Venture, Market Penetration, Product Development 4. IE based on the IFE 2.74 and EFE 2.73 this is under the Quadrant V which suggested Hold and Maintain and suggest the following strategy; Market Penetration and Product development. 5. GRAND - the matrix results the recommended strategies are Market Penetration, Market Development, Product Development, Horizontal Integration, Divestiture and Liquidation.

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Strategies from the QSPM Matrix

As a result of QSPM, Product development strategy obtained the highest score. In table 4.4 of this chapter, market penetration and product development all got the score of 6, which means that most of the matrices suggested these two strategies. But only stand out and the main business strategy that attained highest score in QSPM is Product development. Looking into the results of QSPM assessment, there are several strategies that the company can adopt. On top of it, these strategies can actually be combined to be able to maximize desired results to be able to achieve the corporate objectives set. Going into critical assessment of the companys internal scanning; it is obvious that it has a lot of improvement that needs to work on particularly to its Marketing. The brand and product awareness of the consumers will depend on this aforementioned sector. Thus, it will create greater impact if the organization will focus on Product Development strategy. Since the bulk of the work will fall under the consultancy and support division the management should create a development team that will focus on the development of the pilot project.

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A second strategy to follow after a successful implementation of Product Development is Market Penetration.

Recommendations

In view of the findings and conclusions, the researcher offers the following recommendations;

1.

Case Company should embark on a Product Development program. Foremost in the plans of the company is an adoption of the Cloud Computing System model.

2.

The researcher was able to think of the following product development implementations : Cloud Computing, Add-on Customization using Software Development Kit for the existing product and Reports customizations to be built-in in the existing system.

3.

Upon collecting the opinions of the senior management through interviews, Cloud Computing was the best implementation program for a product development strategy for Case Company since this is for the long time direction of the company. Details are as follows :

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a. Software as a Service is the best model to adapt since the company is in software business. b. Create a Development team to handle the project. c. For pilot project, Focus the development on the Financial module for smaller scope.

Proposed Strategy Implementation Plan

Objectives To create a Software as a Service System focusing on Financial Module.

Implementing Policies Scrum Methodology will be used. Since Scrum is an iterative and incremental agile software development framework for managing software projects and product or application development. Its focus is on "a flexible, holistic product development strategy where a development team works as a unit to reach a common goal" as opposed to a "traditional, sequential approach". This is very flexible in a very small team.

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Implementation using TRACKS Time Schedule for Implementation the product development will covered the Financial Year 2013- 2014. Resources needed for implementation is the Product

development team this is consists of System analysts (consultants) who analyze, design specifications based on the existing software, documents and test. The Programmer on the other hand is responsible in developing the software based on the System Analysts

specifications while Software Architect is responsible to the facade of the system. Action Programs or Steps for Implementation (1) hire

programmers with programming

experienced on Visual basic .net of PHP System Analysts(Consultant) start

language.

documenting the process of the existing software to be migrated in SaaS including database design. The Cost of Implementing the software is approximate 1.5 million in two years covering salaries of at least 3 employees including hardware they will be using. Knowledge needed for proper implementation . It is important that before implementing the strategy the following areas should be revisit/studied thoroughly: software knowledge, business process,

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Service Level Agreement, Legal and compliance issues, Security practices and business integrity, Infrastructure to be used. Supply Chain for implementation is very minimal for the development phase only hardware like laptops, printers, USB and

power supplies will be used that can be bought one time. Table 5.1

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Other Possible Future Researches

The results of this thesis indicate a number of strategic suggestions and opportunities for improvement. The next stages would be to decide what strategy to make and to implement. After a certain period, an evaluation of the chosen strategy would be advantageous, in order to analyze whether the direction is correct. Strategic

enhancements should be made whenever needed.

Future research

should focus on the analyzing the effectiveness of the chosen strategy of the organization.

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Hawthorne, J. & Pygmalion. Competitive Business. Paulson, D. (2002). Caring Business. Paraview Special Editions Trade Paper Original, December 15, 2002.

Web Articles Commerce One Business Solution, Inc. , Retrieved December 8, 2012, from http://www.commerceone.com.ph.

Exact, Exact Profile, Retrieved December 8, 2012, from http://www.exact.com. Narasimhan, B. (2009). Cloud Computing Saving Real or Imaginary? Appirio. Retrieved on December 10, 2013, from http://blog.appirio.com/2009/04/cloud-computing-savings-realor.html. NIST, Special Publication, The NIST Definition of Cloud Computing. Retrieved January 19, 2013 from http://csrc.nist.gov/publications/nistpubs/800-145/SP800-145.pdf. Microsoft, Microsoft Cloud Computing for SMBs in the Philippines. Retrieved January 7, 2013, from www.microsoft.com. Top 10 Software Vendors . Retrieved February 9, 2013, from http://www.rediff.com/business/slide-show/slide-show-1-tech-worldstop-25-software-companies/20120112.htm#10 ISACA, Six principles for successful Cloud adoption. Retrieved January 14, 2013, from http://www.businesscloud9.com/content/six-principles-successful-cloudadoption/8305,

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Gartner , Cloud technology improves PHL businesses. Retrieved February 2, 2013, from (http://www.gmanetwork.com/news/story/269679/scitech/technology/clo ud-technology-improves-phl-businesses-gartner and http://www.networkworld.com/supp/2009/ndc3/051809-cloudcompanies-to-watch.html?page=2).

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APPENDICES Appendix A Certification from the Dean

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Appendix B Management Survey

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Appendix C Respondents Profile

Top Management (Working Directors) General Manager Consultancy & Support Manager Marketing Manager Consultants

Admin and Finance Accountant Admin Staff Supplier Exact Software Customers Active Customers in different industries.

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Appendix D Letter to the Respondents

September 15, 2012

Dear Customer Good day! Im currently having my Thesis in my MBA program. My thesis topic is about Strategic Management which to provide Commerce One Business Solution Inc. the best strategy. In order to come up with this, I need your opinion as one of our customer regarding the internal and external factors that affecting the organization through a Management Survey. May I then request to please fill-out the attached Management Survey, then send it back to me after one week. Your cooperation is highly appreciated. Thank you very much.

Regards, Katherine Aguilar Support/Consultant

Unit 804, Cityland 10 Tower II 6815 H.V. Dela Costa St., cor. Ayala Ave., Salcedo Village, Makati City, Philippines T +63 2 328 5810 to 13 F +63 2 310 5817 katherine.aguilar@commerceone.com.ph www.commerceone.com.ph

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Appendix E Letter to De La Salle University Library, Taft Campus

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Appendix F Letter to De La Salle University Library, Makati Campus

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Appendix G Letter to Ateneo de Manila University, Graduate School of Business Library, Makati Campus

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Appendix H Certification of Statistical Treatment

CERTIFICATE

This is to certify that the Thesis entitle Proposed Cloud Computing strategy for Commerce One Business Solution, Inc. of Katherine M. Aguilar was statistically analyzed by the undersigned.

sgd MR. DURWIN SANTOS LEAD Professor Ateneo de Manila Schools Statistician

Noted:

sgd ATTY. IRINEO F. MARTINEZ, JR., Ph.D. Dean, Graduate School

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Appendix I Certification of Editing

CERTIFICATE

This is to certify that the Thesis entitle Proposed Cloud Computing strategy for Commerce One Business Solution, Inc. of Katherine M. Aguilar was edited / read by the undersigned.

sgd JAIME G. ANG, Ph.D. Editor

Noted:

sgd ATTY. IRINEO F. MARTINEZ, JR., Ph.D. Dean, Graduate School

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Appendix J Internal Factor Environment Tabulation Table

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Appendix K External Factor Environment Tabulation Table

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Appendix L

Board of Directors

Organizational Chart

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Appendix M Managerial Interview

Another survey interview was conducted specifically to the senior management of the company. The interviews were made purposely to determine the best strategy to be implemented

The following questions were asked:

1. Based on the Matrices in the study Product development and Market penetration are the major strategy.

Do you agree that Product development is the priority strategy?

If we adopt Product development what will be the product are we going to develop?

2. What Cloud Computing Model are we going to use.

3. What will be our long term plan in implementing this Product development Strategy.

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Appendix N Software Vendors Market Shares

Top 10 Software Vendors 1. Microsoft 2. IBM 3. Oracle 4. SAP 5. Ericsson 6. Hewlett Packard 7. Symantec 8. Nintendo 9. Activision Blizzard 10. EMC Total Software Revenues Total Revenues in $ (mn) 54,270 22,485 20,958 12,558 7,274 6,669 5,636 5,456 4,447 4,356 144,109 Market Share 37.66% 15.60% 14.54% 8.71% 5.05% 4.63% 3.91% 3.79% 3.09% 3.02%

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Appendix O Cloud Computing Framework (NIST)

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Appendix P Cloud technology improves PHL businesses Gartner

August 14, 2012 In a 2011 study of the information technology (IT) research and advisory firm Gartner, cloud computing tops the Asian and global technology priority list. In fact, despite the global economic crunch,

cloud technology spending is forecast to reach $207 billion by 2016, also according to Gartner. Here, current global spending on cloud is expected to increase from last years $91 billion to $109 billion this year. Cloud computing or cloud technology refers to the use of computing hardware and software to deliver service whenever and wherever one needs it. It may also be called hosting services. The cloud basically is defined as a set of hardware, services, networks, and interfaces that combine to deliver various aspects of computing as a service. Cloud technology offers diverse benefits, especially to

businesses that operate from multiple sites, said DTSI Group president and chief executive Miguel Garcia, who also serves on the BPAP board of directors. DTSI Group is a company specializing in providing technology, and advanced communication services.

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Based on a survey by the Business Processing Association of the Philippines IT-business process outsourcing (IT-BPO) and shared services companies in the Philippines are seen to invest more in cloudbased technology to decrease operating cost, and to compete globally. Cloud technologys reach in the Philippines is not limited to technology centric industries as companies in the healthcare, financial, and insurance industries utilize the technology to support an increasing range of business processes, Garcia said. However, Garcia also said that despite the increasing take-up rate of cloud technology in the country, some companies and industries remain hesitant to adopt the technology because of security issues. "For us, thats actually a non-issue. By outsourcing security and leveraging public and private clouds to deliver applications, companies are ensured of 24/7, world-class security support, Garcia said. (http://www.gmanetwork.com/news/story/269679/scitech/technology/clo ud-technology-improves-phl-businesses-gartner and http://www.networkworld.com/supp/2009/ndc3/051809-cloudcompanies-to-watch.html?page=2)

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Curriculum Vitae

Name Address Date of Birth Gender Place of Birth Civil Status Spouse

: : : : : : :

Katherine Mauricio Aguilar B3 L30Villa Celina 3, Bayan Luma 7, Imus, Cavite May 3, 1977 Female Quezon City Married Renan D. Aguilar

Educational Background
Graduate Studies : Master of Business Administration (CEMBA Program) University of Perpetual Help System Dalta Las Pinas City 2013 Bachelor of Accountancy University of Perpetual Help System Dalta Las Pinas City 2005 Computer Secretarial and Business Management IETI, College, Alabang, Muntinlupa City 1995 Secondary : St. John Institute Bautista, Pangasinan 1993

Tertiary

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Elementary

Bautista Elementary School Bautista, Pangasinan 1989

WORK EXPERIENCES CONSULTANT/SUPPORT Commerce One Business Solution, Inc. 24th Floor Axa life Bldg. Gil Puyat Avenue, Makati City April 4, 2011 to Present CONSULTANT Exact Software Philippines 10th Floor Rufino Pacific Tower 6784 Ayala Avenue, Makati City August 2008 to March 31, 2011 SR. SUPPORT /COORDINATOR Kaiser dela Cruz Consulting Incorporated LORMA Medical Center, San Fernando, La Union July 2006 to August 2008 SYSTEMS/NETWORK ADMINISTRATOR MIS Department UPHR Medical Center, Pamplona, Las Pinas City October 21, 2002 to July , 2006 IT SUPPORT STAFF MIS Department University of Perpetual Help Rizal/UPHR Medical Center Pamplona, Las Pinas City January 1, 1996 October 20, 2002 CLERK/TYPIST Management Services Department UPHR Medical Center, Pamplona, Las Pias City July11, 1995 December 31, 1999