The Role of Virtualization Technology to Increase Operational Cost Efficiency of Indonesian SMEs: Case Study of Internet Service Providers

Abstract

This research investigates the role of virtualization technology in enhancing operational cost efficiency for Indonesian Small and Medium-sized Enterprises (SMEs), specifically Internet Service Providers (ISPs). A quantitative approach, utilizing Partial Least Squares Structural Equation Modeling (PLS-SEM) version 2.0, was employed to analyze data collected from 68 respondents representing 216 Indonesian SME ISPs. The study focused on the relationship between virtualization technology planning, adaptation capability, server consolidation services, and operational cost effectiveness. The findings demonstrate that adaptability to virtualization technology is the most significant factor influencing operational cost efficiency. Effective implementation requires careful planning and a proactive approach to adapting to the technology's demands. Server consolidation services play a crucial role in optimizing resource utilization and reducing costs while virtualization technology offers substantial benefits, SMEs should carefully assess their specific needs and resources before implementation. Factors such as infrastructure, skills, and business objectives should be evaluated to ensure successful adoption and maximize cost savings. This research provides a foundation for further exploration into the impact of virtualization technology on SMEs. Future studies could investigate the applicability of these findings in different contexts, such as other industry sectors or regions. Additionally, examining the long-term effects of virtualization technology adoption and the potential for scalability could offer valuable insights. Further research could also focus on the challenges and opportunities associated with virtualization technology adoption in SMEs with varying sizes and resources.