1 CHAPTER I INTRODUCTION 1. CHAPTER I INTRODUCTION 1.1 Research Background As global development continues to advance, technology plays a crucial role in transforming various aspects of society. In the 21st century, the most significant leap has been witnessed in the development of digital technology, which has revolutionized information, communication, and connectivity (Conceição et al., 2020). This digital evolution has paved the way for the adoption of Industry 4.0 technologies, including cloud computing, big data analytics, and the Internet of Things, enhancing automation, networking, and overall efficiency (Javaid et al., 2022). Businesses, in particular, have been completely impacted by these advancements, leading to significant changes in how they operate and compete in the market. For example, digital technology implementation for big data across industries has enabled firms to store and process massive amounts of data, leading to better decisions and more effective use of resources. This results in better economic and environmental performance, which reduces cost, increases productivity and minimizes waste and energy consumption (Li, Dai & Cui, 2020). One of the key technologies driving this change is cloud computing, which is used to store data and exchange information through internet-connected servers, databases, and networks (Moura & Hutchison, 2016). On-demand self-service, quick adaptability, and controlled service are also some of the main characteristics of cloud computing. It allows users to access data more efficiently and supports the use and development of applications (Golightly et al., 2022). Moreover, cloud computing enables businesses to expand their digital networks without the need to build expensive data centers, which makes it beneficial for organizations with limited resources (Islam et al., 2023). Improved access and internet bring new opportunities for business engagement, especially for MSMEs, that leads to possible growth and expansion in such business endeavors (Wulandari et al., 2023). MSMEs refer to individually established business enterprises owned by individuals, groups, or communities (Purba, 2019). According to a press release from the Coordinating Ministry for Economic Affairs of the Republic of Indonesia in 2023, the Ministry of Cooperatives and MSMEs stated that Indonesia has 65.5 million MSMEs and contributes up to 61% to the country’s GDP. 2 The connections between cloud computing and MSMEs in Indonesia have become increasingly evident through the development and growing utilization of cloud computing. In 2020, 70% of MSMEs in Indonesia used cloud computing, surpassing the adoption rate of larger corporations (Waranggani, 2020). This high adoption rate highlights the significance of cloud computing in enhancing MSMEs' productivity and overall business performance by reducing operating costs and providing convenient access to a variety of services without significant capital investments (Nurhaliza, 2023). As a result, the integration of cloud computing is proving to be a pivotal factor in the digital transformation of MSMEs in Indonesia. An example of cloud computing usage by an MSME that has transitioned into a startup is E-Fishery, an agricultural business from Bandung that has successfully utilized cloud technology to optimize its operations. By collecting data through an application, E- Fishery has reduced costs and increased production (Amazon Web Services, 2023).