A Transaction Cost Perspective of the "Software as a Service" Business Model

Susarla, Anjana; Barua, Anitesh; Whinston, Andrew B.

doi:10.2753/mis0742-1222260209

Cited by 103 publications

(77 citation statements)

References 39 publications

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“…These findings expand from earlier economic literature (Bucovetsky and Chilton, 1986;Bulow, 1982;Flath, 1980), and studies on software renting (Choudhary et al, 1998;Choudhary, 2007), which have tended to use predetermined variables applied to monopolistic market situations, and to ignore possible mixed revenue models or hybrid pricing mechanisms in situations of market competition. In addition to the selection of the revenue model, the selection of a proper pricing model is not always a simple choice between binary models, as posited by Sundararajan (2004) and Susarla et al, (2009Susarla et al, ( , 2010; in fact, the selection of the most appropriate pricing model will depend on the competitive forces in the market.…”

Section: Discussionmentioning

confidence: 99%

“…For instance, Susarla et al (2009) studied how two forms of ex-post transaction costs 5 (monitoring costs and maladaptation costs) impact on contracts between SaaS providers and customers. It appeared that transaction costs tended to lead to information asymmetry, possibly resulting in contractual incompleteness and opportunism.…”

Section: Servitization In the Context Of Cloud Computingmentioning

confidence: 99%

“…In addition, it was found that for the service provider a cost-based rent fee becomes more attractive than a fixed rent fee if there is uncertainty concerning the specification of service requirements, or if there is interdependence between the SaaS application and the IT system on the customer's side. However, for the purposes of cost reduction, a fixed rent fee is more attractive for customers (Susarla et al, 2009). In a later study, Susarla et al (2010) studied challenges in service disaggregation between the SaaS provider and the customer.…”

Section: Servitization In the Context Of Cloud Computingmentioning

confidence: 99%

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Adjusting software revenue and pricing strategies in the era of cloud computing

Ojala

2016

Journal of Systems and Software

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Recent research has recognized cloud computing as a new paradigm of servitization in which software products are offered based on service contracts. Thus, instead of selling software licenses, software vendors can rent software as a service to customers. However, it is still unclear how software providers can use software renting as a competitive strategy in the software market. Based on 37 interviews with software professionals from five case firms, this paper focuses on the connection between competitive forces and the factors influencing the selection of a pricing model. The findings indicate that servitization of the software offering makes it possible to adjust revenue and pricing strategies relative to market competition. Depending on the competitive situation in the market, firms apply mixed revenue models, or else a hybrid pricing mechanism, to protect their business against rivalry and substitutes. The software renting model has several advantages which significantly help software vendors to expand their business opportunities. However, in some cases, powerful customers are able to limit the revenue and pricing options. The findings also indicate that software renting is related to cost leadership and differentiation strategies, whereas software licensing is linked to a focus strategy.

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Section: Discussionmentioning

confidence: 99%

Section: Servitization In the Context Of Cloud Computingmentioning

confidence: 99%

Section: Servitization In the Context Of Cloud Computingmentioning

confidence: 99%

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Adjusting software revenue and pricing strategies in the era of cloud computing

Ojala

2016

Journal of Systems and Software

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“…With the rise of outsourcing, fixed-term rental or subscription to the system provided as a service by the outsourcing company has become a popular alternative. Now, cloud computing allows companies to take yet a step in the direction of infrastructure as a service and software as a service, available via the Internet, and priced on a per use basis (Mathew and Nair, 2010;Susarla et al, 2009). In other words, the pricing of the product changes from the left (i.e.…”

Section: Theoretical Discussionmentioning

confidence: 99%

How to differentiate by price: Proposal for a five-dimensional model

Iveroth¹,

Westelius²,

Petri³

et al. 2013

European Management Journal

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The purpose of this article is to analyse the repertoire of possible price models that organisations may deploy for their products and services. This is attained by developing the SBIFT model that suggests that organisations can differentiate by price along five dimensions. Previous research on pricing has been dispersed across different academic disciplines. This article offers a more integrated perspective, derived from earlier theory as well as discussions in a collaborative research project with the international telecom company Ericsson. The model can be used as a tool for price modelling in a descriptive and prescriptive sense. Altogether, this article uncovers implicit features of price models, and by doing so it illustrates how an organisation can differentiate and re-invent their offering based on price.

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“…Contract design affects the alliance partners' social interactions and relationship (Mellewigt et al, 2012;Susarla, Barua, & Whinston, 2009;Weber & Mayer, 2011) and those partners with contract design capability have a competitive advantage (Argyres & Mayer, 2007). Since it is considered impossible to cover all obligations and eventualities in a contract in advance, it has been proposed that contractual remedies (Volery & Mansik, 1998) incompletely minimise risk and only serve as a weak impersonal substitute for trust (Malhotra & Murnighan, 2002;Sitkin & Roth, 1993).…”

Section: Contract Defining Targets Structures and Processesmentioning

confidence: 99%

Benchmarking Inter-Hospital Alliances against Industry Best Practices

Wildhaber

Collerette

Pelletier

et al. 2015

MOS

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A semi-quantitative analysis of inter-hospital alliances in Germany, Canada and Switzerland was performed to: (a) Analyse the degree to which current inter-hospital alliances comply with best practices for inter-organisational business alliances; (b) identify management opportunities to improve the efficacy of hospital alliances.An alliance best practices management benchmark was compiled using literature searches and compared with actual hospital alliances. A series of interviews were conducted at 12 different inter-hospital alliances, monitoring the perceived and factual attributes relating to management processes, structure and governance.All alliances studied were perceived as successful. The healthcare contracts were short and pragmatic and management tended to be informal. There was an absence of rigorous partner selection on the basis of due diligence and no clear communicated, or monitored, alliance targets. The contracts often lacked conflict resolution, anti-solicitation and liability clauses. Clinical parameters specific to the alliance were not measured but an improvement of patient standard of care was perceived. There was a low awareness of financial parameters. Compatible IT systems / databases between the partners were lacking and institutionalised alliance capability is, in Europe, in the planning phase.Healthcare alliances have a high (perceived) success rate yet opportunities remain to improve the partner selection assessment, setting and monitoring of alliance targets and centralising alliance capabilities. Transparent performance rewards and conflict resolution mechanisms need establishing upfront.

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A Transaction Cost Perspective of the "Software as a Service" Business Model

Cited by 103 publications

References 39 publications

Adjusting software revenue and pricing strategies in the era of cloud computing

Adjusting software revenue and pricing strategies in the era of cloud computing

How to differentiate by price: Proposal for a five-dimensional model

Benchmarking Inter-Hospital Alliances against Industry Best Practices

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