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The “As-a-Service”-Paradigm and Its Implications for the Software Industry – Insights from a Comparative Case Study in CRM Software Ecosystems


Abstract and Figures

By presenting insights from our comparative case study of two CRM ecosystems, we indicate how “as-a-service”-based ecosystems differ from traditional “on-premise” ecosystems and how the particular roles of the market players might change due to the increasing diffusion of the “as-a-service” paradigm. Within the scope of our case studies, we differentiate two views on the ecosystems: the relationship between the platform provider and providers of complementary extensions (ISVs) as inside perspective and the relationship between customers and the CRM ecosystem as a whole as outside perspective. Based on transaction cost theory and intermediary theory our results let us assume that (1) “as-a-service”-based ecosystems will have a higher level of market coordination than “on-premise” ecosystems and (2) the task profiles of intermediaries and platform providers participating in “as-a-service”-based software-ecosystems will differ from task profiles in “on-premise” ecosystems. Based on these findings, we discuss practical implications for involved market players.
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The “as-a-Service”-Paradigm and its Implications for
the Software Industry Insights from a Comparative
Case Study in CRM Software Ecosystems
Daniel Hilkert1, Christian M. Wolf1, Alexander Benlian1 and Thomas Hess1
1 LMU Munich, Institute for Information Systems and New Media,
Ludwigstrasse 28, 80539 Munich, Germany
{hilkert, wolf, benlian, thess}
Abstract. By presenting insights from our comparative case study of two CRM
ecosystems, we indicate how as-a-service”-based ecosystems differ from
traditional “on-premise” ecosystems and how the particular roles of the market
players might change due to the increasing diffusion of the “as-a-service”
paradigm. Within the scope of our case studies, we differentiate two views on
the ecosystems: the relationship between the platform provider and providers of
complementary extensions (ISVs) as inside perspective and the relationship
between customers and the CRM ecosystem as a whole as outside perspective.
Based on transaction cost theory and intermediary theory our results let us
assume that (1) “as-a-service”-based ecosystems will have a higher level of
market coordination than “on-premise” ecosystems and (2) the task profiles of
intermediaries and platform providers participating in “as-a-service”-based
software-ecosystems will differ from task profiles in “on-premise” ecosystems.
Based on these findings, we discuss practical implications for involved market
Keywords: software-ecosystems, analysis of value chains and value creation
structures, “as-a-service” vs. “on-premise”, cloud computing, transaction costs,
intermediaries, case-study research.
1 Introduction
Following the latest news from the software industry, buzz words such as cloud-
computing or platform- and software-as-a-service have gained ground in the attention
span of IS executives. Driven by numerous examples of successful pure software-as-
a-service providers like, traditional software companies, such as SAP
with Business ByDesign or Microsoft with the Azure platform, have significantly
expanded their "as-a-service" activities in recent years. These new service based
products now form the basis ofas-a-service”-based software ecosystems.
The term ecosystem refers to the fact, that the platform provider together with
vendors of complementary applications and services can be described as a sort of
ecosystemin terms of a biocoenosisincluding the surrounding environment. A
specific characteristic of software ecosystems’ core products is that customers derive
added value only if the core product is extended with functions that are outside the
core competencies of the particular core platform provider and that can be delivered
by independent software vendors (ISVs), instead. Hence, on the one hand participants
of ecosystems commonly benefit from their commitment and on the other hand their
commitment is also necessary for the long-term survival of the system. Due to these
occurring reciprocal dependencies, also called indirect network effects [1], market
players who are involved in these ecosystems strongly urge to align their activities
and integrate themselves into the system [2-4].
Unlike on-premise”-software, ecosystems based on the “as-a-service”-paradigm
are characterized by the fact that the software is no longer sold to the customer as a
product but operated on the infrastructure (i.e. servers, …) of the suppliers and
therefore provided as a service. This technically entailed change is also the starting
point of numerous economic and organizational implications for the involved
participants of “as-a-serviceecosystems [5]. For all market players in these as-a-
service” ecosystems (including platform providers, ISVs as providers of
complementary extensions, system integrators and customers) the question arises,
how as-a-service”-based ecosystems differ from traditional on-premiseecosystems
and accordingly how the particular roles of the involved market players might change
due to the increasing diffusion of the as-a-serviceparadigm.
Hence, the purpose of this paper is to compare a typical “on-premiseecosystem
with a typical as-a-service” ecosystem within the scope of a comparative case study.
In section 2, we therefore review the literature on the analysis of value creation
structures and pinpoint the research gap addressed in the paper at hand. In the
subsequent sections 3 and 4, we first introduce the design of our case studies and
report its results. Our paper closes with a conclusion in which we summarize possible
practical implications and suggest starting points for further research.
2 Related Work
The possible paradigm shift in the software industry, which we address in our
research question, is to be considered on the level of the involved market players and
hence aims at the analysis of value creation structures. Such analyses of value
creation structures are already intensively discussed in the literature. In their overview
article, Picot et al. (2007) summarize established concepts and distinguish them on a
macro-, meso- and microeconomic level [6]. Models on a macroeconomic level
examine the contribution of different economic sectors to the gross national product
while in case of a consideration on the microeconomic level a single company is in
the focus of research activities. The meso-level of analysis resides in between the
aforementioned levels and refers to value creation in different branches. Since the
intention of our paper is the investigation of software ecosystems, our analysis
focuses on the meso-level.
Although the body of knowledge on value chains has also dealt with changes of
value creation structures at the meso-level, amongst other things also within the
context of digital goods [7-8], there were no studies which analyzed value creation
structures of software-ecosystems in particular. Hence, beside the general literature on
added value creation structures, the emerging body of knowledge on economic
changes in the software industry is chosen as theoretical basis. Here, the “application
service provider” (ASP) concept which is considered as predecessor of the “as-a-
service” paradigm, has been elaborately discussed (see e.g. [9-10]). Although we
meanwhile know that the ASP-concept has not lead to a sustainable structural change
in the software business, Cusumano (2008) could still empirically prove that a change
from products to service business is taking place in the software industry [11].
Consequently, in recent literature on the software business, the “as-a-service
paradigm is still intensively discussed. In their empirical study based on transaction
cost economics, Susarla et al. (2009), e.g., have identified the form of contracts as a
critical success factor for service business models [12]. Regarding the transformation
of value creation activities, the reference model for “as-a-servicevalue chains by
Altmann et al. represents an particularly important preliminary work of this study
Summing up, we find that topical contributions agree in the assumption that the
shift towards the “as-a-service” paradigm will result in a sustainable structural change
of the software industry. Nevertheless, to our knowledge, no contributions exist that
specifically address the differences between “on-premise”- and “as-a-service
ecosystems and indicate which changes could arise for the involved market players.
This research gap is to be addressed in the paper at hand.
3 Research Concept
The design, procedures and evaluation of our case study is based on the concept and
the recommendations of Yin (2008) [14]. In order to achieve an adequate level of
representativeness, we consciously selected two ecosystems for our comparative case
studies that can be considered as typical in terms of the respective paradigm (“as-a-
service” or “on-premise”) [14]. The chosen enterprises CAS Software AG and as well as their respective ecosystems are therefore introduced in
detail in section 3.1. In the following sections 3.2 and 3.3, we develop the applied
research framework and present the theoretical backgrounds for the analysis. The
detailed and transparent description of the research design ensures the repeatability
and therefore guarantees the reliability of our research [14].
3.1 Presentation of the Case Study Objects
CAS Software AG. Founded in 1986, the CAS Software AG with its headquarter
in Karlsruhe is the German market leader for CRM solutions for small and medium-
sized businesses. In the preceding fiscal year the company gained a turnover of
approx. 35 million with 190 employees and more than 150,000 users (see: CAS
Since 1998 CAS produces the CRM-Groupware software “genesisWorld”, which
we regard in the following. Because of the fact that more than 100 ISVs develop
diverse horizontal and vertical complementary extensions on it, genesisWorld is to be
understood as a core product of an on-premise” software ecosystem for the purpose
of this paper. The mentioned cooperation partners produce horizontal extensions
which are specific for a branch, as well as vertical extensions for additional
functionalities which are independent from branches. All extensions are listed and
priced in the official solution catalog of CAS genesisWorld. Beyond that, integration
partners exist in the CAS ecosystem, which offer services like the installation and
configuration of the solution and can act as general contractors. was founded in 1999 by the former Oracle
manager Marc Benioff with the purpose to provide enterprise applications and in
particular CRM solutions over the internet. Salesforce accomplished a remarkable
development since its foundation up to date, more than 63,000 customers and 1.5
million users, e.g. numerous famous enterprises like Dell, Motorola or CNN, use the
CRM solution which is now called “Sales Cloud 2”. The Salesforce group, which
appoints more than 3,500 employees worldwide, reached a turnover of $ 316 million
in Q2 2009. Hence, Salesforce is regarded as a SaaS pioneer as well as one of the
most prominent success stories in the field of SaaS providers (see:
An important driver of the depicted growth is the open architecture of the
Salesforce ecosystem. With the introduction of the “”-platform in 2007,
Salesforce offers a “platform-as-a-service”-solution which enables ISVs to provide
extensions of the Salesforce products as well as Salesforce-independent "software-as-
a-service"-solutions. In the associated AppExchange marketplace for Salesforce
extensions topically more than 1,000 horizontal and vertical extensions are listed by
approx. 500 partners (see: AppExchange portal).
3.2 Case Study Design
Starting point of the case study survey were interviews with experts conducted
with responsible persons from the respective ecosystems1
As we discussed in chapter 2, the analysis of ecosystems constitutes a
consideration at the meso-level. Important for the structures of value chains at this
level are on the one hand the relations between the platform povider and the ISVs
and, on the other hand, the relations between customers and the ecosystem as a whole
[4]. To take into consideration both views, our case study design is divided into the
analysis from an inside and an outside perspective. We therefore consider four market
players: The (1) platform provider is the hub of the ecosystem since he develops and
. To guarantee the
comparability of both cases, the interviews were partly standardized, meaning that a
questionnaire and an interview guide were used to structure the conversations. To
ensure the validity of the research, according to the recommendations of Yin (2008),
we carried out a document analysis of publicly available information like corporate
websites and press releases of the participating market players in the sense of a data
triangulation [14].
1 Altogether, we conducted 9 circumstantial interviews over a period of six months in 2009.
Our interview partners included managerial executives of the respective platform providers
( and CAS) as well as general managers and leading employees of ISVs and
system integrators.
provides the core system. (2) ISVs offer complementary extensions, while (3)
integrators typically help (4) customers to install and configure the software solution.
The inside perspective examines the relationship between the platform provider and
the ISVs while the outside view refers to the connection between the customers and
the software ecosystem as a whole, as well as the support of integrators where
appropriate. These two perspectives are illustrated in Fig. 1.
Fig. 1. Case study design: Inside- and Outside Perspective of a software ecosystem.
3.3 Two Research Perspectives on Value Creation
Inside Perspective. A key aspect when considering the relationship between the
platform provider and ISVs, which we refer to as inside perspective, is, to find the
optimal coordination form of this relationship. The question of the optimal
coordination form of an economic relationship, regarding its efficiency is often
analyzed by the transaction cost theory [15]. The transaction cost theory is based on
the fact that the coordination of distributed value creation activities generates costs.
Therefore, transaction costs cover the costs for the initiation, agreement, execution,
control, and adaption of the transaction [16]. The purpose of an analysis based on
transaction costs is to determine the coordination form of a relationship that
minimizes its transaction costs, depending on the value of certain parameters. Based
on the assumption of limited rationality and opportunistic behavior of the involved
market players, the parameters asset specificity, uncertainty and transaction frequency
determine the extent of the transaction costs [17]. The transaction costs theory
generally recommends hierarchic coordination for relationships which are
characterized by high asset specificity and uncertainty, hybrid coordination for
average specificity and uncertainty and market coordination for low specificity and
uncertainty [15]. Since the transaction frequency only leads to a strengthening of the
recommendation towards hierarchic coordination, if the asset specificity and/or
uncertainty are increased, it is commonly considered as supportive only and can
therefore be neglected in the following [18].
The purpose concerning the inside perspective therefore is to analyze, whether “as-
a-service” ecosystems differ from on-premise” ecosystems in the parameters asset
specificity and uncertainty. If yes, the transaction cost minimizing coordination form
in “as-a-service” ecosystems would differ from the coordination form in “on-premise”
Outside Perspective. In terms of the outside perspective, the relevant question
particularly is to what extent intermediaries are needed to support the relationship
between customers and the overall system [4]. In the given context, market players
who act neither as suppliers nor as consumers, but who, for a commission, facilitate
the functioning of the market are called intermediaries [15]. According to this
definition, integrators, which adapt software solutions to the individual needs of
customers and support the integration into their processes, represent typical examples
of intermediaries in the software industry. The central functions of intermediaries in
electronic markets are (1) to supply the market participants with information (2) to
organize the composition of the individual solution, (3) to build trust between the
market participants and (4) to offer additional services like handling of payments or
financing [15].
Therefore, based on the intermediary theory, the purpose concerning the outside
perspective is to point out whether a change of market structures caused by a shift
towards theas-a-service”-paradigm also leads to a differentiated task profile of
intermediaries in software-ecosystems [19].
4 Results
We derived our results by performing a qualitative content analysis of the
conducted interviews[20]. A document analysis of corporate websites and press
releases on the two selected ecosystems was used to complement our information
basis [14]. According to the perspectives introduced above, the presentation of our
case study results is subdivided into inside- and outside perspective. In chapters 4.1
and 4.2 the results from the chosen ecosystems are compared and the implications are
pointed out.
4.1 Comparative Analysis of the Inside Perspective
The comparative analysis of the inside perspective is based on the transaction cost
theory. As discussed in the preceding chapter, the influential factors asset specificity
and uncertainty are analyzed in terms of their impact on the transaction cost occurring
in the relationship between the platform provider and the associated ISVs.
Asset specificity. From the perspective of ISVs, the asset specificity of the
relationship between them and the platform provider is determined in particular by the
extent of their need to make specific investments for being able to provide
complementary products. These investments can either be to acquire specific
knowledge or to buy specific hard- and software, which would only be useful in the
context of the respective ecosystem [18]. The higher these specific investments are,
the higher is the resulting threat potential of the platform provider which he could use
opportunistically e.g. to enforce a higher revenue share for himself. From the view of
the platform providers, however, the specificity is measured through the extent to
which he has to reveal specific knowledge about his product core to the ISVs. This is
also correlated with an imminent behavioral uncertainty, because opportunistic ISVs
could use the specific knowledge otherwise, e.g. to become competitors or to pass it
on to an existing competitor of the platform provider.
Investments in transaction specific hardware and software are in both worlds
equally of little importance, because the development of extensions is possible in each
case with standard development tools and with no specific hardware needed.
Nevertheless, ISVs associated to CAS as well as to have to
intensively invest in gaining specific knowledge about the respective product core
before being able to produce suitable extensions. Because the documentation of how
to develop complementary applications for is publicly available on
the Internet, it can be supposed that the obtainment of specific knowledge is easier
with than with CAS and accordingly that it will be easier to recruit
employees with the required skill sets. Furthermore, offers numerous
SOA interfaces. With their help, ISVs can integrate standardized external software.
Therefore, the knowledge ISVs have to build up in the ecosystem can
possibly be used in other SOA-based ecosystems as well. Consequently, regarding the
perspective of ISVs, asset specificity in the ecosystem tends to be
lower in comparison to the ecosystem of CAS genesisWorld. Because both, CAS and offer open interfaces to their core systems, both platform providers
only have to reveal very little information and insights about their specific product
core. Because the conceptual design of was very open from the
beginning on, we however expect that has to reveal even less specific
information about the core system in their interface descriptions than CAS has to for
genesisWorld. Hence, the platform providers’ perspective allows us to confirm our
assumption of a comparatively low specificity of the relationship between and the associated ISVs. Hence, we can overall assume a higher
extent of specificity in the relationship between platform providers and ISVs at CAS
Uncertainty. The uncertainty as an influencing factor of transaction costs is
usually subdivided into environmental uncertainty and behavioral uncertainty [17].
Behavioral uncertainty is especially high if one party is able to fleece his transaction
partner due to an existing opportunism potential, e.g. because of high transaction-
specific investments [16]. The relationship between and its ISVs was
built on a purely electronic processing from the very first; hence, the partner
management is entirely handled via the online-platform. At CAS genesisWorld,
however, interested ISVs first have to complete questionnaires and send them to the
partner management office of CAS before CAS gets in touch with the potential ISV
and initiates the contract negotiations. Overall it is to be stated that the relationship
between and the associated ISVs is characterized by a higher
behavioral uncertainty because purely electronic connections generally offer bigger
opportunities for opportunistic behavior than relationships that are at least to some
extent built on a personal basis [7].
Besides the just mentioned behavioral uncertainty, the second important
influencing factor of transaction costs is the environmental uncertainty, which is
characterized by the complexity and dynamic of a relationship [18]. In the case of the
here examined relationship between platform providers and ISVs of a software
ecosystem, complexity refers in particular to technical developments as well as to the
resulting necessary abilities and knowledge of human capital, while dynamic applies
to the change of complexity over time [21]. In terms of the analyzed ecosystems, we
assume that the complexity and dynamics and therefore also the environmental
uncertainty are a little higher in the ecosystem of CAS genesisWorld than at This is caused by the fact that’s platform is
also widely established as stand-alone programming environment and therefore must guarantee a certain continuity and compatibility. In contrast,
CAS genesisWorld is, like other established on-premise software systems such as
SAP’s R3 or Oracle’s E-Business Suite, a proprietary platform that is only utilizable
to develop specific extensions for CAS genesisWorld. Hence, because the impact of
modifications is generally less far-reaching, CAS as a manufacturer could make
changes easier and more often than could do it.
Table 1. Recommendations of the transaction cost analysis
relative parameter value in the
result of analysis
specificity lower higher
indication for a relatively higher degree of
market coordination in the selected “as-a-
service” ecosystem
uncertainty lower higher
indication for a higher degree of market
coordination in the selected “as-a-service”
uncertainty higher lower
indication for a higher degree of market
coordination in the selected “on-premise”
Implications. The results of our transaction cost analysis are summarized in table
1. We find that two central influential factors of the transaction cost theory,
specificity and environmental uncertainty, are relatively lower in the relationship
between and its ISVs compared to the relationships between CAS and
its partners. However, the results of the behavioral uncertainty point at the opposite
Following the general notion that the asset specificity is the most important
influential factor of transaction costs [16], our results allow the following careful
assumption: Under the condition that the transaction partners manage to control the
given opportunism potential caused by the purely electronic relationships (e.g. by
implementing accordant contract conditions and adequate possibilities for sanctions),
in the “as-a-service” world a higher degree of market coordination is reasonable than
in the on-premise” world because this coordination causes the comparatively lowest
transaction costs in the relationship between platform providers and ISVs. The
following scenario is imaginable: the platform provider of an as-a-service”
ecosystem establishes a special online marketplace that enables ISVs to offer their
extensions to the customers of the ecosystem. In doing so, the core manufacturer
keeps control of all terms and especially entry conditions of this marketplace. As we
will elaborate more thoroughly in the following chapter,, for example,
has already established an element of market coordination by offering the
AppExchange Marketplace.
4.2 Comparative Analysis of the Outside Perspective
The analysis of the relationship between customers and the CRM-system as a
whole, which is covered by the outside perspective, aims to reveal whether the
presumed paradigm shift results in a modified task profile of integrators. The analysis
is carried out along the central functions of intermediaries as introduced in chapter
Supply of market players with information. Especially in opaque markets the
supply of market players with information is an important function of intermediaries. offers a considerably larger number of extensions, currently about
1,000, compared to CAS genesisWorld (with about 100 extensions) or other typical
“on-premise” software ecosystems. This implies a greater need of a central bundling
of information by an intermediary. is, however, trying to shape the
market for extensions as transparent as possible and has established the AppExchange
platform for this purpose. Besides providing a complete list of all available extensions
and their prices, this platform allows commenting and evaluating extensions as well
as browsing reviews of other users. At CAS genesisWorld all extensions are
documented in an official solution directory, too, but a public platform for ratings or
comments does, however, not exist. Altogether, the higher number of available
extensions in the "as-a-service"-ecosystem entails a stronger need for an intermediary
to bundle and provide information about the supply. In this case, however, this task is
undertaken by the platform provider itself.
Composition and configuration. The second fundamental function of an
intermediary is to support customers in the composition and configuration of the
specifically customized software solution. Due to the fact that CAS tries to establish
long-term relationships with their partners, the frictionless integration of extensions is
largely guaranteed. Because of the high complexity of their software system, it is
however intended that the installation and configuration is supported by CAS or a
certified partner. In accordance to the SaaS-paradigm, the solution of
is operated on their dedicated infrastructure and accessed by customers solely via the
browser. Hence, an installation is not necessary and accordingly the integration of
specific extensions can be done with a few clicks by the customers themselves.
Although does offer support services (especially to key accounts),
such as the adaptation of special templates, customers should generally be able to
accomplish most of the necessary adjustments by themselves. Overall, our analysis
indicates a higher need for clients of the CAS genesisWorld ecosystem to task an
intermediary with the composition and configuration of the software solution than for
clients of
Trust Building. Another function of intermediaries arises from the need to build
trust between the various market players. addresses this issue by
providing the above mentioned evaluation and annotation features and thus ensures a
certain transparency and security within their extension marketplace. As the partner
network of CAS genesisWorld consists of significantly fewer partners, who moreover
are tightly bounded to CAS by means of detailed partnership agreements, however, it
can be assumed that within the CAS genesisWorld ecosystem the need of confidence
building between customers and complementors is less important in comparison to
Additional services. In addition to the mentioned core functions, intermediaries
often offer additional services to support the functioning of the market. One of these
additional functions is the handling of payments. Whereas at CAS genesisWorld
integrators can appear as general contractors, and so undertake this function, takes care of the handling of payments by itself. Furthermore,
according to the SaaS paradigm customers of do not have to pay for
the acquisition of the software and pay a monthly fee instead. Hence, for customers of no significant costs of acquisition occur and accordingly generally no
need of financing these upfront costs arises.
Table 2. Results of the intermediary functions analysis
greater need in
“as-a-service” ecosystem
“on premise” ecosystem
“as-a-service” ecosystem
“on premise” ecosystem
Implications. The results of the intermediary functions analysis are summarized in
Table 2. The analysis of the two considered cases indicates a change of integrators’
task profiles as a result of the postulated shift towards the “as-a-service” paradigm.
Especially those integrators that have specialized on the composition and
configuration of software systems and/or that were acting as general contractors in the
sense of handling payments and offering financing will possibly have to take on a
different role in as-a-serviceecosystems which are comparable to the one we
Our analysis reveals that besides the informational function, which is largely
undertaken by the platform provider itself, the function of building trust will gain
further importance. A possible scenario for the change in the specific role of the
integrators would be that in addition to traditional integration services, trust building
services such as customized security consulting will become increasingly important in
as-a-serviceecosystems. How necessary these confidence-building services can be,
became obvious at the SaaS-provider had to react on customer
demands for more transparency and now provides permanently updated data on safety
and the system status of the infrastructure on their publicly available portal
5 Limitations, Further Research and Discussion
The goal of this paper was to take a closer look at possible changes in the software
industry resulting from the increasing diffusion of the as-a-serviceparadigm. For
this purpose, we analyzed the value creation structures of an exemplary on-premise”-
(CAS genesisWorld) and an exemplary as-a-service software ecosystem
( The transaction cost theory was used for the inside perspective and
the intermediary theory has built the basis for the analysis of the outside perspective.
The results of both views let us assume that a paradigm shift towards as-a-
servicebased ecosystems will result in changes for all involved market players. It
should be noted, however, that, although the usual quality criteria for case studies
have been sufficiently taken into account, a generalization of the results has only a
limited legitimacy [14]. The findings presented in chapter 5.1 are therefore
consciously formulated as propositions which should be understood as starting points
for further research on the given topic. Moreover, in chapter 5.2 we discuss concrete
practical implications resulting from our findings.
5.1 Propositions for Further Research
Proposition 1: As-a-service”-based software ecosystems will have a higher
level of market coordination than on-premise” ecosystems. The tendency towards
a comparatively lower specificity and environmental uncertainty, which was detected
in the context of the inside perspective analysis, could indicate a relatively higher
degree of market coordination in as-a-serviceecosystems, because a coordination
implementing a market would result in comparably lower absolute transaction costs in
the relationship between the particular platform provider and the associated ISVs. For
established ISVs this development raises the question whether they have to be afraid
to lose their contractually secured position in the future and therefore encounter the
mere price mechanism of market coordination. Platform providers will face the
challenge to retain those ISVs that are providing especially important extensions
within their ecosystem and therefore control the increased behavioral uncertainty
resulting from the trend towards all-electronic extension marketplaces.
Proposition 2: The task profiles of intermediaries and providers participating
in as-a-service”-based software ecosystems will differ from task profiles in “on-
premise” ecosystems. Consistent with comparable findings on “as-a-service”
implications, our analysis showed that a significant shift of task profiles is to be
expected [22-23]. Our findings imply that the importance of conventional integrators
that primarily undertake the task of composing and configuring the software solution
will comparatively rather decrease in “as-a-service” ecosystems, because providers
themselves might undertake this task. At the same time, our analysis however reveals
that the task of building trust becomes more relevant. Hence, a possible scenario
would be that integrators increasingly focus on addressing the confidence issues
occurring in the as-a-servicecontext, for example by becoming a “trusted third
party” [24]. Conversely, providers whose role in “on-premise ecosystems is
especially the production of the core software will undertake additional tasks in as-a-
serviceecosystems. Together with the higher degree of market coordination (see
proposition 1), our findings imply that platform providers will increasingly undertake
the task of supplying the market participants with information. So, beyond the role of
being pure software manufacturers, platform providers will increasingly also act as
orchestrators of their platform ecosystems.
5.2 Discussion of Practical Implications
Though, as we already denoted above, only a limited generalizability of our results
is possible, we want to discuss which implications could arise for the individual
market players of “as-a-service”-based software ecosystems.
As our results indicate that in “as-a-service” ecosystems the supplies of extensions
will rather be organized in markets, we expect an intensification of the competition
among the ISVs compared to “on-premise” ecosystems. Hence, customers of “as-a-
service”-based solutions should find a wider variety of extensions at lower prices. In
addition, upfront costs for the integration and configuration of the software solutions
will rather decrease, because customers become less reliant on integrators. As a result,
it can be assumed that integrators undertake more confidence-building functions in
“as-a-service” ecosystems, because their function of customizing and integrating the
software solution becomes less relevant. For example, established integrators could
offer additional services, like legal counseling services, involving aspects of
individual forms of contracts and the potential risks, which could arise from the
global distribution of the IT-infrastructure. In doing so, integrators could use their
reputation to convince those customers, who are still critical for “as-a-service”-
solutions especially because of security concerns. ISVs that could rely on their
contractually protected position within the ecosystem so far are likely to face greater
competition in “as-a-service” ecosystems. Due to the increased importance of
markets, it will in reverse also be easier for ISVs to offer their extensions in further
ecosystems and there to assert themselves against well-established competitors. We
expect the task profile of platform providers to change as well. In addition to the
changes, which are directly determined by the “as-a-service”-paradigm, such as the
development of an own multi-tenant server infrastructure or the implementation of a
service-based pricing model, providers will most likely have to fundamentally rethink
the character of their relationship with customers, integrators and ISVs. Whereas
customers of “on-premise” solutions were tied to providers because of extensive
expected switching costs, this lock-in effect is much lower with “as-a-service”
solutions. Therefore, it can be assumed that “as-a-service” platform providers will
increasingly invest in customer loyalty. Also the shift of partner management, moving
away from a small number of partners bound by contracts towards a market-organized
ecosystem, will make it inevitable for platform providers to develop new skills in the
management and orchestration of ecosystems.
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... We believe this is necessary because different types of cloud suppliers exist with different interests and roles in providing cloud services. In literature (Hilkert et al., 2010;Makkar and Bist, 2012;Marston et al., 2011;Plummer, 2012;Stuckenberg et al., 2011;Willcocks et al., 2011) we identify at least two types of suppliers which are fundamentally different from each other; the Cloud Provider and the Cloud Services Brokerage (CSB). Cloud providers offer their services in the most standardized way possible and do not differentiate their service to suit specific client needs. ...
... This especially holds for applications that are easy to configure and extend via some digital marketplace; e.g. Salesforce CRM and its AppExchange platform (Hilkert et al., 2010). For more complex SaaS-applications however and also for certain tasks, like assembling different extensions to provide custom solutions, specialist providers are still needed (Hilkert et al., 2010;Makkar and Bist, 2012). ...
... Salesforce CRM and its AppExchange platform (Hilkert et al., 2010). For more complex SaaS-applications however and also for certain tasks, like assembling different extensions to provide custom solutions, specialist providers are still needed (Hilkert et al., 2010;Makkar and Bist, 2012). ...
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The rise of cloud computing provides important challenges for organizations. One such challenge relates to the core capabilities organizations need in order to successfully deploy cloud computing. While implications of cloud computing for client capabilities have been studied, the implications for different types of suppliers are not well understood. Our research investigates the effects of cloud computing on the core capabilities of suppliers. In particular we focus on the consequences of Software as a Service (SaaS) for the required competencies of IT-Brokerages, intermediary parties between IT-providers and the client organization. Based on literature we developed three propositions which were examined in three in-depth case studies. Results indicate an increased importance of business facing skills, customer development and process re-engineering capabilities of the IT-Brokerage when engaging with SaaS. Results also indicate that governance of SaaS-applications at the client is diverse and often underdeveloped, possibly leading to lack of focus on SaaS-governance at the IT-Brokerage. The research contributes to an increased understanding of requirements for suppliers to optimize cloud usage for organizations. This is crucial for organizations as with cloud computing they become more reliant on the capabilities of their suppliers.
... Over the last years, the cloud hype fostered the establishment of a multitude of cloud offerings, revolutionizing the outsourcing of IT services [42]. The majority of technologies and products capitalize on the evocative banner "as a Service," emphasizing the on-demand availability of the products [147]. At the forefront, the best known concepts are Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS) [237]. ...
... From a remote perspective, a PaaS system offers a hosted software ecosystem for application development to the users as a service. What makes the concept of a software ecosystem interesting is that customers can derive added value if the core product is extended with functions that are outside the core competencies of the particular platform provider that can be delivered by Independent Software Vendors (ISVs) [147]. An example for such symbiotic relationships inside a PaaS ecosystem is the connection of platform vendors and other service providers (add-on providers) via the add-on marketplaces, e.g., the Heroku Elements marketplace 93 . ...
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In recent years, the cloud hype has led to a multitude of different offerings across the entire cloud market, from Infrastructure as a Service (IaaS) to Platform as a Service (PaaS) to Software as a Service (SaaS). Despite the high popularity, there are still several problems and deficiencies. Especially for PaaS, the heterogeneous provider landscape is an obstacle for the assessment and feasibility of application portability. Thus, the thesis deals with the analysis and improvement of application portability in PaaS environments. In the course of this, obstacles over the typical life cycle of an application - from the selection of a suitable cloud provider, through the deployment of the application, to the operation of the application - are considered. To that end, the thesis presents a decision support system for the selection of cloud platforms based on an improved delimitation and conceptualization of PaaS. With this system, users can identify offerings that enable application portability. For validation, a case study with a real-world application is conducted that is migrated to different cloud platforms. In this context, an assessment framework for measuring migration efforts is developed, which allows making the differences between compatible providers quantifiable. Despite semantically identical use cases, the application management interface of the providers is identified as a central effort factor of the migration. To reduce the effort in this area, the thesis presents a unified interface for application deployment and management. In summary, the work provides evidence of application portability problems in PaaS environments and presents a framework for early detection and avoidance. In addition, the results of the work contribute to a reduction of lock-in effects by proposing a suitable standard for management interfaces.
... Product definition is always challenging, especially for Software As A Service (SAAS) applications [2]. Barriers to competitive entry are often low and competition can be fierceespecially if the target market expects the service to be free. ...
Conference Paper
This short paper presents an iterative and incremen-tal process to improve the probability that the product or service definition leading to requirements and implementation is both representative of the market needs and has a reasonable expectation of a financially viable business model. Rather than a relatively linear process wherein marketing delivers a product definition to the development team, this process ensures that all assumptions are validated during the definition stage and that all team members are engaged. The process balances the need to address current challenges against future opportunities, providing short-term customer satisfaction (and justification for purchasing or adoption) and a coherent vision for future development efforts (and maintaining and growing the customer base). The process is applied to a case in the agriculture commodities sector.
... Different companies were cited explicitly as examples of being keystones of a business-oriented software ecosystem: SalesForce [30], SAP [63] and FaceBook [7]. ...
Conference Paper
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The paper is a meta-analysis of the research field of software ecosystems, by method of surveying 26 authors in the field. It presents a relevant list of literature and six themes in which challenges for software ecosystems can be grouped: Architecture and Design, Governance, Dynamics and Evolution, Data Analytics, Domain-Specific Ecosystems Solutions, and Ecosystems Analysis. As such, it provides a roadmap for future research in the field.
... Web-data management applications support customer service. CRM software solutions provide quicker access to customers and manage customer data quickly and efficiently (Hilkert, Wolf, Benlian, & Hess, 2010). Electronic banking functions, e-billing, online investment and credit management would be unimaginable without the internet. ...
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In the age of virtualisation and globalisation, customer relationship management (CRM) increasingly utilises new media for advertisement, customer contact, data management, servicing and sales. However, the opportunities, risks and success factors of the application of these new technologies have not been comprehensively explored to date. The study systematises new media technologies for CRM in the form of a review and differentiates and synthesises new media-based opportunities, risks and success factors in CRM referring to the corporate value-added process. It draws upon Kim, Zhao and Yang's (2008) and Kim and Kim's (2009) earlier research and extends the framework based upon a more extensive literature review, adapting it to new media applications. Success effects of new media usage at the shareholder and customer level are elaborated. Therefore, this work provides academic research with a theoretically-founded classification system for new media research that is applicable to CRM and neighbouring study fields. Practitioners can also apply the category set to revise and organise their CRM strategy regarding the technological options of new media. The study is the theoretical and structural foundation to a planned empirical study on the success effects of new media in CRM.
Software development companies are venturing towards collaborative approach and software ecosystems (SECO) participation. Over the years, many papers have been written and different modelling languages were proposed to capture the interactions between the SECO participants. What is missing, however, is a comprehensive meta-model describing possible entities and relationships that constitute a SECO. The goal of this paper is to create a common language for academic researchers for software ecosystems by creating such a meta-model. We constructed the meta-model by extracting and grouping entities and relationships from research papers. The meta-model consists of 5 themes: actors and roles, products and platforms, boundaries, ecosystem health and strategy. We advocate that our meta-model allows for easy sharing and comparing of case studies and the generalization of results across studies. We present the results from initial expert evaluation of the meta-model.
Conference Paper
To compete in dynamic, globalized markets manufacturers shift from product-centric to service-oriented engineering paradigms and join forces in Manufacturing Service Ecosystems. They combine technological competences, knowledge about materials, as well as production capabilities in order to offer innovative product-services to existing or emerging markets. Even though best practices as well as scientific reports proof huge advances in concurrent engineering and collaborative innovation, recent studies show economic necessity for increasing effectiveness and efficiency of managing in-/tangible assets in manufacturing ecosystems. By taking advantage of formal semantics, the virtualization method outlined in this paper allows for transforming real-world in-/tangible assets into In-/Tangible Assets as a Service. Evaluation within four industrial use cases demonstrates that In-/Tangible Assets as a Service significantly facilitate identification, communication, and finally composition of in-/tangible assets in Manufacturing Service Ecosystem and thus empower its members to deploy highly innovative product-services to the market.
Conference Paper
The field of software ecosystems is gradually transiting towards an established means of software development and distribution, counting numerous areas of applicability. However, research in software ecosystems, although the activity of over 10 years, is still characterized as premature with significant lack of software ecosystem specific theories that are solid, mature, generic, and detailed enough to be measurable and transferable. In this study, we intent to come closer to an evolution of the field by supporting the “localization” of research, i.e. the focus on specific types of software ecosystems. To do so, we investigate the literature of empirical, non open source ecosystem studies and intent to identify the various aspects and perspectives studied. In total, we review 56 empirical studies that investigate 55 software ecosystems. Our analysis confirms the assumption that proprietary software ecosystem studies lack deeper investigation of technical and collaborative aspects. Moreover, we identify an increased focus on organizational aspects and a rather limited focus on business. Furthermore, we identify common technology as the component investigated most in the ecosystems, both from the technical aspects, but also as means of applying orchestration. Finally, comparing the main areas with the overall ecosystem literature, we identify that empirical studies lack representation of health, motivation, actor activity, reusability, integration, and quality of ecosystems.
‘Software ecosystems’ is argued to first appear as a concept more than 10 years ago and software ecosystem research started to take off in 2010. We conduct a systematic literature study, based on the most extensive literature review in the field up to date, with two primarily aims: (a) to provide an updated overview of the field and (b) to document evolution in the field. In total, we analyze 231 papers from 2007 until 2014 and provide an overview of the research in software ecosystems. Our analysis reveals a field that is rapidly growing, both in volume and empirical focus, while becoming more mature. We identify signs of field maturity from the increase in: (i) the number of journal articles, (ii) the empirical models within the last two years, and (iii) the number of ecosystems studied. However, we note that the field is far from mature and identify a set of challenges that are preventing the field from evolving. We propose means for future research and the community to address them. Finally, our analysis shapes the view of the field having evolved outside the existing definitions of software ecosystems and thus propose the update of the definition of software ecosystems.
Conference Paper
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Within developed economies, the field of m-payment appears to be driven by (disruptive) technological innovations. M-payments, similar to e-payments, have been regulated in such a way that banks and other established financial institutions have been able to maintain an unchallenged position in the payment ecosystem. However, disruptive technologies like Near Field Communication, but more importantly cloud technology based solutions might lead to dramatic changes. In the long run this may change the position of banks in the payment ecosystem including their control over " money flows ". Yet, for this to happen m-payment solution and service providers need to understand the role of money and payment instruments as well as how payment ecosystems work, in-depth. In this conceptual paper we discuss how the ecosystem of m-payment is expected to change due to technology changes. Based on platform and ecosystems concepts, theories of money and behavioral theories a comprehensive literature review and a qualitative meta-analyses of the m-payment literature is presented. On the basis of the theory review and literature analysis we expect that the role of Over The Top (OTT) providers in the m-payment ecosystems will be driven by cloud-based solutions and threaten the position of traditional players. Banks need regulators to safeguard their control over the money flow.
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Application service providers (ASP), which host and maintain information technology (IT) applications across the Internet, offer an alternative to traditional models of IT service for user firms. We build on prior literature in transaction cost economics (TCE) to argue that the contract design should address ex post transaction costs that result due to contractual incompleteness and opportunism. We argue that contract design is multidimensional, and that it is necessary to design governance structures that can protect user firms from shirking and monitoring costs, as well as provide for efficient adaptation when requirements are incompletely specified at the start of the initiative. Our empirical analysis suggests that factors such as uncertainty in specifying service requirements, interdependence between the ASP application and IT systems in the client organization, and the need for specific investments favor time and materials contracts, whereas fixed prices are desirable when strong incentives are needed for cost reduction. We also find that contracts that are aligned with transaction attributes in a transaction cost-economizing manner are significantly less likely to experience budget overruns and realize better ex post performance than those that are not. These results hold normative implications for both user and provider firms to assess the performance implications of choosing contracts in line with prescriptions of TCE.
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Arnold Picot is the Chair of the Institute of Organization at the Ludwig-Maximilians University of Munich. Ralf Reichwald holds the Chair for Information, Organization and Management at the TUM-Business School, Technische Universität Munich. Rolf Wigand holds the Maulden-Entergy Chair and is Distinguished Professor of Information Science and Management at the University of Arkansas at Little Rock. Information, Organization and Management is a comprehensive treatment of the economic and technical foundations for new organizational forms, relations and processes. It provides a wide range of underlying concepts and frameworks that help the reader understand the major forces driving organizational and marketplace change, rather than presenting these changes as simple outcomes of technological or management fads. "The book has a heavier than usual economic bent, yet also considers the human cognitive aspects. The emphasis throughout is on the total concepts, with subsections at the end of each chapter describing the role of information and the implications for management. The content is well worth reading." Paul Gray, Claremont Graduate University and University of California at Irvine "This book marks an epoch in education and fills a new-felt need. It has successfully applied Economic theories of the organization to explain conceptually different organization forms. This same argument can be applied to the most recent cooperation, alliance crossed the boundary between Keiretsu." Tetsu Miyagi, Komazawa University, Tokyo. © 2008 Springer-Verlag Berlin Heidelberg. All rights are reserved.
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According to TCE, different forms of economic organization – markets, hierarchies, hybrid forms of various kinds, etc. – are characterized by different “syndromes of attributes,” or coherent sets of features (Williamson, 1991). Because each form of organization implements a distinctive set of governance features, each is efficient for a different type of transaction, implying trade-offs among the forms. The two key categories of features are the allocation of decision-making authority among and within firms and the intensity of the incentives facing firms and members of them. By concentrating decision-making authority, hierarchies have the benefit of facilitating “cooperative adaptation”; that is, coordinated change among two or more parties. Adaptation to new economic circumstances is, after all, the main function of an economic system (Hayek, 1945). Hierarchies are said to facilitate cooperative adaptation better than markets because unlike for markets, courts will not intervene in internal disputes and fiat is available as a last resort. This leaves more scope for the management hierarchy to use its authority to promote cooperative adaptation to unanticipated circumstances (Williamson, 1975, 1991). On the other hand, hierarchies feature weaker incentive intensity, that is, weaker links between individual or unit performance and individual or unit reward. This is because market-like levels of incentive intensity would inhibit cooperative adaptation by stimulating “autonomous adaptation” instead. Autonomous adaptation refers to adaptation by individual firms or organizational members that occurs without regard to its effects on other parties. Williamson (1985) also argues that market-like incentives lack credibility within hierarchies due to the ultimate availability of fiat. Thus, for TCE, the most fundamental trade-off between various forms of internal organization is between cooperative adaptation and incentive intensity.
Firms boundary choices have undergone careful examination in recent years, particularly in information services. While transaction cost economics provides a widely tested explanation for boundary choice, more recent theoretical work advances competing knowledge-based and measurement cost explanations. Similar to transaction cost economics, these theories examine the impact of exchange attributes on the performance of markets and hierarchies as institutions of governance. These theories, however, offer alternative attributes to those suggested by transaction cost economics or offer alternative mechanisms through which similar attributes influence make–buy choices. Traditional empirical specifications of make–buy models are unable to comparatively test among these alternative theories. By developing and testing a model of comparative institutional performance rather than institutional choice, we examine the degree of support for these competing explanations of boundary choice. Hypotheses are tested using data on the governance of nine information services at 152 companies. Our results suggest that a theory of the firm and a theory of boundary choice is likely to be complex, requiring integration of transaction cost, knowledge-based, and measurement reasoning. © 1998 John Wiley & Sons, Ltd.
Twenty-two decision groups in three manufacturing and three research and development organizations are studied to identify the characteristics of the environment that contribute to decision unit members experiencing uncertainty in decision making. Two dimensions of the environment are identified. The simple-complex dimension is defined as the number of factors taken into consideration in decision making. The static-dynamic dimension is viewed as the degree to which these factors in the decision unit's environment remain basically the same over time or are in a continual process of change. Results indicate that individuals in decision units with dynamic-complex environments experience the greatest amount of uncertainty in decision making. The data also indicate that the static-dynamic dimension of the environment is a more important contributor to uncertainty than the simple-complex dimension.
For some time now, traditional IT operating models such as company-owned infrastructure and inhouse-developed application landscapes, have been increasingly replaced by infrastructure offshoring and outsourcing of non-strategic business processes in large BPO contracts. More recently, an apparently new era of IT operating models has surfaced – cloud computing. Rather than signing typical contracts in megadeals, companies have been shifting toward selective sourcing strategies, now leveraging “cloud” solutions as an integral component.
Software-as-a-Service (SaaS) has recently gained significant popularity as it is perceived as a disruptive trend with the potential to reshape the whole software industry. While the positive effects of SaaS on the software market, e.g. additional revenues for software providers and higher flexibility for software customers, prevail in the current discussion in academics and the industry, incumbent software vendors still struggle with defining their future on-demand business model and with setting up their SaaS model right. The financial crisis and the current downturn have recently been fueling the discussion around customers moving to SaaS faster, increasing the pressure on software companies to take a stand regarding on-demand software delivery models and the need to gain traction in that new market segment.
Firms' boundary choices have undergone careful examination in recent years, particularly in information services. While transaction cost economics provides a widely tested explanation for boundary choice, more recent theoretical work advances competing knowledge-based and measurement cost explanations. Similar to transaction cost economics, these theories examine the impact of exchange attributes on the performance of markets and hierarchies as institutions of governance. These theories, however, offer alternative attributes to those suggested by transaction cost economics or offer alternative mechanisms through which similar attributes influence make-buy choices. Traditional empirical specifications of make-buy models are unable to comparatively test among these alternative theories. By developing and testing a model of comparative institutional performance rather than institutional choice, we examine the degree of support for these competing explanations of boundary choice. Hypotheses are tested using data on the governance of nine information services at 152 companies. Our results suggest that a theory of the firm and a theory of boundary choice is likely to be complex, requiring integration of transaction cost, knowledge-based, and measurement reasoning.© 1998 John Wiley & Sons, Ltd.