Abstract
Cloud computing is an emerging paradigm that allows users to conveniently access computing resources as pay-per-use services. Whereas cloud offerings such as Amazon's Elastic Compute Cloud and Google Apps are rapidly gaining a large user base, enterprise software's migration towards the cloud is still in its infancy. For software vendors the move towardscloud solutions implies profound changes in their value-creation logic. Not only are they forced to deliver fully web-enabled solutions and to replace their license model with service fees, they also need to build the competencies to host and manage business-critical applications for their customers. This motivates our research, which investigates cloud computing's implications for enterprise software vendors' business models. From multiple case studies covering traditional and pure cloud providers, we find that moving from on-premise software to cloud services affects all business model components, that is, the customer value proposition, resource base, value configuration, and financial flows. It thus underpins cloud computing's disruptive nature in the enterprise software domain. By deriving two alternative business model configurations, SaaS and SaaS+PaaS, our research synthesizes the strategic choices for enterprise software vendors and provides guidelines for designing viable business models.
Highlights
Cloud computing is an emerging concept that allows users to conveniently access computing resources as pay-peruse services [4]
Our study reveals that the move from on-premise software to cloud services impacts all nine business model elements and synthesizes the specificities of enterprise software vendors’ business model
In view of the radical changes in the business model – on the customer-facing side as well as on the resource base and value configuration side – our study confirms that cloud computing has the characteristics of a disruptive technology for the enterprise software market [12], [32]; first, it enables less skilled users to receive the same utility from enterprise software that was previously available only for larger organizations, because services are delivered through a web browser and with recurrent price models
Summary
Cloud computing is an emerging concept that allows users to conveniently access computing resources as pay-peruse services [4]. The business user perspective has been extensively investigated in recent studies on cloud adoption drivers and challenges [6], [27] as well as approaches for migrating to the cloud [36]-[37] This slow migration towards cloud enterprise software may be explained from the supply side, where vendors are reluctant to introduce cloud offerings. Our case analysis starts by presenting details of selected enterprise software offerings and vendors Based on these insights, we analyze the key characteristics of cloud-based business models in order to derive two distinct cloud business model configurations. This paper concludes with a summary of the paper’s contributions, limitations, and implications
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