Software-as-a-Service Model: Elaborating Client-Side Adoption Factors

Abstract

Software-as-a-Service (SaaS) is emerging as a viable outsourcing option for clients interested in paying for the right to access a standardized set of business software functions through the network. SaaS model largely replaced the Application Service Providers (ASPs) model, by creating an architecture that provides no mechanisms for customizing the software on the vendor side; all customization is done on the client side through standardized interfaces. The fact that vendors are not making any client-specific investments makes this outsourcing model quite intriguing. In this paper we investigate client's side determinants the SaaS model adoption. We draw on economic, strategic management, and Information Systems theories to develop a theoretical framework. By integrating diverse literature streams, we are able to develop a more elaborate view of uncertainty arguing that some types uncertainty increase the propensity to adopt SaaS, while other types do not. Finally, we argue that the maturity of the client's internal enterprise IT architecture plays an important role in SaaS adoption decisions.

Keywords: Software as a Service, SaaS, Outsourcing, ASP, IT architecture maturity, Property Rights Theory, Resource Based View, IS Strategy

JEL Classification: L14, L23, L86, M10, O30