Coordination Strategies in an SaaS Supply Chain.

Author List: Demirkan, Haluk; Cheng, Hsing Kenneth; Bandyopadhyay, Subhajyoti;
Journal of Management Information Systems, 2010, Volume 26, Issue 4, Page 119-143.
The computing industry is gradually evolving to cater to the demand for software-as-a-service (SaaS). Two core competencies that have emerged over the past few years are that of the application service providers (ASPs) and the application infrastructure providers (AIPs). The arrangements between them result in system dynamics that is typical in supply chain networks. We examine the performance of an SaaS set up under different coordination strategies between these two players. Our analysis indicates that coordination between the monopoly ASP and the AIP can result in an outcome with the same overall surplus as can be achieved by a central planner. Even though the players have an incentive to deviate, it is possible to create the right incentives so that the economically efficient outcome is also the Nash equilibrium. The results of the analysis have significant implications for the coordination strategies for providers in the burgeoning business model of delivering software services over the Internet.
Keywords: cloud computing; economic analysis; information sharing; infrastructure-as-a-service; service science; services; services management; software-as-a-service; strategy; supply chain coordination
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#5 0.220 consumer consumers model optimal welfare price market pricing equilibrium surplus different higher results strategy quality cost lower competition firm paper
#211 0.142 service services delivery quality providers technology information customer business provider asp e-service role variability science propose logic companies especially customers
#19 0.113 content providers sharing incentive delivery provider net incentives internet service neutrality broadband allow capacity congestion revenue cost efficient enhanced provides
#52 0.106 supply chain information suppliers supplier partners relationships integration use chains technology interorganizational sharing systems procurement buyer interfirm coordination enterprises flexibility
#22 0.098 software vendors vendor saas patch cloud release model vulnerabilities time patching overall quality delivery software-as-a-service high need security vulnerability actually
#80 0.069 organizations new information technology develop environment challenges core competencies management environmental technologies development emerging opportunities levels based change business technical
#254 0.066 level levels higher patterns activity results structures lower evolution significant analysis degree data discussed implications stable cluster exist relationships identify
#256 0.062 coordination mechanisms work contingencies boundaries temporal coordinating vertical associated activities different coordinate suggests dispersed coordinated horizontal relative demand spatial hours