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2011 | Book

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Business Aspects of Web Services

Authors: Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk

Publisher: Springer Berlin Heidelberg

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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About this book

Driven by maturing Web service technologies and the wide acceptance of the service-oriented architecture paradigm, the software industry’s traditional business models and strategies have begun to change: software vendors are turning into service providers. In addition, in the Web service market, a multitude of small and highly specialized providers offer modular services of almost any kind and economic value is created through the interplay of various distributed service providers that jointly contribute to form individualized and integrated solutions. This trend can be optimally catalyzed by universally accessible service orchestration platforms – service value networks (SVNs) – which are the underlying organizational form of the coordination mechanisms presented in this book.

Here, the authors focus on providing comprehensive business-oriented insights into today’s trends and challenges that stem from the transition to a service-led economy. They investigate current and future Web service business models and provide a framework for Web service value networks. Pricing mechanism basics are introduced and applied to the specific area of SVNs. Strategies for platform providers are analyzed from the viewpoint of a single provider, and so are pricing mechanisms in service value networks which are optimal from a network perspective. The extended concept of pricing Web service derivatives is also illustrated. The presentation concludes with a vision of how Web service markets in the future could be structured and what further developments can be expected to happen.

This book will be of interest to researchers in business development and practitioners such as managers of SMEs in the service sector, as well as computer scientists familiar with Web technologies. The book’s comprehensive content provides readers with a thorough understanding of the organizational, economic and technical implications of dealing with Web services as the nucleus of modern business models, which can be applied to Web services in general and Web service value networks specifically..

Table of Contents

Frontmatter

Web Service Business Models

Frontmatter
Chapter 1. Introduction
Abstract
Since the end of the 1990s, the software industry has undergone tremendous changes. Driven by maturing Web service technologies and the wide acceptance of the service-oriented architecture paradigm, the software industry’s traditional business models along with business strategies have already started to erode – with far-reaching consequences: software vendors turn into service providers. While traditional software products are installed at the customer site, including prepaid perpetual-use licences, so-called software-as-a-service (SaaS) or on-demand software is hosted and maintained by the service provider itself that offers usage- or subscription-based pricing models (Dubey and Wagle 2007; Choudhary 2007a,b; Sääksjärvi et al. 2005). Salesforce.com’s Sales Cloud 2 is repeatedly referred to as a prime example for SaaS, mapping valuable customer relationship management (CRM) software into an online service infrastructure that can be accessed via Web browsers.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 2. Services vs. Web Services
Abstract
Without doubts, services have become the major driver of value creation in the last decades. This manifests in official statistics showing that services make up the largest part of the gross domestic product (GDP) in industrialized countries. In 2009, the share of the GDP within the European Union amounted to 71.9% and in the United States to 76.9% increasing steadily over last years. This trend is further amplified by the “servicification” of traditional products in many industries. According to Vargo and Lusch (2004), the major shift towards a service-centered view is driven by changes in society and markets that lead to exchanges of services rather than goods. It is not only stagnant product demand in many domains, but also the customers’ demand for customized and sophisticated goods which has pushed economic value downstream – away from manufacturing and toward the offering of services, both in preparing and customizing sales and in aftersales (Baumgartner and Wise 1999; Oliva and Kallenberg 2003). Driven by advancing Web service technologies, servicification in the software industry is a fundamental trend that tremendously changes the companies’ strategies and business models: software vendors become service providers (Dubey and Wagle 2007). The growing importance of automated service provision over the Web is impressively documented by the rise of platforms like Salesforce.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 3. Service Value Networks
Abstract
Following the service definition in Chap. 2, the organizational form of service value networks (SVNs) will be introduced as a novel network type and specialization of business networks. Section 3.2 contributes a fundamental definition of the SVN concept and its differentiation from related network types. As it is shown, however, SVNs exhibit special characteristics compared to the known definitions that are not yet sufficiently discussed and formulated. As both academics and practitioners still lack approaches to formalize and economically analyze SVNs, this research gap is filled by Sect. 3.3. It introduces a formalization of SVNs that will serve as the notational basis for the mechanism design approaches introduced in Chap. 7 of this book. Several examples for SVNs presented in Sect. 3.4 round off this chapter.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 4. Business Models
Abstract
Business models are oftentimes considered as “the most discussed and least understood aspect of the web. There is so much talk about how the web changes traditional business models. But there is little clear-cut evidence of exactly what this means” (Rappa 2001). Today, a whole decade later, this statement is still very true, especially when is is transferred to business models in newly arising business networks that are, for instance, fostered by Web service technologies. Business networks arise in an environment of intense but possibly short-run cooperation between different service providers and require a high degree of complementarity of services. For these requirements to be met, on the one hand technological changes need to take place. On the other hand, business networks for the automatic provisioning of Web services have some special economic features which must find consideration in the respective business models before they can be realized.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk

Web Service Pricing

Frontmatter
Chapter 5. Pricing Foundations and Implications on Web Service Pricing
Abstract
One of the key building parts of a market is its market mechanism. This mechanism encloses the rules for allocation and pricing and thus regulates and, in some cases, enforces the procedures of trading on a specific market. In general, both issues of allocation and pricing are intrinsically tied to one another. Neumann et al. (2007) and Buyya et al. (2008) treat online trading platforms. For example, such as Grid and Cloud service exchanges. Yet, since allocation procedures are often directly connected to technical conditions, in the following the focus is mostly on the pricing mechanisms that are used in today’s markets. Basically, one can distinguish between static, flexible, and dynamic pricing, which can be further subdivided into concrete pricing schemes.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 6. Pricing Strategies for Platform Providers
Abstract
For several years, a change in the economy has been observed. The established focus on products made way for a new perspective that concentrates on the provisioning rather than only the result, that is, on services. This development affects technical as well as organizational aspects of the economy. On the one hand, service mashups and situational approaches are facilitated by dynamically composing Web services. RESTful architectures (Fielding and Taylor 2002) and slim messaging formats like JSON (Crockford 2006) support the technical feasibility of the aforementioned composition. This way, the interplay of numerous service providers is enabled which creates value by integrating the provided modules into one joint solution, a complex service that is suited to meet individual customers’ requirements.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 7. Coordination and Pricing in Service Value Networks: A Mechanism Design Approach
Abstract
Weinhardt et al. (2003) and Neumann (2004) state that there is no general mechanism available to fit any possible market setting. In accordance with this statement, it is necessary to present a suitable mechanism designed to fit the underlying field of application. The adequacy of a mechanism depends, amongst others, on the properties of the trading objects. In SVNs, the latter are modular Web service components as well as the composed complex services resulting thereof – whose characteristics were discussed in detail in Chap. 3.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 8. Web Services Advanced Reservation Contracts
Abstract
In Chap. 5, the benefits which dynamic pricing mechanisms hold for providers as well as customers were pointed out. Though already commonly used in practice both market participants are faced with certain risks: Web service providers face the risk of low incomes in times of (unexpected) low utilization and demand, and are thus forced to lower their prices accordingly in order to keep up with their competitors. This may result in considerable losses. On the other hand, Web service customers may run into situations where, despite of a high willingness to pay, cannot fulfill their demand in peak times. While for the provider this dilemma has mainly direct economic consequences only, it can become a more serious issue to the customers than only high costs.
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Chapter 9. The Vision of Web Service Markets
Abstract
Services become a central building block of value creation in today’s society. Novel technical, economic, and organizational challenges arise from their unique nature as services’ provision and consumption coincide in time (Hill 1977). Recognizing and understanding the importance of an efficient design, production, and provision of services under the presence of their special characteristics is inevitable for individuals and the society to compete in today’s global economy. Especially, rapid service innovation driven by the power of modularity that is inherent in the concept of services (Baldwin and Clark 2000) embodies the success factor in service-centric environments. However, when composing distributed service activities, the question of an efficient form of coordination comes to light and turns out to be fundamental to govern distributed value creation. As Web services are living artifacts that generally exist under the ownership of different economic entities which are self-interested in nature, system-wide goals are hard to achieve as they mostly collide with individual objectives and are therefore not intrinsically pursued (Parkes 2001).
Christof Weinhardt, Benjamin Blau, Tobias Conte, Lilia Filipova-Neumann, Thomas Meinl, Wibke Michalk
Backmatter
Metadata
Title
Business Aspects of Web Services
Authors
Christof Weinhardt
Benjamin Blau
Tobias Conte
Lilia Filipova-Neumann
Thomas Meinl
Wibke Michalk
Copyright Year
2011
Publisher
Springer Berlin Heidelberg
Electronic ISBN
978-3-642-22447-8
Print ISBN
978-3-642-22446-1
DOI
https://doi.org/10.1007/978-3-642-22447-8

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