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Business & Information Systems Engineering
Published in: Business & Information Systems Engineering 1/2011

01-02-2011 | Research Paper

Product Differentiation for Software-as-a-Service Providers

Author: Dipl.-Ing. Dipl.-Wirt. Ing. Arne Katzmarzik

Published in: Business & Information Systems Engineering | Issue 1/2011

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Abstract

The market for the new provisioning type Software-as-a-Service (SaaS) has reached a significant size and still shows enormous growth rates. By varying size of SaaS products, providers can improve their market position and profits by successfully acting in the tension area of customer acquisition, pricing and costs. We first elaborate differences concerning product differentiation between classic software provisioning models and SaaS. Then, we introduce a micro-economic based decision model to maximize the return of a provider by finding an optimal granularity, i.e. by varying the size of services. This paper makes two contributions in this context: (1) it provides a conceptual foundation for product differentiation within the scope of SaaS and (2) it presents the first implementation of variable reproduction costs for web based software offers. The model is illustrated by a real world case with data from a SaaS provider.
previous article Impact of IT Service Management Frameworks on the IT Organization
next article Method Support of Information Requirements Analysis for Analytical Information Systems

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Appendix
Available only for authorised users
Footnotes
1
Let a SU be a general measure for a size of software. Applying the model, this measure should be replaced by a software metric such as the Function Point Analysis or COCOMO.
 
2
Due to changing granularity, other customer clusters with different required SU and WTP may become relevant for determining β resulting in another value for β. However, β is kept fixed and these effects were modeled by the factor γ which itself is multiplied with β in the objective function.
 
3
Due to characteristics of a monopoly, both market price and sold SU will be lower than maximal RP and demand. Thus, resulting prices and demand may differ from the estimations.
 
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Metadata
Title
Product Differentiation for Software-as-a-Service Providers
Author
Dipl.-Ing. Dipl.-Wirt. Ing. Arne Katzmarzik
Publication date
01-02-2011
Publisher
SP Gabler Verlag
Published in
Business & Information Systems Engineering / Issue 1/2011
Print ISSN: 2363-7005
Electronic ISSN: 1867-0202
DOI
https://doi.org/10.1007/s12599-010-0142-4

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