Investigating the Market Success of Software-as-a-Service Providers: the Multivariate Latent Growth Curve Model Approach

Software-as-a-Service (SaaS) Cloud computing as the next stage of internet evolution provides all the computing resources as services over the Internet. In the SaaS cloud computing research area, there are many studies from the user’s point of view, but there is relatively little research on the supplier’s success strategy. The purpose of this study is to empirically analyze the factors that determine the market competitiveness necessary for SaaS cloud computing providers to survive in the mid to long term. We presented application dimension and technology maturity as SaaS idiosyncratic factors and show how these factors influence the business performance of SaaS providers through a differentiation strategy and low-cost strategy. Using a multivariate latent growth curve model, this study analyzed 199 strategic business units of SaaS cloud computing providers in Korea for three years. Our results find that SaaS cloud computing idiosyncratic factors did not significantly enhance the software providers’ business performance in the early stage. However, they significantly affected the growth rate of their customer base and financial performance as the SaaS technology became mature over time. In addition, this study identifies a set of business, strategic, and technical considerations to guide the practitioners’ decision-making process for selecting an appropriate SaaS cloud computing model.