Design Choices Underlying the Software as a Service (SaaS) Business Model from the User Perspective: Exploring the Fourth Wave of Outsourcing

Software as a Service (SaaS) can be viewed as the fourth wave of outsourcing. SaaS is a relatively new type of service delivery model in which a service provider delivers its services over the web to many users on a pay per use or period basis. In the scarce literature available, the SaaS business model is almost always analyzed from the perspective of the service provider perspective, and rarely from the user organization. Using the unified business model conceptual framework, two case studies are investigated to understand the design choices underlying the SaaS business model from the user organization perspective. The analyses on the business model dimensions provided insight into the differences between the case studies and helped to identify eight discriminating design choices that are important when designing SaaS business models. These include the (1) SaaS service characteristics, (2) SaaS value source, (3) SaaS user target group, (4) data architecture configuration and tenancy model, (5) SaaS governance and demand/supply management core competencies, (6) cloud deployment model, (7) SaaS integration and provider strategy and the (8) SaaS pricing structure. An appeal is made for more research into the impact of cloud business models.