Never Change a Running System? How Status Quo-Thinking can Inhibit Software as a Service Adoption in Organizations

Despite the “buzz” about Software as a Service (SaaS), decision makers still often refrain from replacing their existing in-house technologies with innovative IT services. Industry reports indicate that the skeptical attitude of decision makers stems primarily from a high degree of uncertainty that exists, for example, due to insufficient experience with the new technology, a lack of best practice approaches, and missing lighthouse projects. Whereas previous research is predominantly focused on the advantages of SaaS, behavioral economics conclusively demonstrate that reference points like the evaluation of the incumbent technology or a familiar product are oftentimes prevalent when decisions are made under uncertainty. In this context, Status Quo-Thinking may inhibit decisions in favor of potentially advantageous IT service innovations. Drawing on Prospect Theory and Status Quo Bias research, we derive and empirically test a research model that explicates the influence of the incumbent technology on the evaluation of SaaS. Based on a large-scale empirical study, we demonstrate that the decision makers’ attitude toward SaaS is highly dependent on their current systems and their level of SaaS. A lack of SaaS experience will increase the impact of the Status Quo, thus inhibiting a potential advantageous adoption of the new technology.