Capturing Value from Platform-as-a-Service Technology

Abstract

Cloud computing market is expected to grow rapidly in the next five years. Even though Software-as-a-Service and Infrastructure-as-a-Service solutions will dominate most of the market, Platform-as-a-Service solution is forecasted to have the fastest-growing segment, especially in Western Europe. On the other hand, cloud computing is also argued to be the new playing ground for Telecommunication industry. As the industry facing a threat for just being the network “bit piper”, telecom operators might find a new revenue source within the cloud computing domain. The issues explained above have led us to conduct a research that aimed at two objectives. First is to give guidance to larger enterprise companies in the Netherlands on how to capture values from PaaS offering. Second, this research aimed to identify whether telecom companies could create particular new business value and opportunities from the PaaS service provision. Therefore this study raised a challenging main questions: “What factors are important for large enterprise clients to adopt Platform-as-a-Service in order to capture the business value that is offered from Platform-as-a-Service offering, and what are the strategic implications of the Platform-as-a-Service adoption for Telecom industry?” To answer the main questions, five research sub-questions were formulated. A theoretical approach from business model literature is used to guide answering the main research questions. A conceptual model of PaaS adoption factors was developed, which is based on the STOF business model framework. Analysis of PaaS market in the Netherlands was conducted among 9 client companies and 3 PaaS provider companies, in order to validate the conceptual model. The results showed that the PaaS market in the Netherlands are still immature, thus making the validation of the conceptual model for PaaS adoption hard to be generalized. Modification of the analysis approach was taken that enable us to analyze the conceptual model for SaaS adoption as well. Our study found that there are several factors within the Service domain that are important for clients when they consider which applications to be moved to PaaS or SaaS environment. The most important factor is criticality of application that wants to be moved to the cloud. These factors from the Service domain influence client’s technical requirements on Security, Quality of Service, and System Integration issues. Furthermore, our research found that there are several factors that client take into account when they about to choose PaaS and SaaS providers. These factors serve as assessment framework whether the providers’ profile can meet clients’ requirements. Our finding shows that Branding is the most important factor of PaaS and SaaS providers. Branding is important because it is closely associated with trustworthiness. Moreover, trust also becomes really important, because in PaaS and SaaS implementation clients are losing control of their application data. In addition, our finding also shows that the factor of data location is really important in PaaS and SaaS adoption. A key stakeholder, namely the regulators, drives this data location factor. We also found that clients perceived system integrators and network providers as the other important key stakeholder in the provision of PaaS and SaaS services. Furthermore, our study also found that telecom companies could play two roles in cloud computing domain in order to create new business value, and hence making new revenue source. The first role is to be Cloud service provider. This role means that telecom companies could exploit their main resources of Internet network infrastructure to deliver a guaranteed and high level end-to-end cloud services (both PaaS or SaaS services). The second role is to be Cloud service broker. This role exploits telecom companies’ resource of broad customer base and customer relationship in order to mediate cloud providers and the clients. Being cloud service broker enables telecom companies to gain monetary incentives by means of revenue sharing. Our study concludes that clients need to take into account factors in the four domains of Service, Technology, Organization, and Finance in order to capture the value of PaaS and SaaS offering. On top of that, clients need to take into consideration the regulation applied in order to legally implement cloud computing solutions. Clients also need to acknowledge the importance of system integrators and network providers in utilizing cloud computing services. This study adds several main contributions to the literature. Firstly, this study has made the first attempt to construct an adoption model for PaaS and SaaS specifically. Secondly, this study has contributed to business model theory, particularly by extending the applicability of STOF model. Thirdly, this study confirms the existing literature that describes key stakeholders on cloud computing. On top of that, we contribute by adding Network Provider as another key stakeholder. Nevertheless, this study bears some limitations. Due to small sample size, this research serves as means of first validation of the constructed model. We are aware that further research can be conducted to do more extensive validation by means of survey research. However due to the immaturity of cloud computing market, especially PaaS, we suggest that further research on PaaS is better to be conducted later to wait for the market to be developed. Besides the sampling issue, our research was not able to validate our findings on telecom companies role in cloud computing. Further research could focus on validating our results empirically through involvement of industry experts.