Understanding SaaS adoption from the perspective of organizational users: A tripod readiness model

Highlights

• We examine factors that influence how ready organizational users are to adopt SaaS.

• SaaS adoption depends on technological, organizational and environmental readiness.

• Survey study in China support the importance of each aspect of SaaS Readiness.

• Different aspects of SaaS Readiness vary in priorities at decision and use stages.

Abstract

As an innovation that revolutionizes application delivery based on cloud-computing, software-as-a-service (SaaS) has seen a tremendous growth during the last few years. However, its diffusion is not evenly distributed: some organizational users are open to SaaS but others are still hesitant despite the huge cost saving it may bring. The behavioral impacts of SaaS are far-reaching and the new socio-technical phenomenon deserves a close look. Based on the literature review, this study proposes a tripod model of SaaS Readiness that suggests that organizational users need to get prepared from technological, organizational and environmental aspects for the adoption of SaaS. The empirical results support that all three aspects are important for SaaS adoption yet their influences vary across psychological and overt outcome variables.

Introduction

Software-as-a-service (SaaS) emerges as an innovative approach to deliver software applications based on cloud-computing technology (Chou & Chou, 2007). In this model, SaaS providers deploy software applications on cloud servers for users to order based on their needs and pay for the services according to actual usage (Armbrust et al., 2010). This “on-demand” service delivery approach is similar to utility service mode: a user just subscribes an application without the need to buy, install and maintain the software, like getting power from the grid rather than one’s own generator. In addition, SaaS enhances the quality of software services through automatic application upgrade and data backup (Xin & Levina, 2008).

SaaS allows organizations to outsource many of their applications, including generic tools (e.g. anti-virus software, e-mail, office package) and business applications (e.g. accounting, customer relationship management – CRM, enterprise resource planning – ERP). Based on cloud computing, organizations can also outsource their IT infrastructures (e.g. storage, backup and computing) in form of Infrastructure as a Service (IaaS) as well as IT platforms (e.g. database and business intelligence) in form of Platform as a Service (PaaS) (Vaquero, Rodero-merino, Caceres, & Lindner, 2009). Among the three, SaaS is considered the most promising as it gives business clients various tangible benefits, such as reduced IT costs and improved IT performance (Catteddu, 2010, Wu, 2011).

Through cloud computing, SaaS providers allocate IT resources and capacities among subscribers based on their real-time demands. Such an approach of dynamic instance and data partition management is conducive to the economies of scale. As organizations do not need to worry about acquiring and maintaining their own software applications, they can save tremendous cost and focus on productivity.

Despite the fact that more and more organizations adopt SaaS, however, its diffusion is still far from full potential due to issues like security concerns, fear of losing control, and organizational resistance (Benlian and Hess, 2011, Lee et al., 2013). The outsourcing of IT functions often brings significant organizational changes, leading to the overhaul of business processes and management structures (Clark, Zmud, & McCray, 1995). Most employees are hesitant to go through such changes unless they are well prepared and motivated (Walden & Hoffman, 2007).

Thus the general incentive in terms of cost saving is not sufficient to explain SaaS adoption decisions. Rather, the behavioral impacts of SaaS that revolutionize how people acquire and use software need to be taken into account. Organizations are not likely to implement SaaS unless relevant personnel get ready. These people include users at different levels such as employees who use computers in their daily jobs, IT specialists who provide technical support, and managers who make decisions based on the information obtained, and they are generally referred to as organizational users (Klein, Conn, & Sorra, 2001). This study will examine the key factors that make differences in their psychological tendency to adopt the SaaS innovation.