Determinants of choice of semantic web based Software as a Service: An integrative framework in the context of e-procurement and ERP

Abstract

The ever increasing Internet bandwidth and the fast changing needs of businesses for effectiveness with the partners in the procurement chain and is leading organizations to adopt information systems infrastructures that are cost effective as well as flexible. The question seems to be: what is driving organizations to go in for Software as a Service (SaaS) based e-procurement and ERP, rather than the packaged model of software provisioning? Whereas there have been studies reporting technology, cost, quality, network externalities and process as the main variables in the utility function of the user, but most of the studies have modelled either one or two in the their models. The study is exploratory in nature and tries to identify, classify and rank dimensions affecting SaaS sourcing decisions. In this study, we developed an integrative framework to identify the determinants of choice of SaaS in the specific context of SaaS based e-procurement and ERP. The framework was then analyzed using the extended Analytic Hierarchy Process (AHP) method suggested by Liberatore (1987) and the relative importance and the weights of the criteria identified using data collected on 8 users and 9 service providers of SaaS based e-procurement and ERP. Although the analysis helped in identifying quality and costs as the two most important determinants of choice of SaaS based e-procurement and ERP, but the other criteria such as network externality benefits, technology and process were also found to be significant determinants of choice.

Introduction

The ever increasing Internet bandwidth and the fast changing needs of businesses for effectiveness with the partners in the procurement chain and is leading organizations to adopt information systems infrastructures that are cost effective as well as flexible [14]. In Software as a Service (SaaS) based e-procurement and ERP business model of software provisioning, the consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings [30]. SaaS takes advantage of the thin client technology and provisions SaaS based upon the Internet and semantic technologies, where all the software and the data reside on the server and the client side needs an interface application like the browser, as against the packaged software provisioning model where the software is sold as a product. Some of the successful examples of SaaS are SalesForce.com and NetSuite. Although there are pure SaaS vendors, i.e. only provide SaaS, such as SalesForce and NetSuite, but some traditional packaged vendors such as Oracle, Microsoft, SAP and IBM are fast adopting hybrid SaaS i.e. Provide SaaS as well as packaged software to accommodate customer expectations and preferences [2]. According to the Sand Hill Group and McKinsey & Company report [13], The SME organizations are the biggest adopters of the SaaS based e-procurement and ERP model.

The question seems to be: what is driving organizations to go in for SaaS based e-procurement and ERP rather than the packaged model of software provisioning? Some of the major drawbacks of packaged model of software provisioning are the high upfront and implementation costs [9], [15], [16], [36], [42]. Also the software is difficult and costly to maintain and upgrade [14], [35]. Long lead times, high costs, complex planning sessions and deployment delays inherent to packaged, make SaaS based e-procurement and ERP a viable may to overcome these challenges and provide easy-to-use and cost-effective tools for system integration.

This paper contributes to the literature of SaaS and IS outsourcing. Research in IS outsourcing/ASP/SaaS although has talked about the motivations for going in for IS outsourcing/ASP/SaaS but has just listed the determinants either on the basis of a qualitative study or through a survey of literature but none of the studies have ranked the criteria for SaaS sourcing decisions. This study helps to determine: What dimensions organizations use when evaluating SaaS sourcing? How many dimensions they may use in a SaaS sourcing situation? The relative importance of each dimension in SaaS sourcing. The study is exploratory in nature and tries to identify, classify and rank dimensions affecting SaaS sourcing decisions. The reasons behind using extended AHP are: firstly, each respondent will not perceive a decision making situation to have the same dimensionality; secondly, the respondents need not attach the same level of importance to a dimension, even if all respondents perceive this dimension; and thirdly, judgments of a stimulus in terms of either dimensions or levels of importance need not remain stable over time and context.

The paper is organized as follows: an introduction is followed by a literature review of the important concepts used in the study. The next section is the theoretical framework which introduces the way in which the sub-criteria were clubbed together into criteria variables. A methodology section clarifies two stages in which the study was conducted. The analysis section introduces the step by step method of the extended AHP analysis and the results. Finally the study ends with a section on discussion and future directions for the study.