Incumbents and Challengers: Conflicting Institutional Logics in SaaS ERP Business Models

Abstract

With a shift in the architecture for the design and delivery of information systems (IS), new business models are emerging. Professional analysts predict that by the end of 2012, a majority of all enterprise-wide information systems will be delivered by a business model dominated by services rather than by on-site installations. This paper reports on a research project conducted between 2009 and 2011 that involved case studies of Enterprise Resource Planning (ERP) systems delivered according to a Software as a Service (SaaS) logic. Using a business model ontology, 10 case studies in the Swedish ERP market were conducted and analyzed. After constructing generic business models that explain two types of vendors in the market—the Incumbents (the traditional ERP vendors) and the Challengers (the new SaaS ERP vendors)—a discussion follows, based on institutional logic, which examines how these two groups of vendors adapt the dominant institutional logic. As the results show, both vendor groups hybridize their business models using the other’s institutional logic. At the same time, the vendors differentiate themselves as they try to establish the dominance of their own logic

Introducing app stores into a packaged software ecosystem: a negotiated order perspective

“…With the rise of alternative delivery models such as SaaS and other notions related to cloud computing (Ghormley, 2012;Petrescu, 2012;Schenk and Guittard, 2009), industry analysts such as Gartner and Forrester expected the market to experience a radical shift during the end of the first decade in the 21st century (Magnusson et al, 2012). Traditional ERP and CRM models have included on-site installations and substantial configuration initiatives, often making implementations of these systems cumbersome and lengthy.…”

“…Traditional ERP and CRM models have included on-site installations and substantial configuration initiatives, often making implementations of these systems cumbersome and lengthy. With the rise of a model for packaged software delivered via the Internet, according to a pay-per-view logic of services, the traditional business model of the mega-vendors (SAP, Oracle and Microsoft) is under pressure from smaller, more adaptable players building directly on the emerging technological platform (Magnusson et al, 2012).…”

“…Incumbent vendors of monolith solutions such as SAP and Oracle experience pressure from smaller challenging vendors, offering products with a more narrow functional scope (Magnusson et al, 2012). The mantra of these challenging vendors is criticising the one-vendor policy, advocating a best-of-breed strategy, fuelled by technological developments within cloud computing for off-site hosting and dynamic sizing (Böhm et al, 2011, Uzoka et al, 2012.…”