Optimal Distribution Strategy for Enterprise Software: Retail, SaaS, or Dual Channel?

Li, Shengli; Cheng, Hsing Kenneth; Jin, Yong

doi:10.1111/poms.12909

Cited by 42 publications

(31 citation statements)

References 15 publications

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“…However, one distinct feature of these markets lie in that they don't rely on revenues from advertisements as the digital music market. Therefore, previous literature usually focuses on deterioration of cars (Desai and Purohit 1998), software's upgrade (Jia et al 2018), customization (Li et al 2018), or eBook readers re-lending options (Chen and King 2017) when examining the subscription model of software and eBook. We analyze how revenues from advertisements impact the music provider's choice of pricing models.…”

Section: Managerial Implicationsmentioning

confidence: 99%

Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?

Li¹,

Luo

Qiu

et al. 2020

Production and Operations Management

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Traditionally, consumers purchase physical music (often in the form of CDs or cassettes) from local retailers. With the development of Internet technology, the market share of digital music has grown rapidly in recent years. Unlike physical music, digital music is provided by several emerging digital music providers through the Internet to consumers. Pricing models of digital music are also drastically different from those of physical music. In this study, we identify three common schemes for selling digital music: ownership, subscription and mixed pricing models. Under the ownership model, consumers purchase and download their preferred songs and enjoy music using their local devices. Under the subscription model, music is provided through an online streaming service. The mixed pricing model is a combination of the previous two. Our paper explores and compares the three pricing models. Through a stylized model, we find that several factors, including the advertisement revenue rate and consumers’ reservation value for the music service, have crucial effects on the comparison of the three pricing models.

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Section: Managerial Implicationsmentioning

confidence: 99%

Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?

Li¹,

Luo

Qiu

et al. 2020

Production and Operations Management

Self Cite

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“…A significant finding of our research is that in the relatively secure environment, the firm is suggested to exclude the on-premise strategy from releasing products, which is different from what was proposed in Li et al (2017Li et al ( , 2018. The main reason is that the decrease of potential loss from security risks ωα effectively benefits the market expansion of SaaS even under the negative externality.…”

Section: Discussionmentioning

confidence: 73%

“…However, with the advent of high-speed broadband access, cloud service has become widely acknowledged, rapidly changing how software is delivered (Guo and Ma, 2018). Many well-established software firms release cloud-based versions of their existing products, making software-as-aservice (SaaS) appear and become another crucial versioning strategy (Li et al, 2018).…”

Section: Imds 1223 592mentioning

confidence: 99%

SaaS or not: optimal versioning strategy of releasing enterprise software

Sun

Dang

Feng

2022

IMDS

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PurposeWith the rapid development of cloud computing, most software firms face the significant choice of whether they should change the versioning strategy of enterprise software from releasing the on-premise version to the software-as-a-service (SaaS) version. Data being generated and hosted on SaaS vendors' servers brings multiple effects. It enables customers to enjoy the flexibility of accessing data and using the software remotely, named the “portability” effect. However, on the other hand, the cumulative data resources on the cloud also provide a clear target for external attacks, leading to the concern of information security. Considering these, the authors hope to offer insights for software firms by exploring the strategy selection problem.Design/methodology/approachTaking the portability effect and security risks of the SaaS licensing model into account, the authors develop a two-period model to figure out the market segmentation and identify the feasible conditions for employing three alternative strategies. Comparative statics analyses are conducted to explore the influencing mechanism of exogenous factors on strategy selection. The authors also discuss the strategy selection in the presence of the network effect and the security loss faced by users of on-premise software.FindingsOne significant finding is that the on-premise strategy can be excluded when the potential loss from security risks is small. Under this circumstance, the dual version strategy is optimal provided that the increase of customer valuation caused by portability effect is below a threshold. Otherwise, the SaaS strategy generates the highest profit. When the potential loss from security risks turns large, the on-premise strategy, the dual version strategy and the SaaS strategy are the optimal options in order as the portability effect on customer valuation gets stronger.Originality/valuePrevious literature has insufficiently addressed the versioning issue of enterprise software. In this paper, the distinctive features of the SaaS model are considered, and differentiated results compared with previous work are obtained. The research results provide guidelines for software firms in deciding their product releases in the future.

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“…Xu (2009) study a joint pricing and product quality decision problem in a distribution channel, Numerical experiments (Hua et al, 2011a(Hua et al, , 2011b find that the revenue-sharing contract can perfectly coordinate the distribution channel in the product design problem. The detailed topic has also become part of distribution channel literature where people pay more attention (Li et al, 2018;Saha et al, 2018;Xiao, 2019;Farham-Nia and Ghaffari-Hadigheh, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Will foundry become a competitor of manufacturer in ODM supply chain?

Xie

Xia

2021

JM2

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Purpose This paper aims to study whether the upstream foundry in the original design manufacturer (ODM) supply chain will violate the commission contract and engage in the production of pirated products. Based on the conclusion, this study hopes to explain the phenomenon of pirated products in reality and provide management enlightenment for related companies. Design/methodology/approach To understand when will foundry violates the processing contract, this paper constructs a five-stage decision-making model, this study derives a model to get three situations and draw data images to describe the characteristics of decision-making by the foundry. Finally, this paper also considers some external supervision. Findings The results show that processing fee and other parameters (special cost, common cost, weakening factor and product difference) jointly determine the possibility of piracy by the foundry. Moreover, the external supervision mechanism has a significant effect on the piracy behavior of the foundry. Research limitations/implications The research provides some support for real business activities, which actually involve many participants and mechanisms. Thus, it could be interesting to explore more multi-stage and complex business methods in reality. Practical implications The analysis highlights less-concerned moral hazard behaviors in the ODM supply chain. By recreating the complex interactions of participants, the conclusion shed light on how should different roles deal with their risks and take actions in a real business environment. Originality/value The biggest contribution of this study is to discuss the issue of moral hazard in the ODM supply chain. Piracy initiated by foundries may be a new type of supply chain risk and should be paid attention to.

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Optimal Distribution Strategy for Enterprise Software: Retail, SaaS, or Dual Channel?

Cited by 42 publications

References 15 publications

Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?

Optimal Pricing Model of Digital Music: Subscription, Ownership or Mixed?

SaaS or not: optimal versioning strategy of releasing enterprise software

Will foundry become a competitor of manufacturer in ODM supply chain?

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