Cloud Computing Service Provider Business Model Success Characteristics

Cloud Computing Service Provider Business Model Success Characteristics

Ignitia Motjolopane, Tshinakaho Relebogile Seaba
DOI: 10.4018/978-1-7998-8169-8.ch006
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In a digital arena, information technology services provision is shifting to a cloud computing ecosystem. Cloud computing is an enabler for digital transformation with cloud computing service providers central to the digital transformation of both companies and higher education. As cloud computing service providers play the role of an ‘architect' for companies as supply chain is digitised and in supporting higher education institutions striving to deliver user-focused services in the face of increasing competition, an understanding of successful characteristics of cloud computing service provider business models is of main interest for providers and may also be of value for companies and higher education institutions when selecting cloud computing service providers. Despite the importance of cloud computing service providers' business models, information systems literature has provided limited analysis on the characteristics of successful business models. As such, the chapter aims to contribute to the emerging research on characteristics of successful business models.
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In the digital era, the provision of information technology (IT) services is shifting from traditional on premise to a cloud computing service with computing services delivered through an ecosystem. In this digital transformation, cloud computing plays a key role enabling companies to create competitive advantage and establishing useful links with other companies (Masenya, 2020). Digital transformation may be defined as the innovative use of IT to significantly change the model of how business operates in generating and capturing value for customers and shareholders (Chan, 2020). Therefore, cloud computing will play a fundamental role in businesses in the future with IT as the backbone of digital transformation (Abolhassan, 2017), and cloud computing service providers playing ‘architect of the digital future’ for companies (Hottges, 2017). Furthermore, collaboration between higher education institutions and industry is increasingly viewed as a primary vehicle to enhance innovation through knowledge exchange (Gunay, 2021). As such, the value of cloud computing in the digital transformation journey for companies and higher education cannot be understated. More so, industries in areas such as manufacturing, transportation and logistics are experiencing a digital transformation across the value chain (Abolhassan, 2017). In higher education, the digital transformation has become a priority (Benavides et al., 2020) and is aimed at delivering user-focused services as changes occur in technology, competition and audience (Seres et al., 2018).

Companies and higher education institutions require a cloud computing provider that is able to provide flexibility and support progress towards successful digital transformation. More so, Higher Education business model paradigms have been shifting (Yildiz, 2021). Cloud computing providers are central in meeting the diverse companies and higher education institution needs and overseeing the value creation network.; hence the right IT partners are an important element for digital transformation (Abolhassan, 2017). Therefore, for the overall success in digital transformation, the cloud computing service providers’ success is of importance to the digital transformation ecosystem’s success. However, despite cloud computing’s potential to fuel business model disruptions and digital transformation, value creation and capture comes with several challenges and concerns for cloud computing service providers (Sunyaev, 2020).

Some cloud computing service providers have reaped the rewards from the transition to cloud computing, and others have experienced substantial difficulties in formulating and operationalising effective business models (Clohessy et al., 2018) that contribute to economic success. As in moving to cloud computing for survival and retaining customers implies service providers’ need to change existing business models revenue streams from upfront license fees, to periodic subscription fees (Xiao & Hedman, 2019). The cloud computing ecosystem further complicates business model creation as, while the actors bring almost unlimited creativity to the ecosystem, the actors also add complexity, interdependencies, and uncertainties that escalate the need for information (Wang, 2021). Consequently, to achieve business model agility, continuous business model development is needed (Bouwman et al., 2018), taking into account business model component interdependencies (Lanzolla & Markides, 2020) and testing business models under different scenarios (Bouwman et al., 2018).

Key Terms in this Chapter

Platform as a Service (PaaS): Offers a computing platform and solution stack as services enabling the consumer to deploy applications without the cost and complexity of buying and managing the hardware and underlying software layers.

Software as a Service (SaaS): Provider licences an application to the customer for use as a service on-demand offering consumers benefits such as operational efficiency and reduced cost.

Cloud Computing: Delivery of both hardware and software services on-demand to customers over the internet independent of device and location.

Business model: A dynamic set of interrelated set of components that articulate how a business makes money, creates, and captures value in serving the target customer, taking into account key activities, resources and partnerships as well as the value exchanges between the company and its partners.

Digital Transformation: Application of innovative digital technology to fundamentally how the business operates, and the way technology is delivered to support the overall business.

Identity as a Service (IDaaS): Cloud-based identity solution to manage cloud computing customers’ identities enabling cloud computing to manage their identities centrally.

Infrastructure as a Service (IaaS): Provision, processing, storage, networks, and other fundamental computing resources where the service provider controls the underlying infrastructure.

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