Cloud Computing Service Provider Business Model Success Characteristics

Introduction

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).