IDEAS home Printed from https://ideas.repec.org/a/spr/binfse/v61y2019i2d10.1007_s12599-017-0494-0.html
   My bibliography  Save this article

How to Succeed with Cloud Services?

Author

Listed:
  • Manuel Trenz

    (University of Augsburg)

  • Jan Huntgeburth

    (University of Augsburg)

  • Daniel Veit

    (University of Augsburg)

Abstract

How can cloud providers be successful? Severe competition and low up-front commitments create enormous challenges for providers of consumer cloud services when attempting to develop a sustainable market position. Emergent trends like consumerization lead to high growth rates and extend the reach of these services far into the enterprise sphere. Using a freemium model, many providers focus on establishing a large customer base quickly but fail to generate revenue streams in the long run. Others charge consumers early but do not reach their growth targets. Based on a representative sample of 596 actual cloud service users, the study examines how consumer cloud services can become self-sustainable on the basis of the user base and revenue streams they generate. The authors identify two mechanisms that influence the success of consumer cloud services, dedication- and constraint-based mechanisms, and show how they drive different elements of success. They find that satisfaction impacts the success of cloud services in terms of user generation and continuance, while switching barriers need to be in place to generate revenues. The results indicate that focusing on a single success element can be misleading and insufficient to understand the success of cloud services. The key findings are used to derive recommendations for three generic strategies that cloud providers can apply to become successful in their competitive market environment.

Suggested Citation

  • Manuel Trenz & Jan Huntgeburth & Daniel Veit, 2019. "How to Succeed with Cloud Services?," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 61(2), pages 181-194, April.
    • Handle: RePEc:spr:binfse:v:61:y:2019:i:2:d:10.1007_s12599-017-0494-0
    DOI: 10.1007/s12599-017-0494-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12599-017-0494-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12599-017-0494-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:dar:wpaper:63687 is not listed on IDEAS
    2. Benlian, Alexander & Koufaris, M. & Hess, Thomas, 2011. "Service quality in Software-As-A-Service: Developing the SaaS-QUAL measure and examining its role in usage continuance," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 58027, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    3. Marius F. Niculescu & D. J. Wu, 2014. "Economics of Free Under Perpetual Licensing: Implications for the Software Industry," Information Systems Research, INFORMS, vol. 25(1), pages 173-199, March.
    4. Stine Labes & Nicolai Hanner & Ruediger Zarnekow, 2017. "Successful Business Model Types of Cloud Providers," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 59(4), pages 223-233, August.
    5. Miguel I. Aguirre-Urreta & George M. Marakas, 2014. "Research Note—Partial Least Squares and Models with Formatively Specified Endogenous Constructs: A Cautionary Note," Information Systems Research, INFORMS, vol. 25(4), pages 761-778, December.
    6. Dan J. Kim & Donald L. Ferrin & H. Raghav Rao, 2009. "Trust and Satisfaction, Two Stepping Stones for Successful E-Commerce Relationships: A Longitudinal Exploration," Information Systems Research, INFORMS, vol. 20(2), pages 237-257, June.
    7. repec:dar:wpaper:64420 is not listed on IDEAS
    8. Dellarocas, Chrysanthos, 2003. "The Digitization of Word-of-mouth: Promise and Challenges of Online Feedback Mechanisms," Working papers 4296-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    9. Chrysanthos Dellarocas, 2003. "The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms," Management Science, INFORMS, vol. 49(10), pages 1407-1424, October.
    10. Johnson, Michael D & Anderson, Eugene W & Fornell, Claes, 1995. "Rational and Adaptive Performance Expectations in a Customer Satisfaction Framework," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 21(4), pages 695-707, March.
    11. Pei-Yu (Sharon) Chen & Lorin M. Hitt, 2002. "Measuring Switching Costs and the Determinants of Customer Retention in Internet-Enabled Businesses: A Study of the Online Brokerage Industry," Information Systems Research, INFORMS, vol. 13(3), pages 255-274, September.
    12. Wagner, T. & Benlian, Alexander & Hess, Thomas, 2014. "Converting freemium customers from free to premium - The role of the perceived premium fit in the case of music as a service," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 66722, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    13. Jinwoo Kim & Jungwon Lee & Kwanghee Han & Moonkyu Lee, 2002. "Businesses as Buildings: Metrics for the Architectural Quality of Internet Businesses," Information Systems Research, INFORMS, vol. 13(3), pages 239-254, September.
    14. Wagner, C. & Benlian, Alexander & Hess, Thomas, 2014. "Converting freemium customers from free to premium - The role of the perceived premium fit in the case of music as a service," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 63495, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    15. Robert J. Meyer & Shenghui Zhao & Jin K. Han, 2008. "Biases in Valuation vs. Usage of Innovative Product Features," Marketing Science, INFORMS, vol. 27(6), pages 1083-1096, 11-12.
    16. Gary C. Moore & Izak Benbasat, 1991. "Development of an Instrument to Measure the Perceptions of Adopting an Information Technology Innovation," Information Systems Research, INFORMS, vol. 2(3), pages 192-222, September.
    17. Veit, Daniel J. & Clemons, Eric K. & Benlian, Alexander & Buxmann, Peter & Hess, Thomas & Kundisch, D. & Leimeister, Jan Marco & Loos, Peter & Spann, Martin, 2014. "Business Models – an Information Systems Research Agenda," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 62747, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    18. Wagner, T. & Benlian, Alexander & Hess, Thomas, 2014. "Converting freemium customers from free to premium - The role of the perceived premium fit in the case of music as a service," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 69900, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Chia-Ying & Fang, Yu-Hui & Chiang, Yu-Hung, 2023. "Can AI chatbots help retain customers? An integrative perspective using affordance theory and service-domain logic," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    2. Jonathan Jan Pieters & Alinda Kokkinou & Ton Kollenburg, 2022. "Understanding Blockchain Technology Adoption by Non-experts: an Application of the Unified Theory of Acceptance and Use of Technology (UTAUT)," SN Operations Research Forum, Springer, vol. 3(1), pages 1-19, March.
    3. Sebastian Lins & Konstantin D. Pandl & Heiner Teigeler & Scott Thiebes & Calvin Bayer & Ali Sunyaev, 2021. "Artificial Intelligence as a Service," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(4), pages 441-456, August.
    4. Christian Matt & Manuel Trenz & Christy M. K. Cheung & Ofir Turel, 2019. "The digitization of the individual: conceptual foundations and opportunities for research," Electronic Markets, Springer;IIM University of St. Gallen, vol. 29(3), pages 315-322, September.
    5. Sebastian Floerecke & Franz Lehner & Sebastian Schweikl, 2021. "Cloud computing ecosystem model: evaluation and role clusters," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(4), pages 923-943, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Le Wang & Paul Benjamin Lowry & Xin (Robert) Luo & Han Li, 2023. "Moving Consumers from Free to Fee in Platform-Based Markets: An Empirical Study of Multiplayer Online Battle Arena Games," Information Systems Research, INFORMS, vol. 34(1), pages 275-296, March.
    2. Li, Jingyan & Wu, Jie & Zhang, Juzhi & Ji, Xiang, 2024. "Freemium design: Optimal tier differentiation models for content platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 188(C).
    3. Oliver Francis Koch & Alexander Benlian, 2017. "The effect of free sampling strategies on freemium conversion rates," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(1), pages 67-76, February.
    4. Kang Li & Jingwei Zhang & Lunchuan Zhang, 2021. "Optimal Software Feature-Limited Freemium Model Design: A New Consumer Learning Theoretical Framework," Mathematics, MDPI, vol. 9(9), pages 1-24, April.
    5. Xiaoyan Chen & Wei Geng, 2022. "Enroll now, pay later: optimal pricing and nudge efforts for massive-online-open-courses providers," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 1003-1018, June.
    6. Tang, Hua & Chen, Jing & Ai, Xingzheng & Li, Xiaojing & He, Haojia, 2023. "First-party content decision under competitive hardware/software platforms: Free vs. charge," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1068-1083.
    7. Zijun (June) Shi & Kaifu Zhang & Kannan Srinivasan, 2019. "Freemium as an Optimal Strategy for Market Dominant Firms," Marketing Science, INFORMS, vol. 38(1), pages 150-169, January.
    8. Biraglia, Alessandro & Bowen, Karen T. & Gerrath, Maximilian H.E.E. & Musarra, Giuseppe, 2022. "How need for closure and deal proneness shape consumers’ freemium versus premium price choices," Journal of Business Research, Elsevier, vol. 143(C), pages 157-170.
    9. Gökçe Esenduran & James A. Hill & In Joon Noh, 2020. "Understanding the Choice of Online Resale Channel for Used Electronics," Production and Operations Management, Production and Operations Management Society, vol. 29(5), pages 1188-1211, May.
    10. Wann-Yih Wu & Phan Thi Phu Quyen & Adriana A. Amaya Rivas, 2017. "How e-servicescapes affect customer online shopping intention: the moderating effects of gender and online purchasing experience," Information Systems and e-Business Management, Springer, vol. 15(3), pages 689-715, August.
    11. Numminen, Emil & Sällberg, Henrik & Wang, Shujun, 2022. "The impact of app revenue model choices for app revenues: A study of apps since their initial App Store launch," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 325-336.
    12. Florian Wiesböck & Thomas Hess, 2020. "Digital innovations," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(1), pages 75-86, March.
    13. Martin Adam & Konstantin Roethke & Alexander Benlian, 2022. "Gamblified digital product offerings: an experimental study of loot box menu designs," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 971-986, June.
    14. Mª Victoria Bordonaba-Juste & Laura Lucia-Palacios & Raúl Pérez-López, 2020. "Generational differences in valuing usefulness, privacy and security negative experiences for paying for cloud services," Information Systems and e-Business Management, Springer, vol. 18(1), pages 35-60, March.
    15. Xue (Jane) Tan & Youwei Wang & Yong Tan, 2019. "Impact of Live Chat on Purchase in Electronic Markets: The Moderating Role of Information Cues," Information Systems Research, INFORMS, vol. 30(4), pages 1248-1271, December.
    16. Hamari, Juho & Hanner, Nicolai & Koivisto, Jonna, 2017. "Service quality explains why people use freemium services but not if they go premium: An empirical study in free-to-play games," International Journal of Information Management, Elsevier, vol. 37(1), pages 1449-1459.
    17. Falko Lucht, 2019. "The Success of the Freemium Business Model. How Riot Games flourishes with a free to play game," Manager Journal, Faculty of Business and Administration, University of Bucharest, vol. 29(1), pages 114-124, December.
    18. Roll, Oliver & Loh, Patrick, 2020. "Der Einfluss der Digitalisierung auf das Preismanagement – Ansatzpunkte, Modelle und Methoden," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 74(4), pages 334-348.
    19. Gefen, David & Reychav, Iris, 2014. "Why trustworthiness in an IT vendor is important even after the vendor left: IT is accepting the message and not just the messenger that is important," Omega, Elsevier, vol. 44(C), pages 111-125.
    20. Jooyoung Hwang & Anita Eves & Jason L. Stienmetz, 2021. "The Impact of Social Media Use on Consumers’ Restaurant Consumption Experiences: A Qualitative Study," Sustainability, MDPI, vol. 13(12), pages 1-33, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:binfse:v:61:y:2019:i:2:d:10.1007_s12599-017-0494-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.