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IT Service Platforms: Their Value Creation Model and the Impact of their Level of Openness on their Adoption

Author

Listed:
  • Selam Abrham Gebregiorgis

    (Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University)

  • Jorn Altmann

    (Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University)

Abstract

Many IT service platforms (e.g., cloud computing platforms) are built as closed systems. They do not allow their customers to interoperate with other platforms or port their data to other platforms. As switching to different system is costly, customer of a closed IT system can be considered locked in. Consequently, potential customers, who are aware of this lock-in issue, do not adopt cloud services. Opening up an IT service platform, however, reduces users¡¯ concerns about lock-in and its associated switching cost. It is even predicted that an IT service platform gets more attractive, if it opens up. This paper validates this prediction by analyzing the level of openness (i.e., interoperability, portability, and usability) of cloud computing platforms on their adoption. For the validation, we develop a value creation model for IT service platforms, using existing methods on value networks. Based on this value creation model and a specification of requirements of open cloud computing platforms, the relationship between the openness of IT service platforms and the adoption of IT service platforms (i.e., attractiveness) is analyzed in detail. In particular, our results show that the level of openness plays a major role in the adoption of IT service platforms of emerging service providers.

Suggested Citation

  • Selam Abrham Gebregiorgis & Jorn Altmann, 2012. "IT Service Platforms: Their Value Creation Model and the Impact of their Level of Openness on their Adoption," TEMEP Discussion Papers 201295, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jun 2012.
    • Handle: RePEc:snv:dp2009:201295
    as

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    File URL: http://temep-repec.my-groups.de/DP-95.pdf
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    References listed on IDEAS

    as
    1. Schiff, Aaron, 2003. "Open and closed systems of two-sided networks," Information Economics and Policy, Elsevier, vol. 15(4), pages 425-442, December.
    2. Ashraf Bany Mohammed & Jorn Altmann & Junseok Hwang, 2010. "Cloud Computing Value Chains Understanding Businesses and Value Creation in the Cloud," TEMEP Discussion Papers 201061, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jun 2010.
    3. Peppard, Joe & Rylander, Anna, 0. "From Value Chain to Value Network:: Insights for Mobile Operators," European Management Journal, Elsevier, vol. 24(2-3), pages 128-141, April.
    4. Carmen Matutes & Pierre Regibeau, 1988. ""Mix and Match": Product Compatibility without Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 221-234, Summer.
    5. Ashish Arora & Farasat A. S. Bokhari, 2007. "Open Versus Closed Firms And The Dynamics Of Industry Evolution," Journal of Industrial Economics, Wiley Blackwell, vol. 55(3), pages 499-527, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Netsanet Haile & Jorn Altmann, 2012. "Value Creation in IT Service Platforms through Two-Sided Network Effects," TEMEP Discussion Papers 201297, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2012.
    2. Netsanet Haile & Jörn Altmann, 2017. "Evaluating Investments in Portability and Interoperability between Software Service Platforms," TEMEP Discussion Papers 2017136, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised May 2017.
    3. Netsanet Haile & Jorn Altmann, 2013. "Estimating the Value Obtained from Using a Software Service Platform," TEMEP Discussion Papers 2013105, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Aug 2013.
    4. Dongnyok Shim & Jin Gyo Kim & Jorn Altmann, 2016. "Identifying Key Drivers and Bottlenecks in the Adoption of E-Book Readers in Korea," TEMEP Discussion Papers 2016129, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jan 2016.
    5. Netsanet Haile & Jorn Altmann, 2015. "Value Creation in Software Service Platforms," TEMEP Discussion Papers 2015123, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Sep 2015.
    6. Cesare Bartolini & Donia El Kateb & Yves Le Traon & David Hagen, 2018. "Cloud providers viability," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(1), pages 53-75, February.

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    More about this item

    Keywords

    Open IT Service Platforms; Interoperability; Portability; Usability; Openness; Cloud Computing Adoption; Value Creation Model; Simulation; Computational Economics; System Dynamics; Value Networks.;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

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