The transition to software-as-a-service in South Africa
Date
2015
Authors
Zhou, Tapiwanashe
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Abstract
ABSTRACT
The global trend towards adoption of Software-as-a-Service (SaaS) is having a transformative effective on the software industry. Global software vendors have started to shift towards SaaS by offering software, which is developed and hosted by the vendor and offered to customers as a service through the Internet. In South Africa, the majority of software in use is developed by major international software vendors and distributed and supported by local channel partners or value added resellers.
The transition to SaaS challenges existing business models and software industry structures, as well as the core operations of existing valued added resellers.
While the implications of the transition to SaaS for primary software vendors have been studied, the impact on other players in the software value chain, such as valued added resellers, is not well understood. For South Africa, where valued added resellers dominate the software distribution market, successful adoption of the SaaS business model by resellers is crucial to the sustainability of the local software industry.
This research focuses on the implications of the transition to SaaS for the business models of South African software value added resellers. Based on literature, four propositions were put forward. These propositions were examined in multiple face-to-face interviews with executives of South African software companies that have undergone a transition to SaaS. The Business Model Canvas, first promulgated by Alexander Osterwalder, was selected as the framework within which to analyse the business model. Results show that SaaS adoption has implications for affected software value added resellers for all nine of the building blocks of the Business Model Canvas.
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The findings demonstrate the disruptive nature of the SaaS phenomenon and highlight the need for existing players to brace themselves for the major changes required for a successful adoption of SaaS. Through the adoption of such measures, incumbents in the software industry can remain competitive and defend their market share against emerging SaaS start-ups or SaaS offerings from other vendors.
The research contributes to an increased understanding of changes that software value added resellers need to undergo to transform their business models from that of distributors and implementers of software to providers of a service.
For the South African software industry, the research provides vital information on the challenges, critical success factors and organizational transformation required for a successful transition to SaaS. Local software resellers whose business is still based on the on-premise model can use this framework and the findings of this research as a guide to ensure a successful transition to become SaaS vendors. Alternatively, the lessons learnt can help organisations undertaking such a transition to minimise risks and costs and the potential business failure associated with an unsuccessful transition.
Keywords:
Business model, Business Model Canvas, Cloud computing, On-premise, Software-as-a-Service, SaaS, Software ecosystem, Software vendor, Traditional licensing model, Value Added Reseller
Description
MBA 2015
Keywords
Business planning -- Computer networks -- South Africa, Integrated software,Management information systems