Evaluating Investments in Portability and Interoperability between Software Service Platforms

Netsanet Haile () and Jörn Altmann
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Netsanet Haile: Seoul National University, Seoul, Korea

No 2017136, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: Within a closed ecosystem, end-users cannot interoperate with other platforms or port their software and data easily without a cost for interface integration or data re-formatting. The customers of these closed software service platforms are locked-in. Potential customers, who are aware of this lock-in issue, are hesitant to adopt a closed software service platform, slowing down the wide deployment of the software service platform. This paper applies an economic perspective to investigate the value creation for providers and users at different levels of interoperability. For the analysis, a value creation model for software service platforms within a software service ecosystem has been developed. Simulations of the value creation model show that, even if investments in interoperability and portability are aimed at addressing user requirements, their impact also drives the providers’ profitability. Furthermore, emerging providers require investing more than market leading providers, as they have less power to set de facto standards. The simulation results also show that there is an optimal level of investments, with respect to profit and return on investments. Overall, from these results, platform providers cannot only obtain an understanding on how investments in interoperability and portability impact cost, enable cost-effective service integration, and create value, but also design new strategies for optimizing investments.

Keywords: Cloud Computing; Software Service Platform; Interoperability; Portability; Value Creation Model; Computational Economics; Simulation; Value Analysis; Net Present Value; Return On Investments; Investment Assessment. (search for similar items in EconPapers)
JEL-codes: C15 D24 D46 D85 E22 L86 O31 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2017-05, Revised 2017-05
New Economics Papers: this item is included in nep-cmp, nep-ict, nep-mac and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Journal of Future Generation Computer Systems.

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http://temep-repec.my-groups.de/DP-136.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:snv:dp2009:2017136

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