Mixed-Channel Competition And Coordination Research Of SaaS In Service Industry

SaaS (Software as a Service), based on cloud computing, is an importantsoftware application service and a critical part of cloud computing as well. Thoughelectronic direct channel is universally adopted by SaaS service providers, more andmore SaaS service providers, both at home and abroad, are expanding physicalchannels promptly, making mixed channel structure in which electronic directchannel coexists with physical agent channels come into being. With such structure,SaaS service providers and SaaS agents are supply chain partners in the horizontalperspective, and market competitors in the vertical perspective. Although mixedchannel structure shows advantages in reducing transaction costs and expandingmarket share, mixed channel members often find them in an awkward situation thatthey must cooperate and compete with each other at the same time. SaaS serviceproviders deliver software services other than software products to customers, whichmeans services become SaaS’ competing targets. Under this circumstance, researcheson services competition and coordination of SaaS’ mixed channel would contribute tooptimize mixed channel and promote SaaS’ rapid development.Four primary conclusions are drawn from this paper:First, for the characteristics of SaaS products as well as customers’ preference, itis necessary to form SaaS’ mixed channel. Enlightened by the great transformationfrom electronic direct channel to mixed channel and based on theories such asresource-based theory, resource dependence theory, transaction cost theory and agenttheory, this research conducts in-depth case studies, not only to interpret the necessityof forming SaaS’ mixed channel from combined perspectives of products, marketsand cost, but also explain the feasibility of transforming from electronic directchannel to SaaS’ mixed channel from the perspective of preliminary theoretical basis.With in-depth case study, this research finds that resources, transaction costs,principal-agent cost and external environment make it feasible to form SaaS’ mixedchannel, and that characteristics of SaaS products and customers’ preference wellinterpret the necessity of the transformation. Second, physical channels under semi-autonomous status in SaaS’s mixedchannel achieve higher efficiency. Based on previous classification of channelautonomous degrees, this research divides physical channels of SaaS’s mixed channelinto four types, fully integrated channel, semi-autonomous channel and totallyautonomous channel. Considering the total profits of the supply chain, this researchfinds out that when SaaS service provider’s unit cost of services is lower than that ofits’ agent, mixed channel is more advantageous than the mere use of direct channel.Considering the profit of SaaS’ service provider’s proft, this paper maintains thatwhen the agent’s customer base surpasses a certain value, mixed channel is moreadvantageous than the mere use of direct channel. The strategy of adding physicalchannels’ semi-autonomous channel degree is opitmal to that of adding fullyintegrated and totally autonomous channel.Third, the advantages and disadvantages of SaaS mixed channel service modesheavily depend on the situation and context it is employed. Considering thecharacteristics of SaaS service and SaaS mixed channel, this research proposes threeservice modes, that is, the independent service, the integrated service by SaaS serviceprovider and the integrated service by SaaS service agent. Also, it studies the servicecompetition of SaaS mixed channel in different modes and compares the advantagesand disadvantages from different standpoints of SaaS mixed channel supply chain,SaaS service provider and SaaS service agent. The current study finds that theadvantages and disadvantages of SaaS mixed channel service modes depend on thesituation, and are especially affected by factors such as the unit cost of services andthe cost of service level. When parameters of the cost of service level and the unitcost of service are at the same level between SaaS provider and SaaS agent, theintegrated service by SaaS agent is better than the other two service modes from thestandpoint of SaaS service provider and customers.Fourth, revenue sharing contract and its improved contract have limited capacityin coordinating the mixed SaaS channel. Based on the characteristics of SaaS andprevious findings about mixed channel coordinating contract, this research exploresthe coordination capacity revenue sharing contract and its improved contract in SaaSmixed channel. It finds that conditions of the coordination of the reverse revenue sharing contract are very strict, and the applicability is rather limited. However, in thecoordination of the independent service mode, the variable cost allocation factor inthe inverse revenue sharing and variable cost allocation contract does not have anysignificant effect on the coordination as well as the factor of revenue sharing in themutual revenue sharing contract. That is the same case in the conditions of thecoordination of the inverse revenue sharing and variable cost allocation contract, themutual revenue sharing contract as well as the reverse revenue sharing contract.Therefore, the coordination capacity of the coordination of the inverse revenuesharing and variable cost allocation contract, the mutual revenue sharing contract andthe reverse revenue sharing contract are the same. The reverse revenue sharing andfixed cost allocation contract could coordinate the SaaS mixed channel in differentservice modes. While adopting this contract can achieve a win-win of the SaaSservice providers and agents without the coordination, the profit of the SaaS agent iszero when the coordination is achieved.With the above findings, this research has generally made the followingcontributions:First, in service competitions, SaaS mixed channel needs to reset its service level.Researches on price competition hold that establishing same price in two channels isbeneficial to supply chain members, however in service competition, SaaS serviceprovider reset its service level in order to maximizing the supply chain profit will bebetter than others when newly added physical channel fully integrated and besemi-autonomous.Second, the optimal service level of SaaS agent in service competition isindependent with the service provider’s service level. We found competitiveequilibrium of the three service modes in service competition is different from that inprice competition. In service competition, the optimal service level reflection of SaaSagent is just a reaction function on transfer price by SaaS service provider,independent from the service level of SaaS service providerThird, traditional contract lacks in coordination in service competition. Bymeans of checking coordination with traditional mixed channel contract, it is foundthat revenue sharing contract which coordinates with traditional mixed channels, as well as inverse revenue sharing contract lack in coordination with SaaS mixedchannels. On improvement of inverse revenue sharing contract, we found thelimitation of inverse revenue sharing and variable cost allocation contract, mutualsharing revenue contract, the coordination of which shows no difference with that ofinverse revenue sharing contract. However, inverse revenue sharing and fixed costallocation contract is able to coordinate with SaaS mixed channels in different servicemodes.This dissertation is divided into8chapters. Chapter1introduces the researchbackground, research questions, research objectives and methods. Chapter2reviewsrelated previous studies and lays theoretical foundations for the current research.Chapter3discusses causes of the mixed channel structure of SaaS, and in-depth casestudies are conducted to check and correct proposed theoretical models. Chapter4reviews and describes major characteristics of SaaS’s mixed channel economictechnology. Based on that, the service mode of SaaS mixed channel and thecompetition modes of SaaS mixed channel are put forward and established. Chapter5explores the influence from different autonomous degrees of newly added physicalchannels of SaaS mixed channel on the profit of SaaS mixed channel. Meanwhile,comparisons are made between different strategies which determine different servicelevels. Chapter6focuses on competitions of SaaS mixed channel between SaaSprovider and agent under its integrated service modes. Comparisons are made amongthe three service modes respectively from standpoints of SaaS mixed channel, theprovider, the agent and the customer. Chapter7, based on the characteristics of SaaSand previous findings on mixed channel coordination contract, examines thecoordination of revenue sharing contract and its improved contract in SaaS mixedchannels in different service modes. Chapter8summarizes major findings of thisresearch and presents primary theoretical and practical contributions. It also pointsout the limitations of this study and proposes directions of further studies.