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

  • 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)

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.

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Paper provided by Seoul National University; Technology Management, Economics, and Policy Program (TEMEP) in its series TEMEP Discussion Papers with number 201295.

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Length: 24 pages
Date of creation: Jun 2012
Date of revision: Jun 2012
Handle: RePEc:snv:dp2009:201295
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  1. 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.
  2. Ashish Arora & Farasat A. S. Bokhari, 2007. "OPEN VERSUS CLOSED FIRMS AND THE DYNAMICS OF INDUSTRY EVOLUTION -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 55(3), pages 499-527, 09.
  3. 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.
  4. Schiff, Aaron, 2003. "Open and closed systems of two-sided networks," Information Economics and Policy, Elsevier, vol. 15(4), pages 425-442, December.
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