SELECTING A START-UP AS SAAS VENDOR : Understanding adoption of software-as-a-service delivered by a start-up

University essay from Umeå universitet/Företagsekonomi

Abstract: Our society is increasingly entangled with, and reliant on software. Previously, software has mainly been operated on-premises, i.e., installed and ran on a physical computer, manually supported, and maintained by individuals at the location where the software is running. Today, software is often delivered via the cloud using a pay-as-you-go subscription service, hosted, and continuously supported by the vendor, i.e., the organization providing the solution. A collective name for this type of solution is “Software-as-a-Service” (SaaS). SaaS is a popular delivery model amongst software start-ups, who are known to be innovative and create valuable new solutions that benefit society. Hence, it can be valuable to help SaaS start-ups understand how most effectively navigate and reach their first customers. This thesis does this by investigating what buyers find important when buying SaaS from a start-up vendor. Technology and innovation adoption has been extensively studied. Theories such as the “TOE-framework” and “Diffusion of Innovation” attempt to explain how the adoption of new solutions is determined and what factors influence it. Moreover, multiple studies have also investigated what affects the decision to buy SaaS. Finally, studies have examined what buyers find important when buying from a start-up. However, no studies have explored what buyers consider when buying SaaS from a start-up vendor. This thesis aims to fulfill the research gap presented above and to answer the following research questions:   What are the determining factors for adoption of Software-as-a-Service delivered by a start-up vendor? How do these determinants affect adoption? To answer the research questions, the study utilizes a deductive approach with elements of induction. Qualitative data is collected in 8 semi-structured interviews, all with a focus on buying organization's SaaS adoption decision. The interview structure is based on the theoretical framework which consists of four major categories that can affect adoption: “Technology”, “Organization”, and “Environment”, of the TOE-framework, and “Vendor Relationship” which is added by the authors of this thesis based on prior studies that suggested this as an important aspect in for the studied context. Within each major category, determinants of adoption, i.e., factors that influence the decision to adopt, are derived from theories specific to SaaS and start-up adoption. The findings confirm all four of the overarching categories of the theoretical framework as important in the decision to adopt SaaS from a start-up vendor. The confirmation of the vendor relationship category can be considered a key finding of the thesis since it is not present in the original TOE-framework or any of the studies on SaaS and start-up adoption. On a more granular level, the thesis highlights the observed adoption determinants under each of the categories and describes how they relate to each other and to existing theory. By answering the research questions, the thesis provides useful insights that can help SaaS start-ups better understand what factors potential buyers consider in their adoption decision. As a result, start-ups can better align their strategy with the wants and needs of buyers and increase the probability of success. Finally, the thesis contributes to theory by expanding knowledge related to the factors determining the adoption of SaaS, when it is delivered by a start-up vendor.

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