An adaptability-driven model and tool for analysis of service profitability

Abstract

Profitability of adopting Software-as-a-Service (SaaS) solutions for existing applications is currently analyzed mostly in informal way. Informal analysis is unreliable because of the many conflicting factors that affect costs and benefits of offering applications on the cloud. We propose a quantitative economic model for evaluating profitability of migrating to SaaS that enables potential service providers to evaluate costs and benefits of various migration strategies and choices of target service architectures. In previous work, we presented a rudimentary conceptual SaaS economic model enumerating factors that have to do with service profitability, and defining qualitative relations among them. A quantitative economic model presented in this paper extends the conceptual model with equations that quantify these relations, enabling more precise reasoning about profitability of various SaaS implementation strategies, helping potential service providers to select the most suitable strategy for their business situation.