Determinants of software-as-a-service benefits and impact on firm performance

Software as a Service (SaaS) is increasingly used by firms for sourcing business application software. SaaS can enable a cost reduction and quality improvement of existing operations and provide rapid and low-cost innovation. However, decision makers are unclear about how they can benefit from SaaS. This study contributes to filling this knowledge gap by investigating factors that determine the magnitudes of operational and innovational benefits and firm performance. These research hypotheses were tested using data collected through a survey of 102 Dutch firms that use sophisticated financial SaaS services. The results show that a firm's adaptation to the SaaS model as well as its ACAP positively affects operational and innovation benefits, whereas contractual governance positively affects only the innovational benefits, and relational governance does not affect any of these two types of benefits. Although both operational and innovational benefits positively impact a firm's performance, the former have a stronger impact than the latter. The insights gained from our survey can support firms' decision-making concerning the maximization of the business benefits and firm performance.