Quo vadis, SaaS a system dynamics model based enquiry into the SaaS industry

SaaS has quickly become a mainstream business phenomenon by delivering a software product as a service. In this study, we examine the system dynamics of the SaaS business model in light of the drivers of growth, the various types of SaaS applications and the various entities in the SaaS value chain. A modeling approach is followed to determine the effects of various drivers of growth in SaaS business model. In addition, our model tries to determine the relative power of the entities in the SaaS value chain under various scenarios chain and attempts to determine when and how bandwagon effects occur in this industry and isolate the factors that contribute to growth or decline of various types of application revenues. The model is also a means to identify the stakeholders in the value network who gain maximum value under different conditions. Our results suggest that the SaaS industry would fall victim to a stronger substitute business model unless SaaS can move more of its resources to work on applications which are more critical and customized to the needs of a client.