Software Renting in the Era of Cloud Computing

In the new era of computing, software can be sold and delivered as a cloud service, and software renting has become as a strategic tool to compete in the market. Software renting has several advantages from the customer's point of view. However, for software providers it is challenging to ensure a profitable revenue stream when a license fee is replaced by a periodic rental fee. In this study, software renting was found to help the case firms to differentiate themselves from competitors; it also increased their competitive advantage by making the software available for a larger customer group. However, the negotiating power of larger customers impacted on software pricing, rental agreements, and the revenue model.