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Exploring public IT procurement: Switching costs in the wake of a turn-to-services

Conference paper
Authors Johan Magnusson
Andreas Nilsson
Published in Proceedings of 8th Scandinavian Workshop on E-government
Publication year 2011
Published at Department of Business Administration, Accounting
Language en
Keywords Switching cost, service, service oriented architecture, public sector, procurement, design science
Subject categories Business Administration

Abstract

Technological and business‐model related developments have continued to push the view that services and not software packages are the upcoming commodities within IT. This can be seen in the wide‐spread adoption of Service Oriented Architecture (SOA) as the de‐facto standard for new systems, and the radical increase in Software as a Service and other Cloud Computing based technologies as the business‐ models of choice for IT procurement. This” turn‐to‐services” brings with it promises of a better fit between IT supply and the changing demands of customers, and an increased competition between interoperable services in the market. Public Sector IT Procurement (PSITP) has yet to see mainstream adoption of these new business‐models, yet the promises of reduced price and increased fit are still there. This paper builds on the assumptions that high switching cost is a factor that reduces the competition on the market for PSITP (Porter, 1980; Frendell, 1995). The paper presents a design science (Peffers et al, 2007) approach towards studying PSITP switching costs. A model for estimating switching cost is developed and a roadmap for demonstrating and evaluating the model is presented.

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