Volume 3 Number 5 (May 2008)
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JSW 2008 Vol.3(5): 1-10 ISSN: 1796-217X
doi: 10.4304/jsw.3.5.1-10

Is SOA Superior? Evidence from SaaS Financial Statements

Thomas W. Hall
Joseph Luter, III College of Business and Leadership Christopher Newport University, Newport News, Virginia, USA

Abstract—We use audited financial statements to examine claims that service-oriented architecture (SOA) leads to higher profits relative to traditional software delivery models. Specifically, we examine vendors that rely on the Software-as-a-Service (SaaS) pricing model, and compare their performance to other firms that still use the traditional perpetual license model. We find that, relative to their peers, SaaS firms tend to have lower costs of goods sold as a portion of revenues. Compared to their software firm peers, SaaS firms are also younger, smaller, possess less financial leverage, and have higher costs (sales, general, and administrative) relative to revenues. Pure, per-unit costs of hosted SOA applications do not appear to be lower, however, compared to firms that specialize in retail provision of mass market software. This leads us to conclude that, despite the predictions of the most ardent adherents of SOA and SaaS, traditional vendors with sufficient economies of scale will not be intrinsically threatened by the new model.

Index Terms—software, SOA, service oriented architecture, SaaS, Software-as-a-Service, pricing strategy, financial statements, information technology, performance, business process outsourcing


Cite: Thomas W. Hall, " Is SOA Superior? Evidence from SaaS Financial Statements," Journal of Software vol. 3, no. 5, pp. 1-10, 2008.

General Information

ISSN: 1796-217X (Online)
Frequency:  Bimonthly (Since 2020)
Editor-in-Chief: Prof. Antanas Verikas
Executive Editor: Ms. Yoyo Y. Zhou
Abstracting/ Indexing: DBLP, EBSCO, Google Scholar, ProQuest, INSPEC(IET), ULRICH's Periodicals Directory, WorldCat, etc
E-mail: jsw@iap.org
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