Economic aspects of building software for service-oriented architectures

The concept of service-oriented architectures (SOA) has recently emerged as a design principle for the next generation of IT solutions. The main idea behind SOA lies in treating software applications as composed of simpler, cooperating services, implemented by components that communicate over networks through open standards. Such a modular structure is expected to question the effectiveness of current business models for building and distributing software, which generate revenue through license fees. Under SOA, the license fee is replaced by more flexible schemes, whereby users are charged according to their actual usage of services and the corresponding hardware infrastructure. Our work constitutes a first step toward exploring the economic aspects of a market for software components, as well as the incentives of software manufacturers to support this trend. In particular, we examine the factors that affect profitability in an open market for services, we build simple models to predict and explain market growth and we also suggest ways to accelerate this growth, while also achieving a higher level of economic efficiency. Copyright (C) 2009 John Wiley & Sons, Ltd.