Abstract:

Currently， many software developers （such as SAP， Oracle， etc.） not only sell software to client enterprises through downstream service providers （such as Accenture， Deloitte， etc.）， but also directly sell it to clients. However， in the field of software service supply chain management （SSSCM）， there is a lack of research on the channel encroachment of software developers. In this study， a software service supply chain （SSSC） with a software developer， a service provider and client enterprises is considered. The clients can either purchase software （developed by the software developer） from the provider with a high price and additional pre-sale services， or directly purchase it from the developer with a low price but without pre-sale service. After purchasing the software， the clients can also purchase the extended warranty service from the developer.The two cooperation modes of “authorization” and “authorization + direct sales” are studied between the developer and the provider， and the equilibrium decision-making of SSSC members and the SSSC performance is compared in the two cooperation modes. It is found that the sales volume of software products and extended warranty services in the “authorization” model is less than that in the “authorization + direct sales” model； thus， the channel encroachment of the developer can increase the sales of software products and extended warranty services. In addition， the developer’s software product sales profit is higher than that in the “authorization + direct sales” model， but the extended warranty service sales profit is lower than that in the “authorization + direct sales” model； thus， the channel encroachment will reduce the developer's software product sales profit， but it can increase that of the developer's extended warranty service. Also it is found that when the intensity of competition between the two parties is weak and the market size occupied by the developer is small， the profit of the provider and the total profit of the SSSC are lower than those in the “authorization + direct sales” model； thus， the channel encroachment of the developer can increase the profit of the provider and the total profit of the SSSC. However， when the competition intensity is weak and the market size occupied by the developer is large （or when the competition intensity is strong）， the profit of the provider and the total profit of the SSSC are higher than those in the “authorization + direct sales” model， and the channel encroachment will not only cause the profit loss of the provider， but also the performance loss of the SSSC.

Key words: software service supply chain （SSSC）, channel encroachment, software authorization, sales strategy