4. Results
4.1 Value-in-Use of Software Solutions From a Customer Perspective
4.1.7 Competition and Substitutes
A handful of Dutch software suppliers has developed a software solution in response to the decentralization of the social domain. The suppliers developed systems with rather different value propositions, design and options. What all systems have in common is that all are new and still subject to development. Most interviewees answered that none of the suppliers offers a software solution that covers their goals and expectations to 100%. In addition, municipalities have dealt very differently with the decentralization. “You choose the
software solution that most closely matches with your organizational vision. From there on you customize the system and refine processes in collaboration with the supplier” (C3;M3).
55 Moreover, the interviewees stated that the existence of competitors is important to maintain high quality offerings.
In prior literature, it is argued that the perceived value-in-use is relative to competition and is subject to comparison with substitutes (see Worm et al., 2017; Helander & Ulkuniemi, 2012; Macdonald et al, 2016; Tuli et al., 2007). According to the case study results, customers in the social domain indeed compare new software with the software they used previously or alternative software that is being used by other municipalities. Especially when the system is newly implemented, staff employees of customer organizations tend to compare the new software with the one(s) they previously used based on features and design, and form an opinion about the new software based on that comparison. Alternatively, “if another
municipality has a different software solution and befits from it or faces struggles, it gives you a worse or better feeling about the software you chose” (C4; M4). Comparisons, thus, can positively or negatively influence how customers experience the software and how satisfied they are about their choice, leading to either a higher or lower perceived value-in-use. This finding is in line with the statement by (Grönroos & Voima, 2013, p. 138) that the nature of value-in-use can also be seen as the “extent to which a customer feels better off (positive
value) or worse off (negative value) through experiences” related to the usage process. One of the interviewees explained that the degree to which municipalities compare their software with peers and openly communicate their experiences with each other might be different from other industries. “As a municipality, we have a monopoly position, and there are about 388 of
us in the Netherlands. We have very similar organizations but there is no actual competition. This is why we easily communicate with each other and gain insight in how other municipalities experience other software solutions and how they cope with the decentralization. You always keep comparing your system and your choices with those of your peers” (C8; M7).
Furthermore, the role of competition appears to be dependent on phases. If the municipality has no system in place and is looking for one, competition will play a relatively large role. Based on a list of criteria (see section 4.1.1) and organizational values, municipalities will compare the available offerings and select the most suitable option. Similarly, in case when the contract with the current software supplier is close to termination, the role of competition will increase as customers will make comparisons. The same holds for municipalities that did not opt for an integrated system from the beginning, but decided to use a combination of existing systems and new software. If such a municipality decides to
56 reorganize and wants to convert towards a single software solution, they will likely compare their current software suppliers and chose the best fit and abandon the other.
However, as soon as the organization has chosen a particular software system, the role of competition declines. The implementation process takes a long amount of time (up to a couple of months), “it is cumbersome to switch and transfer all documents to a new system” (C3; M3), and above all, it is “very expensive to switch and buy a new software system”
(C12; M9). These three factors serve as a barrier or customer lock-in once the software has been chosen and implemented.
In sum, the existence of substitute products can have a positive influence on customer perceived value-in-use if customers feel that the chosen software system has advantages compared to previous systems or software used by peer organizations. But the existence of substitute products can also have a negative influence on customer perceived value-in-use if customers feel that the chosen software system has disadvantages compared to previous systems or software used by peer organizations. The existence of substitute products can also have a negative impact on customer perceived value-in-use if expectations about the are not being met in practice and the customer is dissatisfied and feels that a competitor offering may would have been a better choice. Proposition 7 can be adjusted and extended to:
Proposition 7a: Due to the presence of substitute products and service, customers make comparisons which leads to a better or worse feeling about their own choice of software, which in turn yields a respectively higher or lower perceived value-in-use of the software solution.
Proposition 7b: The role of competition and substitutes is phase dependent.
Proposition 7b1: The role of competition and substitutes increases if the customer is about to acquire a software solution or if the contract with the current software supplier is close to termination.
Proposition 7b2: The role of competition and substitutes declines when the customer organization has chosen a particular software system.