Creating Competitive Advantage in E-Business Value Chains by Using Excess Capacity via IT-enabled Marketplaces

Abstract

Innovations through the "business process as a service" (BPaaS) concept have shaped new business opportunities for service providers. Technological progress allows business process service providers (BPSPs) to offer a wide range of digitized and standardized services to business clients. Within this business model, capacity planning is a major challenge for BPSPs, as costs are the decisive factor in the competitive business environment of digital service provision. Accordingly, BPSPs must tackle inefficiencies in capacity planning resulting from both idle capacity and lost revenue caused by volatile demand. However, recent technological developments offering dynamic integration and information capabilities may help, as they enable the exchange of excess capacity between business partners. We examine the corresponding potential of IT-enabled excess capacity markets to create competitive advantage in e-business value chains by analyzing a BPSP's capacity-related optimization problem. We build an analytical model based on queuing theory and evaluate it through a discreteevent simulation applying a possible application scenario. By solving the optimization problem, we identified a remarkable cost advantage in using excess capacity as a first competitive advantage. Building on this cost advantage, we furthermore identified differentiation advantages realizable without raising prices. Both findings highlight the relevance of further research on this topic.